You hear of phrases like the new healthcare paradigm. You hear of a fundamental shift in how healthcare is consumed and paid for in the U.S. You hear how fee-for-service is going to one day collapse under the infinitely more practical, but perhaps a little bit hard to quantify, fee-for-value.
And yet these are not pie-in-the sky schemes, nor the latest buzzword doing the rounds.
To borrow a VC's phrase - a tectonic shift is underway. Medtech companies are being asked by their hospital customers to help solve their problems, sell their devices even more cheaply, and do more to keep patients healthy. As medtech companies try to reinvent their business models, what attitudes that would cause companies to fail need to be identified and then require a full 180-degree pivot?
Here are five:
We are not focused on services. We do product innovation.
Good for you, but so are your competitors and not a whole lot that you make is that different from what your competitors make. And how far do you think you can win on lowering prices?
So just staying focused on products is a mistake. Medtech experts and consultants have been talking about how companies need to beef up their services in the continuum of care that can help hospitals do something more efficiently, help them manage their chronic patients better, or lower their costs. For instance providing a service that can help reduce a hospital’s heart-failure related 30-day readmissions that prompts a penalty from Medicare.
We do not partner with payors or others
Wake up and smell the coffee. Payors hold the key to the data that can help you know whether your products are having the desired clinical outcomes. That data can bolster your case for evidence-based pricing of products at the next meeting with hospital purchasing manager. Larger companies such as Medtronic and Boston Scientific are already teaming up with the Unitedhealthcare and Aetnas of the world.
There are also other data companies that can help medtech firms leverage and crunch Big Data and get meaningful bytes of them.
So, don’t get left out of this collaboration party.
We don’t care about comparative effectiveness research
So far medtech companies have had to show that their products work and are safe. They haven’t needed to demonstrate that their products work better than other products and current standard of care.
Now as hospitals aim to reduce treatment variation, and as they look at making clinical decisions on treatment, based on evidence, both clinical and economic, device companies need to be armed with the data that convinces them of the value of their products. That’s where comparative effectiveness research comes in.
We are risk averse
Too bad because the new world order is being built upon the cliche of no risk no reward. Providers are demanding that medtech companies share the risk of treating patients and in turn reap the rewards if joint goals of reducing cost, improving efficiency and better patient outcomes are resulting.
Large companies get it - Medtronic launched a hospital solutions business to help cath labs that use so much of the company’s products become more efficient. Some hospitals in Europe have begun working with Medtronic in this space. A Pricewaterhouse Innovation report from 2013 described the arrangement as “risk-sharing for efficiency savings.” In other words, as the hospital wins by cutting costs, Medtronic shares in the savings. If the hospital fails to achieve cost savings, Medtronic also bears the burden.
So far, taking this big operational and financial risk has paid off. The PwC report found that, “on average, efficiency savings range between 20% to 25% at partner hospitals. Patient throughput times and waiting lists have decreased. Physician and nurse satisfaction have improved, and patients are happier with their experience.”
We like a big sales force
Device and pharma companies have historically developed cosy relationships with physicians and hospitals have accommodated them by buying whatever drugs and devices they preferred even if they achieved similar clinical results.Medtech companies have responded to this by hiring bigger and bigger sales forces.
But the selling model has changed. A big sales force is less needed today than a small but knowledgeable workforce. Hiring health economists is as much a good idea these days as is training sales force to know not just the physical bells and whistles of a particular product but also its clinical outcomes and its ability to reduce cost from the overall healthcare system.
A smart, well-rounded sales force is needed today, not simply reps pleasing to the eye.
[Photo Credit: iStockphoto.com user 4x6]