Case Study
Strengthening Compliance and Recovering Warranty Credits
with SpendMend
An integrated health system serving a large and diverse patient population across multiple regions sought to strengthen compliance and improve recovery of warranty credits for explanted medical devices. The organization includes several acute care hospitals, specialty facilities, and a robust home health and hospice network. Collectively, the system delivers more than 1.5 million patient encounters annually and employs over 2,300 physicians.
2.6 Billion+
In Consolidated
Annual Revenue
~1,030
Licensed Beds
Across the System
1.5 Million
Patient Care
Encounters Annually
2,300+
Physicians in the
Network
The Problem
The issue surfaced when the compliance department noted increasing OIG scrutiny around warranty credits for explanted medical devices. Penalties and fines were being issued when credits worth more than 50% of a replacement device’s cost were not returned to payers.
A routine review revealed that each facility had its own process, and almost every decision to return a device for analysis was based solely on a manufacturer’s representative’s advice. There was no independent verification of warranty eligibility, no integration between clinical teams and patient accounts, and no centralized tracking. This led to significant compliance risk, missed credits, and inefficient workflows.
- Device Evaluations: Over 440 explanted devices were evaluated, with more than 21 returned to manufacturers for warranty credit consideration.
- Time Savings: Clinical staff time spent on administrative tasks was significantly reduced, allowing more focus on patient care.
- Compliance: NGHS achieved 100% compliance with regulatory requirements for warranty credit evaluations.
- Financial Benefits: NGHS maximized their warranty credits and experienced a 25% increase in retained dollars, significantly enhancing financial performance.
These results highlight the significant impact of SpendMend’s +Explants solution in optimizing NGHS’s operations and improving overall efficiency,
The Consequences Included:
Compliance Risk
3× repayment penalty for warranty credits not pursued, along with per-instance fines
(min $14,308 / max $28,619)
Lost Credits
Warranty-eligible devices potentially going unclaimed
Operational Inefficiency
Disconnected workflows and no centralized tracking
Why the Problem Persisted
The organization did not have the resources or bandwidth to build a compliant tracking system in-house.
Clinical teams were focused on patient care, IT had no capacity for a custom build, and early internal discussions confirmed that a sustainable process could not be developed internally. Without a dedicated solution, the problem remained.
How the Partnership with SpendMend Began
The turning point came during a quarterly business review with SpendMend, a trusted partner for AP audits for nearly a decade. A senior supply chain leader recalled seeing a slide about SpendMend’s explanted medical device warranty-credit-tracking solution and immediately recognizing its potential. “You had a great track record with us, so when I saw this offering, I knew you would make good on what you promised,” he said. That credibility, built through years of consistent delivery, moved the conversation forward quickly.
First Impressions & Sales Cycle
The initial demo, led by Alan Brander, RN, MBA, FACHE, Vice President of Clinical Services at SpendMend, showcased an encyclopedic knowledge of the warranty-credit process. He explained how the system:
- Independently verified warranty eligibility
- Automated return workflows and generated FedEx labels
- Integrated directly with patient accounts for proper credit application
These capabilities directly addressed the organization’s risks and workflow issues. The decision was made with input from EP, surgical services, compliance, and patient accounts.
Implementation
Training took longer than anticipated due to clinical scheduling challenges, but SpendMend’s flexibility was key. Dennis Beall conducted one-on-one and refresher sessions as needed, ensuring all staff were confident in using the system. Within months, the process was fully integrated into daily workflows. Clinical teams no longer viewed it as extra work—it simply became the standard operating procedure for handling explants.
Results
In the first two years, the health system:
- Tracked 661 explant procedures and 686 devices, leads, and generators
- Received $125 K in warranty credits from 64 returned devices
- Offset roughly two-thirds of the software’s annual cost through recovered credits
- Avoided over $350 K in fines and penalties
- Experienced a 75 % decrease in FTE hours by automating the process
- Ended reliance on manufacturer reps to guide on explant processing
The compliance risk has been greatly reduced, and the program is now sustainable, efficient, and trusted internally.
What’s Next
The health system continues to work with SpendMend for AP audits and asset recovery. The organization is also exploring opportunities in pharmacy analytics once its current engagement with another provider concludes. For the senior supply chain leader, the success lies in the combination of proven results and a trusted partnership—one that solved a persistent problem, delivered as promised,and became an embedded part of operations.
Key Quotes
“You had a great track record with us, so when I saw this offering, I knew you would make good on what you promised.”
“The whole process has exceeded our expectations, and the clinical folks have basically baked it into their normal routine.”
“I can’t say enough about it, to be honest with you.”
“The portal is easy to use. I can pull a comprehensive report for the entire system on my own, without asking anyone.”
Whatever we needed, you were willing to provide, and I’m sure that really contributed to the ultimate success of the program.”
– System Senior Vice President, Supply Chain