Defining what it means matters because public and private healthcare payers in the U.S. and around the world are moving 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.
Some top medical device industry executives explored the meaning of value during a panel at the recent DeviceTalks Minnesota, June 26–27 in St. Paul. (The next DeviceTalks is Oct. 2 in Boston.) Here’s what they had to say:
VP and general manager, Medtronic Care Management Services (formerly Cardiocom)
“At Medtronic, when we talk about value in healthcare, we start with specifics and are trying to focus on specific populations. We’re trying to define narrow cohorts, with very specific outcomes over a very specific time period, and measure the optimal clinical outcomes that matter to patients. We believe that the more narrow you focus, the more refined and specific you get, the more you will actually be able to address value. If you achieve this, you should not get paid based on volume but rather get paid based on outcomes. These aren’t just words, this is what our CEO is talking about all the time, and he is very serious about it, so we are undergoing a lot of that measurement work. We’re identifying what products we have that truly get to this cost-over-outcome equation that we can stand behind with data, and enable the appropriate intervention and then change the way we’re in the market.”
CEO, Rotation Medical
“Rotation Medical is a commercial stage startup in the market for a couple of years. Unlike Sheri’s portfolio, we are very small and just at the beginning. We share a lot of the same philosophy and approach. … It’s no longer enough to prove that a product is efficacious and that it’s safe. Those days have gone. When we think about value, we think about it in terms of not only the clinical impact. … It’s all patient-centric. It’s all related to the patient impact, not clinical impact. What does that mean? That means patient-acknowledged, patient satisfaction. Patient satisfaction is becoming a very big deal, especially for CMS. They put their algorithms together to measure a cross point bonus, incentify providers. Patient satisfaction is becoming [a] bigger component of that algorithm. Then there are provider economics and the impact of the budget. Then we think about societal benefits or cost-relation impact. … We think about it in terms of segmenting the patients into groups of patients that have the same behaviors or have the same level of disease, so they need patients with partial thickness tears, versus patients with full thickness tears, and we look at the value proposition of our product relative to those patient populations.”
“I’m an adoptee into the medical device industry. I’ve been in the medical device industry now for about four and a half years. I think of high technology and component manufacturers [that] exist through our industry. And value is very simple. Do more with less cost, and I think that’s a great way to think about medical devices as well. How can you do more with less cost? Of course, it has to be effective and approved and the FDA has to say it’s OK. We have to have a reimbursement code, that’s all great. But this is about not just a fee for service anymore, it’s a fee for outcome. Value proposition in our world is to drive healthcare innovation costs, and I think that’s where the real value is, and we have to think about the long term.”