Ishrak spoke at OCTANe’s Medical Technology Innovation Forum (MTIF) this week about the opportunity and responsibility medical device companies have when it comes to adopting value-based care models. In this future, Ishrak sees healthcare as an “economic driver, and not a cost driver.”
Moving to value-based care, according to Ishrak, starts with challenging medical device companies to apply the same rigor of collecting and applying objective data about economic value as is currently applied to collecting clinical value data. “We have to have the courage to apply the same degree of precision to demonstrate economic value as we do for clinical value,” he said.
This shift will require a vast change in thinking. “Right now, medical technology is paid on the promise of the change of an outcome, but if something goes wrong, and the procedure must be done again, we get paid again – so there is a lack of accountability,” Ishrak said.
Ishrak said this lack of accountability for outcomes is up and down the healthcare chain, which leads to waste. “When everybody gets paid for service but no one is accountable for value, you get escalating costs.”
Instead, Ishrak hopes to see revenues based on delivering improved outcomes as a result of technology innovation. Without such a shift, he said: “Healthcare will be completely unaffordable.”
And if that happens, Ishrak warned, policymakers “will whack the most expensive stuff and say, ‘That’s it,’” which won’t help innovators, care providers or patients.
To avoid such draconian healthcare policy, Ishrak said the industry has to start by leading the conversations in accountability for value-based care and work with all the stakeholders to better understand the driving motivations for each group. “All of us together have to pay attention to the time between therapy to the point at which the outcome is realized.”
For example, relationships with payers can be enhanced and device firms can foster a better understanding of what drives hospitals. “Right now, hospitals get no financial benefit for better outcomes, so the conversation of value is different.”
Further, there may be motivators that are as yet unidentified, “We have to figure out who benefits from an outcome that keeps someone in the workforce longer and make them part of the conversation.”
But as the conversations happen, Ishrak cautioned that economic value does not replace clinical value, it has to build and add to that value.
Ishrak is confident that the medical device space is uniquely suited to move the needle in economic value. “We have engineered solutions, we understand how to measure outcomes. We have the expertise, and we need to focus it on value-based care,” he said.
To drive innovation in a value-based healthcare world, Ishrak spoke of three key tenets:
- Understand the economic value of innovation. This requires finding ways to objectively measure the economics and apply value to those numbers. Such measurements should include clinical change (e.g., did the technology work the way it should?), functional change (e.g., can the patient now walk upstairs?), and the health status improvement (e.g., how does the patient feel? Can they go back to work?). This value has to be part of the strategy from the beginning. It also requires building foundries of data collected from various sources and applying it to outcomes measurements.
- Broaden the innovation horizon to ensure value is realized. Demonstrating that you are delivering the value being promised requires new technology that might be outside the scope of the stand-alone device, such as digital support products, monitoring and healthcare professional training.
- Collaborate to generate new business models. Getting to outcomes will require more collaboration and cannot be done in isolation.
Ken Miller says
If this is just a fancy way of saying that companies will charge more for essential devices/medicines based on the consumer/patients need, I am unimpressed with the greed. Said differently, if costs will be based on the value to the patient, then any medicine or device essential to staying alive (e.g., insulin and pumps for type-1 diabetics, epi pens, etc.) will become significant expenses (beyond what they already are and crippling costs if insurance becomes any more messed up in this country) simply because the patient will have no choice. Production costs seem to be irrelevant in this thinking.
Chris Newmarker says
Thanks, Ken. My understanding reporting on this trend has been that it turns medical devices and the companies making them into services, versus products. Take this example from a lot of people’s daily lives: Yeah, I’ll need to pay my car mechanic for the parts used to, say, rebuild my car’s engine, but if my car doesn’t start, they’re not getting my money. (Or if I already gave them my money, I’m going to demand they fix their mistakes for free.) My understanding is that it’s becoming increasingly like that for orthopedic procedures that are being bundled in the U.S. – and much more. So medical device companies are trying to get in on the action.
Here’s a really interesting example. Bigfoot Biomedical now had a partnership with Abbott to create an artificial pancreas system. Bigfoot’s co-founder & CEO, Jeffrey Brewer, told me earlier this year that the plan was to sell everything – provide everything Type 1 diabetics need to manage their disease, including supplies, updating equipment, a host of services, etc. – for less than $1,000 a month. He said: “We’re gonna go at risk for doing that, and actually deriving healthcare outcomes that are very motivating to payers.” “Risk” seems to be an extremely important word in Brewer’s quote.
I think the question is whether the additional risk (putting themselves on the line for patient outcomes) is going to be worth the reward for medical device companies.
jack oliver says
all companies have governed themselves, in the past , as “management by crisis”. Therefore is this ” value based care ” just now another example of SAME ?
Chris Newmarker says
Thanks for the comment, Jack. The head of CMS recently said that the agency may not be moving fast enough to implement the new payment models, so they’re definitely here to stay.
https://www.medicaldesignandoutsourcing.com/value-based-care-seema-verma/
The changes in CMS, one of the less talked about parts of Obamacare, mark a major shift in the priorities for paying for healthcare in the U.S. So yeah, it makes sense that medical device companies are reacting to it, or even trying to get ahead of it.
