Originally Published MX July/August
2002
INDUSTRY ASSOCIATIONS
An Opportunity to Educate
Manufacturers and specialty distributors have to work together to educate buyers about the cost—and savings—ramifications of new medical technologies.
Richard Manley
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Richard
Manley is president of CVC Inc. (Arlington, TX), a specialty sales and
marketing company, and president of the Independent Medical Distributors
Association (Mission, KS), the specialty sales and marketing association.
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For years, medical
technology companies have been working to convince their customers to focus
on the long-term or life-cycle costs of their offerings, rather than on the
acquisition price of those products. Buyers may be cynical about this approach,
but only at their own peril.
The reality is
that new medical technologies are often priced higher than those they are meant
to replace. That's why, in today's cost-cutting environment, many
providers have simply shut their doors to such technologies.
This is the "see
no evil, hear no evil" approach to new-technology acquisition. Buyers with
this mindset don't want to see anything that might increase their expenses,
and they won't even consider the potential long-term savings that could
result from adopting a new device or technology. That's a tough frame of
mind for medtech marketers to grapple with.
Overcoming Resistance
True, specialty
distributors and reps get paid to overcome such resistance. After all, they
have the relationships, the credibility, and the track record with providers.
But they are much more successful in their efforts if they and the manufacturers
they represent take the time to educate buyers on evaluating the cost-effectiveness
of new technologies.
What would such
an education include? Nancy Reaven, founder and president of Strategic Health
Resources (La Cañada, CA), has asked herself this question. Her company
helps makers and buyers of new technologies quantify their value.
It makes sense
that, before any other consideration, new technology has to yield clinical results
that equal or exceed those of the existing technology or modality. One technology
that specialty distributors brought to market some years ago—the titanium
suture anchor—reduced the number of revision surgeries. Another technology—blood
filtration devices—offered protection against costly infections and adverse
reactions to blood transfusions. These were novel technologies at the time;
now they are the standard of care. Certainly, medtech executives can fill in
many of their own examples. This kind of clinical information can be documented.
Provided that such
documentation is presented in an easy-to-understand format, distributors and
manufacturers can then help their customers consider a host of other (often
economic) factors surrounding new-technology acquisition, says Reaven.
Professional
Purchasing
The medtech marketer's main task must be to determine how the technology's clinical benefits contribute to the hospital's goals of improving patient care and improving profit. In order to understand the hospital's profit potential, some basic information about the hospital's economic situation needs to be understood. Key elements considered by buyers include the following.
- Payer mix.
- Reimbursement.
- The cost and
service structure of the hospital.
- Patient population.
Having considered all these variables, the buyer has to consider the impact of the technology on the following areas.
- Admissions.
- Length of stay.
- Per-procedure
direct costs.
- Unit operating
costs.
- Efficiencies.
- Complications or errors.
The process of
selling medical technology is becoming increasingly complex, fueled in part
by a more educated, health-conscious, and Internet-savvy public. In response,
hospitals have become smarter buyers. The days when clinicians—enamored
of a new technology—could demand that it be brought into the hospital without
delay, are fast disappearing. Professional buyers are more involved than ever
in making purchasing decisions, and clinicians themselves have grown to understand
how their practice patterns—including the kinds and amounts of devices
they use or consume during procedures—affect their hospitals' margins.
Steps to Take
The Independent
Medical Distributors Association (IMDA) and its members are helping manufacturers
to spread the message that it pays to take the long view of technology costs.
Two years ago,
for instance, IMDA sponsored a presentation at the annual meeting of the Association
for Healthcare Resource and Materials Management (Chicago) on analytical techniques
for determining the cost-effectiveness of new technologies. This audience was
chosen because materials managers are the gatekeepers for many product and equipment
decisions in today's hospitals. Most such managers are rewarded according
to their ability to reduce the current year's expenses by a certain percentage,
without regard to the potential for long-term savings. Consequently, if they
are to bring long-term savings to their facilities, they need an understanding
of the analytical tools required to measure such savings.
Since hospital
CFOs are often the source of pressure to reduce expenses, they represent another
audience to be educated—perhaps via their association, the Healthcare Financial
Management Association (Westchester, IL).
Finally, specialty
manufacturers and distributors currently have a singular opportunity to educate
clinicians about the cost-effectiveness of new technologies. Because of the
financial pressures on both hospitals and private practices, clinicians are
more receptive to this message than ever before. Assuming that quality of patient
care is assured, thoughtful, well-presented data on the ROI of new technology
will help clinicians to be able to choose overall cost-effectiveness above price
savings.
Conclusion
If ever there were a time for cooperation between specialty distributors and manufacturers, it is today. If we fail to join together to educate our mutual customers about how to make smart purchasing decisions regarding new medical technologies, those same customers may retreat further into their "see no evil, hear no evil" approach to purchasing. And that's not good—for patients, for providers, for distributors, or for manufacturers.
Copyright ©2002 MX
