Selling to hospitals: how they buy, who decides and where to find them

This guide is for companies that sell equipment, supplies, software or services to US hospitals: device makers and distributors, bed and furniture manufacturers, health IT vendors, and staffing or facility services firms. It covers how many hospitals there are, how a new product gets bought, who decides, where to get a free list of hospitals, and when to reach out. Drug sales go through a pharmacy and therapeutics committee instead and aren't covered here.

How many hospitals there are

Three official sources give three different counts, each right for its purpose.

The AHA figures show who owns them. Of 5,121 community hospitals, 2,984 are nonprofit, 1,224 are investor-owned and 913 are run by state or local government. 3,567 of them (70%) belong to a health system, which matters because systems often buy centrally. Hospitals employed 6.34 million people in 2023 with an annual payroll of $511.8 billion, according to County Business Patterns.

The CMS list is the one you'll work from, because it's free and names every hospital:

Size tells you more than type. We counted beds for the 5,939 hospitals that reported them in CMS's 2023 Medicare cost report file:

How a new product gets bought

Hospitals publish their vendor rules, and the same path keeps appearing. Children's Mercy Kansas City's supplier policy and University of Utah Health's new product page are clear examples.

1. Supply chain hears about it first. Children's Mercy requires suppliers to introduce every new, changed or upgraded product to its Procurement and Contracting team "prior to introducing any product to any other department."
2. A clinician sponsors it. University of Utah Health asks vendors to obtain a clinical sponsor, and for surgical products the physician champion submits the request.
3. A new product request goes to value analysis. A committee of clinicians, supply chain and finance staff compares your product with the alternatives. At Children's Mercy, the Value Analysis Council evaluates "purchasing options among the GPO contracts and other available alternatives."
4. The hospital may trial it. The committee asks for the trial and hospital staff run it. Don't leave samples: Children's Mercy bans samples or trial products without pre-approval.
5. Supply chain contracts and orders. Only procurement can commit funds, and you need a purchase order before you deliver anything.

Group purchasing organizations

A GPO negotiates contracts on behalf of many hospitals, and vendors pay it an administrative fee. Federal rules protect those fees from the anti-kickback law only if the GPO's written agreement with the hospital caps them at 3% of the purchase price or states the amount, and the GPO discloses what it received to the hospital at least once a year. Children's Mercy, for example, gives priority to its GPO's national agreements and bars suppliers from visiting if their product competes with a sole-source contract, unless the hospital is renegotiating. Ask early: which GPO are you with, and when does the contract for this category come up?

Vendor credentialing

Most hospitals require sales reps to register in a vendor credentialing system before visiting. Children's Mercy uses one to check sanctions, training, background checks and health screenings, and a supplier who doesn't register can't get in. Budget a few days for it before your first site visit.

Who decides

Who's involved depends on what you sell.

If your software or service will handle patient data, expect a business associate agreement: HIPAA lets a hospital share protected health information with a vendor only with written assurance that the vendor will safeguard it.

The rules that shape hospital sales

This is general information, not legal advice.

• The Anti-Kickback Statute. It's a federal crime to knowingly offer anything of value to induce purchases that Medicare or Medicaid pay for. That rules out gifts, trips or fees to clinicians who influence buying decisions. Discounts and GPO fees are lawful only when they fit a safe harbor exactly.
• Open Payments. Drug and device makers report payments to physicians and other covered recipients, and CMS publishes the data each year by 30 June. Assume any meal you buy a surgeon will be public.
• FDA status. Committees ask. Children's Mercy selects only FDA-approved products unless its review board approves research use. Look up your product's classification before the meeting: an AC-powered adjustable hospital bed is a Class II device exempt from 510(k) premarket notification, while manual and hydraulic beds are Class I.
• Bed safety. If you sell beds, bring entrapment data. FDA received 901 reports of patients trapped in hospital beds between 1985 and 2013, including 531 deaths, and it publishes dimensional guidance that hospitals use to assess bed systems.

