Is Medical Device Data The New Lifeblood Of The Industry?

By Chuck Seegert, Ph.D.

To remain competitive, medical device manufacturers may have to do things they haven’t done before, like becoming active in direct patient care and taking on degrees of financial risk. As the Affordable Care Act matures, changes like this may cascade through the industry.

In our changing healthcare environment, data analysis has become an integral part of success. This approach will only increase in the future, as the implications of the Affordable Care Act resonate through the industry and efficiencies are sought on every level. Value analysis by hospital groups and insurance companies is becoming more stringent, which means the financial case for new technologies needs to be iron-clad. Additionally, to survive in this environment, medical device manufacturers will need to have a scientifically backed confidence in their products.

These new realities were highlighted at LifeScience Alley’s 2014 annual meeting held November 19 at the Minneapolis Convention Center, where more than 1,100 attendees participated. Representatives from medical device companies like Medtronic met to discuss the future of the industry with key insurance executives from companies like Blue Cross Blue Shield, according to a recent article from the Minneapolis Star Tribune (MST).

The message from Blue Cross Blue Shield was clear and focused on using scientific data to drive decisions on which technologies the insurance giant will cover. High level marketing presentations featuring flashy graphics may have worked in the past, but digging into clinical data and effectiveness is the future driver of insurance coverage, according to the MST.

“You can talk to me and other scientists in our group ... But I’m not going to invite you in for a marketing presentation. That’s not what we do,” said Suzanne Belinson, executive director of Blue Cross and Blue Shield’s Clinical Effectiveness Center, according to the MST. “My group lives and breathes data.”

Prompted by an aging patient population and healthcare reform, insurers and healthcare systems have started shifting priorities and forming coalitions where once they chose to compete. This cooperation has manifested in groups like SharedClarity, a collaboration between UnitedHealthcare, the nation’s leading insurer, and some of the largest regional health systems. Counted among its ranks are Advocate Health Care, Baylor Scott and White, and many more, according to SharedClarity’s website.

A major goal of SharedClarity is to study data gathered over many thousands of clinical cases and make unbiased decisions about what methods provide the greatest patient benefit, according to the organization’s website. An added benefit is the power of group purchasing that is offered to its members.

As insurance agencies and hospital organizations pool their efforts to find efficiencies, medical device manufacturers may find themselves at risk for price cuts.

“Those pressures have made device costs a big target,” said Chas McKhann, director of life sciences strategy and operations at consulting firm Monitor Deloitte, according to the MST. “Yes, medical devices are a very small portion of the overall spend in health care, but they are a visible line item.”

To remain competitive, St. Jude Medical has assumed some of the financial risk associated with direct patient care, according to the MST. Under a provision of the Affordable Care Act, hospitals receive a penalty for patients readmitted too many times over the course of a 30-day period. Because of this, St. Jude has offered deep discounts on some of its products, like advanced implantable heart defibrillators, if a secondary surgery is required.

Confidence in this approach has come as a result of St. Jude’s re-engineered device, which includes a more robust set of leads that are extremely unlikely to break or come loose, according to the MST. This kind of confidence can only come from rigorous analysis and an understanding of the risk of failure from a statistical and data-driven standpoint. This enables St. Jude to confidently offer these rebates, which are perceived by the hospitals as a significant value addition.

The effects of the Affordable Care Act will impact the medical device industry as a whole, but one area that may be particularly impacted is urological procedures and the associated device markets.