Value-based care is disrupting the old fee-for-service models in the U.S. healthcare industry, and medical device makers must adapt or perish. Here’s how wound care company Acelity is responding.
The rise of value-based care in the U.S. is causing a major shift in the medical device industry. Health provider customers want to know how medical devices are going to improve overall efficiency and quality of care, so device makers are investing in often service-related products that are not traditionally “money makers.”
Medtech companies are also acknowledging that within an event of care, there are millions of little details that have the potential to achieve better health outcomes.
Acelity CEO Joe Woody believes value-based care tackles the concerns of the medical system that will never go away…quality, outcomes, and cost.
Joe Woody has been in the industry for more than 25 years, and he has seen how those details, when missed, add to the overall cost of care. Five years ago, he accepted the CEO position for what used to be KCI and has since transformed into Acelity. (Before that, he was global president of vascular therapies for Covidien, and before that, global president of the wound care business for Smith & Nephew.)
Acelity is involved in wound care and regenerative medicine, but Woody says the company is refocusing and has decided to create products that fit the “wound care continuum.” To that end, the regenerative medicine business, LifeCell, was recently sold to Allergan and 3 years ago, Acelity bought J&J’s wound care business Systagenix. “We want to cover VAC therapy, dressings, biologics—really anything and everything that has to do with a wound.”
Within that goal of covering the continuum of care is the larger calling to tie everything Acelity does to disrupting fee-for-service and furthering value-based care. “A few years ago, we really took a look at the way we innovate in terms of lowering the cost of care,” Woody says. That means “proving, not just saying, to customers that our products really get the best clinical outcomes.”
Proving value to the healthcare system
Acelity commissioned research to show that its Prevena Plus product reduced hospital stays.
To that point, Acelity has invested in data. For example, the company purchased a research study from Optum, an arm of United Healthcare. The group studied Acelity’s flagship product versus the competition and focused on the economics and performance metrics of concern to providers, such as hospital readmission rates. And since then, Acelity has expanded its Prevena System technology used in closed incision management, which can be part of sternotomy, hip replacement, knee surgeries, c-section and colorectal surgeries that see complications such as hematomas, dehiscence, or infections. These complications typically lead to longer-than-average hospital stays and possibly the need for further surgical intervention.
Woody says the impact of surgical site infections is about 3.3 billion per year in the U.S. healthcare system. So, in developing PrevenaTherapy, Acelity examined strategies to potentially mitigate the risks of infection, and looked for ways to take “double-digit infection rates and reduce those down to low single digits, and in some specific cases, zero.”
That’s the kind of product thinking, Woody says, that goes to disrupting fee-for-service and solves a problem. It makes the case to an ACO. “They’re trying to reduce infections and get patients healed and home quickly.”
Improving the value of your business
Remote therapy monitoring, provided by the Ion Progress line is not in Acelity’s traditional wheelhouse. It represents a commitment from the company to treat throughout the continuum of care.
Companies also need to innovate their business processes, says Woody. For Acelity, that meant aligning its products to the continuum of wound care and developing products that are not simply under the category of “wound care.” Acelity developed the iOn Progress remote therapy monitoring system, for example, that enables data sharing from the patient using ACTIV.A.C. Therapy in their home back to Acelity’s Care Network, a group of highly-trained nursing professionals who can interact with patients to drive proper utilization. The goal is to monitor patient use and connect that metric to the rate of healing.
“You have to think about innovating from a mindset of solving problems,” Woody says. “If you have a provider dealing with Medicare or a commercial payer, they are going to be focused on episodes of care. Solving issues that create additional costs, like infection or quality problems helps; but that is only one level.”
The second level is being able to monitor data and analytics and respond to issues as soon as they arise. That level of disrupting fee-for-service, says Woody, is why it was so important for Acelity to get involved in monitoring patient use.
The here and now of disrupting fee-for-service
In the future, providers might be rewarded for total population and savings across a population by Medicare or a private payer. Woody notes, “We’re in a fee-for-service world today, and although we’ve started to think about care more holistically, that is still in its infancy.”
During that time, companies are going to have to change product development processes, accounting processes and provider strategies. Providers need OEMs that will be able to be a partner. “We do a lot of meeting with our customers to assess their wound cases so that we can gather a broad view of the outcomes of the patients.”
Acelity had a bit of a head start thinking about value-based care, Woody admits. The company doesn’t only work with ACOs and providers. It also works with payers, billing them directly for services in the post-acute segment of its business. The company bills 600 payers, including Medicare. This means it has had more than 20 years of dialogue with the medical officers from payment organizations. “Those conversations often require a view on health economics, or a view of the outcomes of your product.”
Woody says medical device companies need to catch up in having those conversations about disrupting fee-for-service. At the same time, providers and payers need to get better connected. “We’re all connected and we need to be better connected directly with payers—and this isn’t just coming from me. Medtronic is talking about this; J&J is talking about this.”
Woody also advises companies not to get trapped into only talking about the lowest cost. “Value-based care is sometimes about spending a bit more on innovative technology that will take cost out of the overall equation. I think Medicare is trying to drive this concept to other payers and the healthcare community must work together to support this.”
Value-based care is here to stay
Even though the Accountable Care Act is on the chopping block with the new Trump administration and Republican Congress, Woody is confident that value-based care is stable. “If you think about when Medicare came into play, it has changed quite a bit over time, and quite dramatically over the decades.”
He says that regardless of the healthcare system in place, from a legislative perspective, disrupting fee-for-service with value-based medicine is inevitable because it tackles the concerns of the medical system that won’t go away … quality, outcome, and cost. “It provides an efficient way for clinicians, payers, and administrators to tackle big episodes of disease.”
Acelity’s future
The main goal for Woody is to broaden Acelity’s portfolio. “We can’t just be in one segment of care,” he says. “We’re going to get into a discussion about episodes of care.” Even, he says, if that means that some of Acelity’s products become obsolete to make sure patients heal more quickly.
For example, the company’s V.A.C. Veraflo Therapy cleanses wounds and can help them heal more quickly than previous products. Ostensibly, that means fewer trips to the OR, and getting the patient home and healed.
Woody says expanding the company’s reach is a two-pronged effort. The first is to develop technology across the continuum of wound care. That could include developing products for debridement, dressings, biologics, and skin substitutes for example. The second aspect is improving the service side.
Acelity has begun a pilot program, Acelity Plus, for which it partners with a number of customers to consult on care in a way that is agnostic of the product portfolio. Woody says this is “because in some cases the wound is not the primary concern, but customers want an expert that can help think through the best care for the condition.”
Other services will work with caregivers to follow the patient and give treatment oversight. “It allows us to kind of work with clinicians, in real time, and troubleshoot, to avoid costs and complications.” Woody says to look for that launch by the end of 2017.
[Want to stay more on top of MDO content? Subscribe to our weekly e-newsletter.]