Where to get a list of hospitals

Both CMS files use the CMS Certification Number as the hospital's ID (called Facility ID in one file and Provider CCN in the other), so you can join them in a spreadsheet and get phone, type, beds and fiscal year end on one row. The files give you hospitals, not people. Finding the nurse director, value analysis manager or supply chain lead at each one is the slow part, and Bebop finds those contacts and researches each account in the list.

Segment before you reach out

• Type. Acute care, critical access, psychiatric and children's hospitals buy different things. VA and Department of Defense hospitals buy through federal procurement, which works differently (see selling to the government).
• Beds. A proxy for budget and how formal the committees are.
• Ownership and system. System hospitals often buy through a system supply chain team, so the decision may sit at headquarters, not at the hospital.
• Fiscal year end. It sets your deadline (next section).
• Quality signals. The CMS file counts the measures where a hospital does worse than the national rate, such as readmissions or safety. If your product addresses one, that's your opening.

Timing: work back from the fiscal year

Hospitals set capital budgets months before the year starts, and a request that misses the budget waits a year. Of the 6,046 hospitals in CMS's 2023 cost report file, 40.2% close their fiscal year on 31 December, 28.8% on 30 June and 14.9% on 30 September. It varies by state: in our count, 86 of Pennsylvania's 90 short-term hospitals with 100 or more beds close on 30 June, while 54 of Ohio's 74 close on 31 December.

Worked example: a bed manufacturer plans Ohio

Illustrative example. The seller, hospital and people are fictional; the Ohio counts come from CMS's 2023 cost report file.

The seller: Northfield Beds (northfield-beds.example) makes powered medical-surgical beds with built-in bed-exit alarms. The territory: Ohio.

Sizing the territory. Ohio has 74 short-term hospitals with 100 or more beds, with 21,914 beds between them. If a hospital replaces its bed fleet about every ten years (an illustrative assumption), roughly 2,190 beds come up for replacement each year. At an illustrative $12,000 a bed, that's about $26 million a year of demand in one state.

Timing. 54 of the 74 hospitals close their fiscal year on 31 December, so their capital budgets are built in the autumn. The rep plans first contact for spring and new product requests by early summer.

One account. Lakeshore Regional (lakeshore-regional.example) has 310 beds, a December year end and a CMS falls-related safety measure worse than the national rate. Its vendor page names its GPO and credentialing system. The rep registers first, then writes to the director of medical-surgical nursing:

Subject: Bed-exit alarms on your med-surg units

Hi [first name],

I sell medical-surgical beds, and I'm writing because [hospital] reports [the measure, e.g. falls with injury] above the national rate on Care Compare.

Our beds have a built-in bed-exit alarm that [what it does]. At [similar hospital type], nurses use it to [outcome you can document].

I've introduced the bed to your supply chain team and I'm registered in [credentialing system]. If it's worth exploring, the next step would be a new product request with you as clinical sponsor. Would 20 minutes next week help you decide?

[Your name]

The email cites the hospital's own data and asks for the one thing the process needs from a clinician: sponsorship.

Checklist before you contact a hospital

• You know its type, bed count, fiscal year end and GPO.
• You've read its vendor or supply chain page and registered in its credentialing system.
• You've introduced the product to supply chain, or know the hospital doesn't require it.
• You have FDA classification or clearance documents ready.
• Your evidence covers outcomes and total cost, not just price.
• Nothing you offer a clinician could look like an inducement.

Common mistakes

• Going around supply chain. It can cost you access to the hospital.
• Pitching price alone. Value analysis committees weigh safety, quality and standardization, and a cheaper product that adds a new process often loses.
• Ignoring the GPO contract. If a competitor holds a committed contract, your window is the renewal.
• Treating every hospital the same. A 20-bed critical access hospital and a 600-bed academic center buy in completely different ways.

Next step: profile your first ten hospitals with the account profiling template, starting with type, beds, fiscal year end, GPO and one dated reason to call.