AdvaMed today launched a new value initiative that includes extensive tables of questions to help medical device companies formulate value-based arguments.
The value framework also includes tools specifically designed for diagnostic technologies – and reports on understanding evidence and use cases.
“Value” has become an important word in medtech in recent years as government and private healthcare payers in the U.S. and around the world have moved away from traditional fee-for-service payments. Instead, payers such as the U.S. government’s Medicare program and private insurers favor health providers delivering more efficient and effective care. The situation means that device companies need to have arguments for why their products create value, both to persuade hospitals and clinics to use their devices and to arrange reimbursement from insurers.
“It is imperative that we know how to demonstrate and clearly articulate how our technologies can improve patient outcomes and create value. The challenge is that there hasn’t been a consistent way of talking about value or even assessing the value of medical technologies and technologies,” Nadim Yared, chairman of AdvaMed and CEO of CVRx, said during an AdvaMed webinar today.
To help its members better navigate this new world, AdvaMed brought in Deloitte Consulting about 2 years ago to help it evaluate the economic and clinical evaluation tools already out there – and conduct extensive interviews with AdvaMed members and officials from health providers and insurers.
The result was a framework that AdvaMed officials think will help medical device companies come up with truly comprehensive value-based arguments for their existing devices, Don May, executive VP of payment and health care delivery at AdvaMed, recently told MDO. On top of that, the questions and metrics can help medical device creators incorporate value-based thinking into the earliest stages of the device development process – informing everything from product ideations, study design, evidence collection, the FDA approval process and more.
“I actually think … some of the venture capital companies will think of this approach when they’re asking, ‘Do we go with this product or this product?'” May said. “They will be looking at this value imperative right from the very beginning.”
“I think this helps create a framework right from the very beginning of the process,” May said.
The value initiative gets medical device companies to examine 4 key drivers of value:
- Clinical impact on the patient – This is the efficacy of the device, something device companies have thought of for a long time.
- Nonclinical impact on the patient – This is about patient experience and economics, something May thinks is going to be key for device companies as health systems become more patient centric and value driven.
- Care delivery, revenue and cost impact – This is about care delivery economics, something that is increasingly important to health providers. Think of metrics such as reducing readmission rates, infection rates, or surgery time. It’s about improving care and lowering costs at the same time.
- Public and population impact – This is about getting people back to their jobs more quickly, and providing better disease management over large populations.
The framework also takes into account different types of patient populations and also gets medical device companies to think about a device’s value over different timeframes, not only on a short-term basis but also over the long-term, May said.
AdvaMed and Deloitte enlisted about a half dozen medical device and diagnostics companies to try out the value iniative’s framework. They included Rotation Medical (Plymouth, Minn.), an early-stage company with a novel, FDA-cleared rotator cuff system that includes a bioinductive implant reconstituted from bovine Achilles tendon tissue.
The value framework helped Rotation Medical officials come up with new value-based arguments for the technology that they may not have had otherwise, Rotation Medical CEO Martha Shadan recently told MDO. For example, the system’s shorter procedure and recovery times reduce worker’s compensation expenses because people are able to return to work faster. Because, people with the Rotation Medical system feel less pain, they need to take fewer painkillers, so the system also reduces opioid addiction rates, Shadan said.
“This framework helped crystalize our thinking and helped us approach it in a different way,” Shadan said.
“We’re premium priced,” Shadan said of Rotation Medical’s rotator cuff system. “But if we can show there’s greater throughput because of the operating time is less, using less anesthesia, etc., then those are offset through the savings from using our product.”
AdvaMed’s new value framework is useful because medical device companies that don’t think of value from the start risk getting stuck competing on price, according to Shadan.
“Companies should be thinking of the patient outcomes and the value impact at the very beginning of product development because it will help inform their regulatory strategy as well as their clinical strategy, Shadan said.
AdvaMed is providing a useful tool for medical device developers, said Tom Hughes, senior principal advisor for health economics and reimbursement at RCRI in Minneapolis.
“I am seeing a growing number of medical device companies asking for help demonstrating the clinical and economic value of their products and services,” Hughes said. “Given the market’s increased focus on value-based medicine, AdvaMed’s new value initiative could not be more timely.”
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