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.