Innovation will always be the key for manufacturers of physician preference items. But innovation can no longer just be about clinical performance and outcomes – as important as those elements are. It must also encompass a value proposition related to economic value.
“We believe that we must deliver value beyond the device through meaningful innovation,” says Jim Mayberry, vice president of marketing and operations for Boston Scientific’s Corporate Accounts and Healthcare Solutions group.
“We’ve always cared deeply about the patient experience,” he says. “But today, we’re also focusing on how to help our customers strengthen their financial health and improve their operational efficiency. That’s not been the historical focus for the industry.”
Decision makers
Based in Natick, Mass., Boston Scientific makes a number of medical devices, including pacemakers and implantable cardioverter defibrillators, coronary and peripheral stents and balloon catheters, urological stone management and severe asthma technologies, as well as endoscopic tools for gastrointestinal conditions and a spinal cord stimulation system.
With a lineup like that, it’s no surprise that Boston Scientific believes the role of the physician in product decision-making is critical. “But they no longer have the sole voice,” says Mayberry. “We consider the three legs of the decision-making stool to include the physician, supply chain executive, and administration. Patients are increasingly having a voice as well.”
Boston Scientific has identified four key areas that all new technologies must address in order to advance in the market:
1. Clinical outcomes: Must be equivalent to or superior to current technology.
2. Financial outcomes: The technology must enhance the provider’s profitability, either by generating new procedures and revenues, or eliminating costs.
3. Operational efficiency: The technology must allow clinicians to perform tasks and procedures faster and more efficiently.
4. Patient experience: Does the technology improve it?
“It’s not that the physician’s influence has been diluted,” he says. “Their voice is typically now one of three critical voices. That’s very real, and it’s been several years in the making.” That’s true even for the newest, most proprietary technology.
The new sales force
Boston Scientific’s salespeople have diversified their approach to sales, says Mayberry. The so-called “clinical trifecta” – doctor, nurse and technician – will always be an important call point for salespeople, he says. “But supply chain and administration have become equally as important.” By making an effort to understand the broader needs of the IDN, the sales force builds a strong working relationship with the clinicians as well as administration.
Today, the Boston Scientific salesperson still has clinical expertise and knowledge. “That’s a prerequisite,” says Mayberry. “But what’s changed is their need for broader business awareness and financial acumen. Salespeople today need understanding of healthcare reform and its implications, the decision-making processes in today’s hospitals, and value analysis. And when you look at supply chain and administration’s focus on the value of interventional cardiology and cardiac rhythm management solutions, our sales force needs a broader understanding and awareness of all this.”
Boston Scientific and providers are being challenged to look beyond what each has historically focused on – that is, product performance and purchase price. Important as those factors are in a fee-for-service environment, they may not be enough from a disease-state or population-health perspective, says Mayberry. As hospitals and IDNs assume long-term responsibility for managing the health of a hypertensive patient population or heart failure population, they will have to consider the “total value” discussion. So, too, will their suppliers.
“We will always need to be competitive from a pricing standpoint,” says Mayberry. “But if we’re going to be on the hook to work with the provider to optimize the treatment of a heart failure patient in the hospital, and then to help monitor and manage him or her post discharge, the discussion has to be broader than an X percent price reduction.”
Can PPI prices really be going down?
Manufacturers group says ‘yes’
Average prices for implantable medical devices declined significantly for major categories of implantable medical devices from 2007 through 2011, according to a report released in September 2013 by AdvaMed, a trade association for manufacturers of medical devices and equipment.
From 2007 to 2011, the seven largest categories of implantable medical devices saw substantial declines in average selling prices paid by hospitals on both a nominal and inflation-adjusted basis, the association reported.
Declines in average inflation-adjusted prices ranged from 17 percent to 34 percent, depending on device type. They include implantable defibrillators (24 percent), cardiac resynchronization therapy defibrillators (26 percent), pacemakers (26 percent), artificial hips (23 percent), artificial knees (17 percent), drug-eluting stents (34 percent), and bare metal stents (27 percent).
On a nominal basis (not adjusted for inflation) the price declines ranged from 5 percent to 25 percent, depending on the device category. The research was conducted by Analysis Group Inc., on behalf of AdvaMed.
“These results reaffirm previous findings that medical technology prices overall have remained consistently low for 20 years, growing at less than half the rate of prices in the overall economy – or at an average annual rate of 1 percent over the period compared to 2.7 percent for the overall CPI and 4.7 percent for the Medical Care CPI. It’s important to note that spending on advanced medical technology makes up a consistently small and stable 6 percent of national health expenditures,” said Stephen J. Ubl, president and CEO of AdvaMed in a prepared statement.