I suppose the situation would be a lot scarier if the medtech CEOs were acting like the captain of the Titanic, and pretending that this huge thing isn’t out there?
Clifford Thornton says
Very well-written article and valid points. Expansion on this discussion is very much needed. One thing that we can all acknowledge is that one of the unique challenges to the healthcare industry is that any metrics used and applied to patient outcomes will be subject to great variability and objectivity. The reason for this is that humans are not cars, computers, or watches. You can not say people of Model No. K1256, have this defect or this problem and put that into a database, and that’s that, black & white, clean & simple; it’s the complete opposite with patient care. With that being said (and I’m not adverse to using metrics for performance outcomes – I actually think this is a critical step forward), I think we need to develop a metric scale that incorporates several variables (i.e. maybe around 5-6). You don’t want to go too crazy, because then it becomes too complex to decipher and track and you’re going to get lost in the numbers.
Each variable can be assigned a 1-10 number and then the numbers for each variable will be averaged. For a start I think the key variables can be (and this is not all inclusive), -To what degree are patient’s symptoms resolved? -To what degree can the patient return to normal activities or has expanded their range of activities? -Can the patient now live independently or outside a care facility? -If surgery / medical device implant/ other therapeutic procedure has been performed, to what degree has the patient made a full recovery?
I think by taking all of these variables into account, we get a better picture of how the patient is actually faring. What brought this to mind, was an article I was reading today in MedPage about the ORBITA trial (Link: https://www.medpagetoday.com/cardiology/cardiobrief/69147). For those not familiar with it, this study focuses on the issue of if PCI should be indicated for patients with stable angina? And it argues that PCI is over-used. A commentor of the article, I thought, made a very good point about how there is a BIG question about the middle ground, “Are we to assume there is no place between once-a-month stable angina, and full MI, wherein there is a good reason to use of a stent?” And I believe, here lies the issue and the challenge in applying more metrics in healthcare to rate and assess patient outcomes — What EXACTLY do these metrics define and how can we formulate related equations which stay true to what the patient is really experiencing and feeling? I’m sure this equation will be assessed, re-assessed, and done over and over as we drive down this value-based road. As per my suggestions, I think the best approach is a bit of pure scientific metrics (i.e. blood-work, diagnostic test results, physician physical assessments, etc.) and a bit of patient input (using sliding scales) – for critically ill patients it might be good to collect input from close family members as the patient may not be honest about how they are feeling or maybe unable to (due to their cognitive condition, level of pain, or level of consciousness) accurate provide and communicate this information (i.e. think of a stroke patient with significant CAD).
To add to the above and put things into context, we must consider the different types of patients we must assess in the value-based world. I encountered a patient who was a gym/ physical fitness teacher at a Secondary school. He worked out very regularly and was in overall good “physical shape” (i.e. in his mid-40-s), but he experienced a MI and had multiple coronary artery disease and underwent a coronary bypass. Now, his recovery and attitude is going to be much different say than that of a 65 year old male, perhaps who has smoked all his adult life, lived a very sedentary lifestyle (did mostly office/management work), has been overweight most of his adult life, and has both very poor physical performance (i.e. say he also has PAD) as well as mild-to-moderately low cardiac output (CO). To be fair to physicians, hospitals, etc., with this in mind, you’ve got to create metrics to take this into account. It’s obviously going to require much more work, more appointments and tests, and more clinically challenging to get the 2nd patient to an acceptable level of health and possibly improved health. The first patient, chances are, he is going to attack his recovery very aggressively and be very pro-active on his own (i.e. reading books about a heart healthy diet, working closely with physical therapists/ exercise therapists), following Doctor’s orders, etc..
In summary, a key factor in making the value-based equation work in the clinical reality is to create weighted metrics that are sensitive to and address the clinical realities of the scope of different types of patients for the same condition or disease.
Thanks Heather Thompson for this excellent and relevant article!
-Clifford Thornton
Chris Newmarker says
Thanks for sharing some extra thoughts on this, Clifford.
Gopi Dandamudi says
The issue that always comes up with value based care is that it requires partnerships with payor, provider and industry. All 3 have to be part of the discussion to drive value to the patient. With new technologies and increasing costs (in a market where medical costs are rising, reimbursements dropping, administrative costs increasing), industries have to shift to a value based pricing model to realize the increased costs in selling their products. With a fixed pot of money, all 3 players have to take risk and reward proportionately. Until this happens, everyone will be looking after themselves and ultimately the value to the patient is suboptimal. Just like any business, consumers have to challenge this outdated business model and drive change in the end.
Chris Newmarker says
Thanks, Gopi. Those are good points.
Cynthia Yock says
All conversations and initiatives to improve health outcomes, efficiency of care and reduce costs are important in the overall health economic climate. Careful innovation and application of technologies certainly have opportunity to positively effect value. But without some attention to administrative costs the overall burden of health care on our national economy cannot be affected in a meaningful way. Administrative cost burdens don’t contribute directly to health outcomes and, as some critics say, may contribute indirectly to worse outcomes due to complexity and delays. http://www.commonwealthfund.org/publications/in-the-literature/2014/sep/hospital-administrative-costs, https://www.forbes.com/sites/theapothecary/2017/02/01/the-aca-increased-rather-than-decreased-administrative-costs-of-health-insurance/#223e20299e77