How physicians shape supply chain decisions in a large group model

Who decides what products surgeons use in the operating room — and on what basis? In large healthcare systems, the answers are often assumed to be driven by cost or centralized control rather than clinical expertise. Yet integrated models can create a very different reality, one in which surgeons play a central, structured role in shaping product decisions that directly affect patient outcomes.

At Kaiser Permanente, an integrated organizational structure supported the evolution of a national product council that unites Permanente physicians with supply chain and Kaiser health plan business partners to guide the selection of high-quality products needed for outstanding patient care. This council relies on selected volunteer physicians to evaluate and recommend products based on clinical evidence, real-world utility, and value. The physicians and surgeons involved in these processes use their frontline clinical experience to help identify high-quality, best-in-class products, establish clinician-led utilization standards, and achieve meaningful cost stewardship. In a predominantly prepaid environment, this balance is critical — not only for the patients and the health plan, but also for maintaining trust among surgeons in the various hospital and clinical environments.

The national product council includes hundreds of members, many of them physicians, across several specialty sourcing teams. Within orthopaedics, a core group oversees various specialty-specific sourcing teams responsible for guiding the selection and contracting of medical devices used across all care environments within the health plan. These orthopaedic sourcing teams focus on areas such as total joints, sports medicine, foot and ankle, spine, and soft goods.

The general principles of the teams, as espoused by Sande Irwin, MD, chair of the national product council, are:

• quality — selecting the highest-quality product via a thorough and robust review of the category;
• outcome — improving patient outcomes and service, assuring supply, and stocking inventory;
• consistency — minimizing practice variation across the organization; and
• alignment — realizing simplicity and efficiency by managing fewer suppliers.

With broad matrixed oversight of the national council and the core group, each of the sourcing teams works as a collaboration of respected clinicians, internal supply chain operational health plan representatives, and external business partners to evaluate products for use within the system. The cadence of meetings occurs over contractual cycles to observe on- and off-contract utilization. The teams also hear about the obsolescence of existing products, new products on the horizon, and generally how the professional relationship between Kaiser and product partners is progressing. Nearer to when contracts mature, the teams are allowed to hear directly from contracted and non-contracted implant companies so a competitive environment is continually encouraged for the benefit of patients’ outcomes and best use of the patient healthcare dollar.

If new technology becomes available, it undergoes a rigorous evaluation by an additional national committee that tracks the emerging technology as it develops. An evidence-based evaluation of the existing literature on the new technology is performed as well. That information is provided to the new technology committee and a multidisciplinary team of clinicians, nonphysician administrators, and legal and ethics representatives (among others), who assess the prevailing data, including the literature review. The committee assesses the new technology or implant based on effectiveness, longer-term safety, and durability.

Based on the published literature reviewed, the new technology committee can issue one of three types of recommendations:

• sufficient evidence shows that the use of the technology is medically appropriate for selected patients;
• insufficient evidence exists for the committee to determine whether use of the technology is medically appropriate for any patient; or
• sufficient evidence shows that the use of the technology is generally not medically appropriate for any patient.

Separately, if a surgeon wants to use a product not on contract, there is a process whereby the surgeon can present the case and reason for the exception to the local product council at their medical center, then pursue the matter up through the sourcing team and beyond to the core group if needed. Reasonableness typically prevails in these settings to allow for exceptions rooted in good justification and judgment.

This system has consistently delivered high-quality products that enable surgeons to achieve the best possible outcomes in patients. It’s not driven by a “use the cheapest” mentality; instead, the council has realized product cost savings over many years while maintaining a strong focus on clinical value, acting as a good steward of the patient healthcare dollar within this not-for-profit system.

The established structure and processes occasionally have led to expensive products not being used because they lack strong evidence or proven outcomes. This approach is supported by the fact that the surgeons are largely free from conflicts of interest, as they cannot be on CMS Open Payments Sunshine Act lists for significant sums of money. As a result, while the group values collaboration with industry partners, these relationships remain mature, professional, and unbiased due to the absence of financial ties.

Is everyone satisfied all of the time within this arrangement? Does the system need to continually orient new surgeons to this highly matrixed operational product utilization construct so they understand how to operate and perform within it? Nothing is absolute. However, the construct itself reflects a strong commitment to meaningful surgeon engagement, alignment with operational and business imperatives, and decision making driven by clinical evidence and utility, rather than cost or convenience alone. While this is not the only model for physician involvement in implant decision making, it works for the patients, surgeons, and teams who practice and advance Permanente medicine.

Ronald A. Navarro, MD, FAAOS, FAOA, is professor of orthopaedic surgery for the Kaiser Permanente School of Medicine and practices shoulder surgery in the Southern California Permanente Medical Group.

References

1. Irwin S. Innovative product selection in a value-based health care organization. Permanente Medicine. Published August 23, 2024. Accessed March 6, 2026. https://permanente.org/innovative-product-selection-in-a-value-based-health-care-organization/
2. Schottinger J, Odell RM. Kaiser Permanente southern California regional technology management process: evidence-based medicine operationalized. Perm J. 2006;10(1):38-41. doi:10.7812/TPP/05-120. PMID: 21519454; PMCID: PMC3076982.