Profits are shrinking at many U.S. healthcare systems. Their inpatient costs are increasing, while their admissions and revenues remain flat.
In response, organizations are shifting their care-delivery strategies away from the costly inpatient setting to more cost-effective outpatient settings. Many companies see this shift and are investing to reflect it. However, simply labeling a product for outpatient use is not enough. In today’s value-based care environment, the bar for outpatient use is even higher than that for inpatient use.
The shift in care delivery demands a shift in R&D and marketing. Follow these five strategies to overcome the barriers and create the vital need for your solution.
Strategy #1: Demonstrate that it reduces the total cost of care
Nearly 150 million Americans have chronic diseases, and those accounted for $1.1 trillion of U.S. healthcare costs in 2016.¹ While prevention is far cheaper than treatment, changing human behavior has proven challenging. Historically, little has been spent on prevention, because its cost savings are hard to determine. That’s why you need to demonstrate how your product, used in an outpatient setting, conclusively reduces the total cost of care.
Cost-reduction case: Livongo Health
Livongo uses behavioral coaching to reduce the impact of diabetes, the single most expensive chronic disease. Payers have aggressively adopted their solution, the result of a marketing strategy that promotes the following cost-reduction proof points.
Researchers have found that reducing HbA1C by 1% in patients with type 2 diabetes leads to:
- a 21% reduction in death from diabetes.²
- a 14% reduction in heart attacks.²
- a 43% reduction in peripheral vascular disease.²
Livongo is averaging a 7.7% reduction in HbA1C for its members. Its success stories include:
- a 59% net reduction in inpatient admissions for Iron Mountain, a data and records management company.³
- a 21% net reduction in non-emergent ER visits for clients of Mercer, an HR consulting firm.⁴
- a 22% reduction in medical spending by employees of three self-insured companies, translating to a savings of $88 per month and more than $1,000 per year.⁵
Strategy #2: Show how it transforms care models
Medtech companies need to do more than build better mousetraps. Providers are looking for them to help transform inefficient and error-prone outpatient care models. If those companies can remove process steps and accelerate diagnosis, initiation of therapy, and recovery, it needs to be marketed.
Care transformation case: Point-of-care ultrasound (POCUS) devices
Many of these products are being marketed today, yet their market uptake remains sluggish. Companies that are succeeding follow the approach utilized by point-of-care lab testing company Abbott with iStat:
- DON’T: Market all the new places where it can be used, or that it costs under $2000.
- DO: Market the exact clinical scenarios where the device can have maximum impact.
- DO: Market how it can redraw and shorten clinical pathways.
Strategy #3: Address the labor component
The critical problem with medical products used in the home is the cost to support them with a professional caregiver. To make the economics work, they need to be used sparingly, if at all.
Labor reduction cases
- Acelity PREVENA RESTOR Incision Management System: For Acelity, extending its negative pressure wound therapy technology to the home after a total knee replacement required one key thing: no visual inspection of the wound or human intervention be required until the first follow-up visit by the surgeon. Creating a drainage canister and power supply that work for two full weeks made this possible.
- Philips Care Orchestrator Patient Management System: Philips sleep apnea devices and non-invasive ventilators for COPD wirelessly send usage data to this remote data management system. With it, durable medical equipment (DME) suppliers can identify patients who are not responding to therapy, so a respiratory therapist can be strategically deployed to intervene. It facilitates more targeted care and a more cost-efficient approach.
Strategy #4: Make it simple to use and troubleshoot
The minimum requirements for technology in the outpatient space are ease of adoption (e.g., easy to use, easy to train) and ease of management (e.g., easy to administer, easy to fix).
Stakeholder simplicity cases
- Professionals: When inpatient-grade technology moves to the outpatient space, chances are the traditional users change. POCUS (point-of-care-ultrasound) devices are not used by sonographers who are trained to use ultrasound technology. They are used by doctors, nurses, EMTs, anyone. POC lab testing devices are not used by medical technologists who are trained to run lab tests. They are used by nurses, pharmacists, doctors. For inpatient-grade technology to be adopted and properly used in the outpatient space, it has to be as easy to use as a consumer device.
- Patients: As outlined in Strategy #3, the professional labor presence in the home (e.g., home health, PTs, RTs, WOCNs [wound, ostomy, and continence nurses], etc.) is waning. This requires patients to become part of the care team. When basic device errors occur, patients must be able to troubleshoot them, so as not to interrupt therapy, require costly professional intervention, or spur a readmission.
Strategy #5: Keep patients engaged and adherent
Bundled reimbursement for knee and hip replacement has resulted in a relatively steep reduction in outpatient rehabilitation services and in-home PT and home health visits. Post-op patients can be uncomfortable, undisciplined, depressed, or disengaged. Without a physical caregiver present to help motivate them, they can become non-adherent with their rehabilitation protocols and put successful outcomes at risk. Zimmer-Biomet saw this risk to providers and developed a solution that packaged all of these services into a virtual assistant.
Engagement case: Zimmer-Biomet mymobility app for the Apple Watch
The weeks after a total knee or hip replacement are critical to a successful functional outcome. Patients that remain immobile post-op can be a harbinger of costly readmissions or poor outcomes. The mymobility app, paired to the Apple Watch, helps guide patient activity pre- and post-op. Not only does it provide tasks for the patient to complete, it captures biometric patient activity data. This gives providers insight into non-adherent patients that require early intervention.
The companies listed here are but a small sampling of success stories. That’s because they don’t focus on the features of their medical devices, but how their solutions save far more than money. Follow the above strategies—and you can, too.
- Waters H, Graf M. Milken Institute. "The Cost of Chronic Diseases in the U.S. Executive Summary." https://assets1b.milkeninstitute.org/assets/Publication/Viewpoint/PDF/Chronic-Disease-Executive-Summary-r2.pdf Accessed 6/27/19.
- Stratton AM, Adler AI, Neil HA, et al. "Association of glycaemia with macrovascular and microvascular complications of type 2 diabetes (UKPDS 35): prospective observational study." https://www.bmj.com/content/321/7258/405 Accessed 7/23/19. BMJ 2000; 321 (7258): 405-12.
- "Case Study: Impact of Livongo on Iron Mountain." https://www.livongo.com/docs/pdf/Livongo%20Case%20Study%20-%20Impact%20on%20Iron%20Mountain.pdf Accessed 6/27/19.
- "Livongo Impact on Utilization and Costs." https://www.livongo.com/docs/pdf/Mercer%20Five-Client%20Study%20-%20Livongo%20Impact%20on%20Utilization%20and%20Costs.pdf Accessed 6/27/19.
- Whaley CM, Bollyky JB, Wei L, et al. "Reduced medical spending associated with increased use of a remote diabetes management program and lower mean blood glucose values. https://www.ncbi.nlm.nih.gov/pubmed/31012392 Accessed 7/23/19. J Med Econ. 2019. DOI: 10.1080/13696998.2019.1609483