Lactam polymers has been modified with sodium borohydride (NaBH.sub.4) to yield lactam polymers bearing hydroxyl functional groups. These functional groups are useful for the covalent attachment of reactive groups, fluorescent probes, antimicrobial agents, bioactive factors, and drugs. The resulting as components for medical devices, specifically ophthalmic devices and more specifically contact lenses. Hydrogels based on these polymers are also useful for biomedical applications in the areas of drug delivery, tissue engineering, and implantable devices.