In my early days as a medical device sales rep, most of my negotiations with hospital supply chain departments were focused on price. This was not because my hospital customers and I enjoyed going back and forth on pricing, but because we did not have an efficient way to access outcomes data specific to the products I was selling. I remember going through massive spreadsheets that contained information on our products’ list prices, sell prices and comparative benchmarks to see where other similar products were priced. This was the limited data that I had access to, and it was the data that drove my negotiations with healthcare providers.
Historically, hospitals have been focused on negotiating lower prices to reduce supply expenses. But in the world of value-based care, pricing is just one small part of understanding the impact that a product has on the hospital’s patient outcomes, quality of care and their overall bottom line. The real solution for sustainable supply purchasing is to focus on finding products with the lowest total cost of ownership (TCO).
As I progressed in my career, the passage of the HITECH Act and the Meaningful Use program drove widespread adoption of electronic health record (EHR) technology to improve quality, safety and efficiency. As a result, both my customers and the companies I represented could get better access to both clinical and financial outcomes data.
This wasn’t the type of data that was represented in clinical trial, FDA 510K submissions or white-papers. Rather, it was data that was specific to individual facilities and patient populations—data that was less focused on price and more focused on the performance of medical products as it related to specific departments, facilities and patient populations. This allowed a shift away from price-oriented discussions and towards outcomes-related discussions.
I recently read some very interesting news that was reported in the Star Tribune on 10/18/16. In the article “Medical Firms are Using Big Data for a Common Cause,” Dr. Richard Migliori, the CMO of UnitedHealth Group, talked about a partnership his organization had recently formed with Mayo Clinic. The partnership was centered on collecting, interpreting and analyzing many different types of data to gain perspective on how specific products impacted costs, quality and outcomes (CQO).
One of the findings of UnitedHealth Group’s partnership with Mayo Clinic was that analyzing customer specific data helps to demonstrate the value of medical devices and move conversations beyond price. For example, there was a specific brand of insulin pump that seemed to decrease hospitalizations for many groups of patients. Because of the data that UnitedHealth Group mined, Dr. Migliori said, “It caused us to stop looking at line-item cost figures and start looking at, what is the total value? Because we saw a total value, we then began to wonder, shouldn’t we be (paying) on the basis of total value?”
This is one of many examples of where the industry is headed now that there is better access to clinical and financial outcomes data. With access to better data, medical device sales reps and their provider customers can engage in an entirely new dialogue when it comes to determining and demonstrating the value of the latest new medical products.