Medical Device Daily National Editor

SAN FRANCISCO – Discussing the pay for performance (P4P) movement as it applies to healthcare has become a cottage industry unto itself.

Adding another log to the fire heating this particular cottage during this week’s Frost & Sullivan Medical Devices 2008 conference was Molly Coye, MD, who brings top-notch credentials to the fray. She is CEO of the non-profit Health Technology Center (HealthTech; San Francisco), and, as a member of the Institute of Medicine (Washington), has co-authored key reports that many consider the backbone of the P4P initiative, including the widely quoted To Err is Human and another that is nearly as ubiquitous, Crossing the Quality Chasm.

Simply put, Coye’s voice on the topic is one well worth hearing, and if she didn’t keep an audience in the main meeting room of the Hyatt at Fisherman’s Wharf on the edge of their seats, she certainly had them putting pen to paper in a collective fury of note-taking.

In making the case for P4P over a fast-paced 45 minutes that seemed to pass in the blink of an eye, she put it very simple terms: “How can we as a nation be smarter in purchasing healthcare?”

That came after she noted that the U.S. spends far more than any other nation on healthcare, but that there is “a straight-line, inverse relationship between spending and quality.”

In other words, we pay more than any other nation and get far less in return.

However, hope is in the air, with “the Centers for Medicare & Medicaid Services having started to get aboard P4P over the past three years or so.”

Coye cited as one great example of nudging P4P forward the Premier (Charlotte, North Carolina) demonstration project.

“Premier went to CMS and said, ‘Let’s take benchmarks and cost reporting and provide incentives” to providers. The incentives really were pretty minimal,” she said, “but we still saw improvements in just 12 months.”

That, Coye said, “was shocking to everyone in the field.” And it also was “an important signal that CMS is getting very serious about P4P.”

As far as the medical device industry is concerned, she said the key question is: “Will P4P specify the technology to be used, or will they just say, ‘We don’t care how you get there, just get there’?”

Where healthcare technologies are headed is central to her organization’s existence. Its membership primarily is large provider organizations.

“Just about all our members are multi-hospital systems,” Coye said. What they want to know is how new technologies may impact their provider organizations. She said HealthTech essentially is “a forecasting group analyzing the potential impacts of emerging technologies. Our mission is to advance the adoption of good technologies.

“I believe you will see movement in this direction under either a Democratic or Republican president,” she said, while adding that she does not think there will be big-time federal movement on effectiveness/quality outcomes studies in the near term (say, two to three years). “In a five-year trajectory, yes, but not right away.”

Saying companies are “going to have to spend big bucks to do effectiveness research,” she said that “the significance for devices is that if you have a good product, you now have the opportunity to work with health plans and purchasers [in demonstrating effectiveness].”

And, “if it’s a disruptive technology” — one that substantially improves the standard of care and hopefully also trims (or at least holds steady) the cost of treatment — “it’s worth doing” such studies, she said.

She cited for an audience consisting largely of device company representatives a number of key points organizations, such as hers and the New England Healthcare Institute (NEHI; Cambridge, Massachusetts) are focused on in their assessment studies:

— “Basically, we want technologies that can reduce the overall cost of care.” It has to beat out the incumbent technology, and do so by a substantial margin, say 10%.

— The quality of care has to at least be the same.

— The new technology needs to penetrate rapidly. “Our purpose is to speed up the adoption of new technologies.”

— It has to be more than a “one-horse” company, having the resources to move quickly once its technology is ready to market.

— Is there any reason why this technology would not be adopted? “We have to see that there is leverage for adoption.”

There are many provider-based technology assessment initiatives that generally are built around seeing innovation as a path to healthcare value, she said, citing the “advocacy initiatives” of AdvaMed [Advanced Medical Technology Association; Washington].”

Characterizing technology as “a true enabler,” she said HealthTech’s hospital members typically ask the organization to identify technologies they should consider adopting in the next 24 to 36 months.

HealthTech evaluates technologies along 12 dimensions, six on each side of the “Value” and “Risk” boards.

Under Value, it looks at safety, effectiveness, patient-centered, timeliness, efficiency and quality. Under Risk, system benefits, training, return on investment, “culture,” savings and recruitment are the key metrics.

Then the organization groups technologies into four quadrants: low value-low risk, high value-low risk, low value-high risk or high value-high risk.

The approach providers should follow, Coye said, is to shape a “balanced” portfolio of technologies. “We encourage them to think of it as a long-term trend, a stream of innovations.”