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Patients to Play Lead Role in New Model of Medtech Innovation


Posted in Medical Device Business by MDDI Staff on March 18, 2014

As the U.S. healthcare model shifts from a fee-for-service to a value-driven model, a new player - the patient - will wield considerable power that will drive medtech innovation in the near future.  


There is no question that five years from now, medtech entrepreneurs and executives will look back at the current medical device market dynamics as tectonic plates undergoing massive seismic activity

What’s harder to figure out is where the formerly successful model of innovation, which relied on physician preference and demand, will migrate to. One glimmer of hope does emerge within segments where therapies and demand can be patient-driven.

Wende Hutton, General Partner, Canaan Partners

So will the physician be left in the background? I would argue, no because the most significant advances that are patient-driven will still be medically directed. But there is no question that the patient will assume more of a central role in the new model of medtech innovation.

Over the past several decades, physicians have spawned the most successful advances in medical devices. They are at the heart of developing, testing and ultimately, driving demand for the latest orthopedic implants, cardiovascular devices and surgical tools.

Expensive sales and distribution infrastructures were built entirely on selling to physicians where the institutional power would swiftly place purchase orders for “physician preference” products. Physicians judged the clinical evidence necessary to persuade their choices, not the institution: They looked for better patient outcomes, of course, but new procedure volumes in a fee-for-service environment and time-saving devices, also played significantly into their adoption of new devices.

Lately, as a result of the shift from the fee for service reimbursement model to value-based reimbursement, and physicians losing substantial power after becoming employees of the hospital, physician preference items are at the heart of cost containment efforts in hospital purchasing departments. One might think that purchasing departments have put together every conceivable bureaucratic hurdle to keep new technology at bay: technology assessment committees, operating room directors who can override physician preference cards on the day of surgery; and restrictions on access to sales reps from the medical device industry, to name a few.

These changes leave entrepreneurial companies especially vulnerable given that creating the right clinical evidence for reimbursement and driving adoption of new technologies are much more expensive and complex undertakings than even a decade ago.

However, what is exciting is the emergence of the patient in central casting, especially when considering procedures where the patient assumes the burden of payment almost entirely. Can innovative technologies serve the needs of the patient in a way that enables new devices to be adopted under medical direction? Patients are more aware of value in the equation of their upcoming surgery – is there an advantage to a premium IOL (intraocular lens) vs. a standard IOL? What kind of hip implant produces the best outcomes or can I put off my hip surgery altogether and engage in physical therapy or more conservative treatment? Would I pay for an unreimbursed acne treatment for my teenage child if the child can avoid systemic side effects from drug treatments?

Ophthalmology, dermatology, life style disorders such as bowel or bladder leakage and elective gastric surgery are leading the way in this new paradigm. Perhaps, this is why we see some of the most valuable venture-backed companies focused on refractive correction, minimally-invasive glaucoma surgical (MIGS) devices, acne and psoriasis treatments and obesity interventions.

Patients may continue to thoughtfully consider their physicians’ advice but with the patient-pay models, patients become the key new player in creating adoption of new medtech companies.

[Feature Photo Credit: iStockphoto.com user  PashaIgnatov]

-- By Wende Hutton, General Partner, Canaan Partners. Hutton has helped to bring over a dozen medical devices and drugs to market, and currently sits on the boards of Aldea Pharmaceuticals, Butterfly Health, Chimerix (CMRX), Dermira, Labrys Biologics, ReVision Optics, Theraclone Sciences and Transcend Medical
 


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