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Shared savings model

Sourcing and Procurement

Definition

A shared savings model is a commercial arrangement in which a hospital and a supplier or technology partner share the financial benefit of an initiative, typically based on measured outcomes. It aligns incentives around delivered value rather than upfront cost.

Why it matters

Shared savings models work well when the value is measurable, the baseline is agreed upfront and the data is trusted by both sides. They tend to break down when measurement is contested or when the data sits in disconnected systems. The more accurate the underlying data, the more credible the shared savings model becomes.

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