Insurance companies and hospitals have begun working together to squeeze costs from the American medical system before a generation of baby boomers hits its peak years of health care consumption.
Don’t bother with the marketing pitch. Suzanne Belinson wants to see the hard data.
Belinson is executive director of Blue Cross and Blue Shield’s Clinical Effectiveness Center, which has begun using scientific data to inform decisions on what medical gadgets are covered by the Blues’ 37 independent health plans. She told a crowd of keen-eared medical device executives on Wednesday that the days of relying on glossy brochures while hiding unpublished clinical data are fast disappearing.
“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,” Belinson told the crowd of about 1,100 attending LifeScience Alley’s annual meeting at the Minneapolis Convention Center. “My group lives and breathes data.”
It was an oft-repeated theme Wednesday. Mark West, president of health care data-analysis firm SharedClarity, said his organization is rapidly crunching the numbers from millions of patients and thousands of hospitals on which kinds of stents, pacemakers and internal-organ slings are the most cost-effective in the long run.
While such studies may not be new, the urgency behind them is, as evidenced by the existence of unusual organizations like SharedClarity, which is a for-profit joint venture between several large health care systems and Minnesota’s UnitedHealth Group Inc.
Traditionally, insurance companies and hospitals have been adversaries. Now they’ve begun working together to squeeze costs from the American medical system before a generation of baby boomers hits its peak years of health care consumption. And that’s not necessarily good news in the sales departments of Minnesota’s many devicemakers, who have long thrived solely by maximizing sales of widgets at the highest price the market will bear.
“How can we deliver more cost-effective health care?” asked Bill Little, vice president of marketing for global cardiovascular therapies at St. Jude Medical Inc. in Little Canada. He said in a panel discussion that how devicemakers answer that question will go a long way toward determining future winners and losers in the field.
It’s not hard to see why. Providing care in hospitals has long been a high-volume, slim-margin business. But the growing cost pressures on Medicare’s trust fund combined with various funding cuts in the Affordable Care Act have led to the widespread realization that the old model of providing hospital care is unsustainable.
Health care cost inflation has been held to historic lows in recent years, but that can’t reverse the process of aging that is inexorably moving more patients off profitable commercial insurance plans and into Medicare, which hospitals say doesn’t pay enough to cover their bills.
Those pressures have made device costs a big target, said Chas McKhann, director of life sciences strategy and operations at consulting firm Monitor Deloitte. “Yes, medical devices are a very small portion of the overall spend in health care, but they are a visible line item,” he said.
One strategy likely to gain traction in coming years is device companies getting more involved in direct patient care, and assuming some financial risk for that.
Little offered an example. Since hospitals are penalized under the Affordable Care Act if too many patients are readmitted within 30 days of being hospitalized and discharged, St. Jude has started offering providers sizable rebates on one of its models of advanced implantable heart defibrillators in cases where rehospitalized patients need do-over surgeries.
Little said the company could afford to take the risk because it was confident in the superiority of its re-engineered device, particularly the redesigned leads that deliver shocks to the heart. One weakness of older cardiac resynchronization therapy defibrillators is that the leads sometimes come loose and require revision surgeries.
Medtronic Inc. Chief Executive Omar Ishrak said the Fridley-based firm has started programs in which it monitors patients at home, and in Europe it even provides some direct patient care. But its flat fees for those services mean expensive patients cost Medtronic, not the hospital, more money.
“The risk-based model is a big business change,” Ishrak said in the closing presentation of the conference. “We will go after areas where we know the answer. That means we have done the clinical trials. We realize that by doing things a certain way you will get results.”
©2014 the Star Tribune (Minneapolis)