It used to be that product approvals and clearances were the benchmark measurement of a technology's success. But in today's health care environment, which favors more value-based solutions, medical device companies are finding out that priorities have changed. The shift in the health care landscape has not only changed the way firms think about adoption, but it has also paved the way for the formation of the Value-Based Medical Technology Association (VBMTA; Washington). The nonprofit organization was founded in April to promote technologies designed for health care value and to impact costs in hospitals and care facilities.
Already health care is proving to be an expensive item in the U.S. The National Healthcare Expenditure (NHE) is projected to hit $3.207 trillion this year, according to Centers for Medicare & Medicaid Services (CMS). The U.S. population is hovering at around 320 million, so 2015 looks to be the first year health care spending will reach $10,000 per person.
"I think we've done a pretty good job as a country moving money from the left pocket to the right pocket for the last 10 years,"said Rick Ferreira, chairman/CEO of Intralign Health (Scottsdale, Ariz.), who also serves as VBMTA board chairman. "But in the [U.S.] we're not really taking cost out of the system. Now it's to the point if the hospitals are going to survive, things are going to have to cost less. It's that simple."
Hospitals and health care facilities have cited three major concerns – increasing costs for devices; decreasing costs for reimbursement for the procedure; and more patients using the service earlier in life and later in life. Reducing the costs in the supply chain for hospitals is where VBMTA comes in. The organization is at six members which are all small companies. The plan is to create a single streamlined voice for these smaller companies to approach hospitals with more affordable and value-driven solutions. VBMTA will serve as a vehicle to educate providers and hospitals on the benefits of value-based medical technologies, and can help hospitals access technologies designed for health care value, not for the legacy manufacturer's bottom line.
Ferreira said that there are membership applications that have come into the organization for about five more companies to join. He added that in the coming weeks the organization would provide the names of some of the firms. When asked about the kinds of companies that are in VBMTA, he said that some of the companies were in the spine and orthopedics market.
But there are other trade associations that med-tech companies can be a part of. The Advanced Medical Technology Association (Advamed) and Medical Device Manufacturers Association (MDMA; both Washington) are perhaps the most prominent of the groups. Ferreira said the key difference with VBMTA from other established trade associations in the med-tech industry is that it will provide a voice for the smaller companies that sometimes get overlooked.
"There's nobody looking out for what the small guys and getting their voice out there," he said.
The Affordable Care Act (ACA) is undoubtedly one of the leading drivers behind the trend of moving toward a more value-based system. The law established the Hospital Value-Based Purchasing (VBP) program, which is a CMS initiative that rewards acute-care hospitals with incentive payments for the quality of care they provide to people with Medicare. Hospitals are given more incentives to demonstrate better outcomes, which will lead to care facilities purchasing more effective solutions.
While Ferreira said he can see the role the ACA is playing in the shift in the health care landscape he said that the main reason for the move is that costs in the industry are just too high.
"Everybody is concerned about rising costs in health care," he told MDD. "We want to be able to talk to these senators, congressmen and their legislative assistants and say these are things hospitals should be using today to control their costs."
A crucial part in the organization's pitch to hospitals, stakeholders and legislators will be that it won't pitch one particular product.
"This effort is going to be product agnostic," he said. "I'm not going to come out and say use [this] pedicle screw because it is the best in the business."
"Companies that are going to survive and grow their business have to give some type of guarantee on what they're selling hospitals," Ferreira said. "Hospitals can't keep going the way they're going."