Towards Linking the Development and Delivery of Care for ...Presentation Transcript
Towards Linking the Development and Delivery of Care for Cardiovascular Diseases: Designing Medical Device Supply Chain for the Unserved & Underserved Global Economies Kingshuk K. Sinha University of Minnesota Joint work with Emily McIlvaine, Ph.D. Student Cincinnati Innovations in Healthcare Delivery 2006 September 22, 2006
“ What We Did Not See First, our call for papers did not elicit any studies focused on the biotech, pharmaceutical, or medical industry sectors. While research in these sectors has been published in related journals ….. we found no publications in recent issues of Production and Operations Management and very few overall directly related to production and operations management. Given the growth and significance of the biotech, pharmaceutical, and medical industry sectors around the globe, it is imperative we begin to identify and address the unique production and operations management challenges faced by these industry sectors.” (p. 121)
“ Industry studies is an observational science …..the systems we study involve companies and markets and institutions and their interactions ….. we must observe if we are to accurately understand and describe the remarkable complexity of it all.”
Reflections on Industry Studies
“ We know that we need a microscope to see very small things …… Seeing large things, like industries, would be much simpler if we had a macroscope … Unfortunately we don't have a real macroscope.”
“ Statistics is in fact our attempt at a macroscope but it is one that only functions erratically. It functions erratically because if we have the right overall picture , then the statistics can size it right for us , and tell us more about it, but if we don't have it right, the statistics won't tell us that we don't have it right and we can be very wrong.”
(Source: “Industry Studies: An Observational Science,” Speech by Dr. Ralph Gomory at the Annual Sloan Industry Center Meeting, Boston December 5, 2005.)
An Introduction to the Research Program: The Central Question How can the development of care be linked with the delivery of care, globally and effectively? “ Effectively” = Right care at the right place at the right time at the right price
Health Care Supply Chain
Medical Device Supply Chain
Cardiovascular Disease-Centric Medical Device Supply Chain
Health Care Supply Chain
Health Care Supply Chain from End-to-End: Linking the Development of Care to the Delivery of Care Pharma Biotech Development of care Medical Device Health Insurance Healthcare Delivery Healthcare Supply Chain Delivery of care
Health Care Supply Chain: A Value Based Perspective “ Health sector supply chain refers to the information, supplies, and finances involved with the acquisition and movement of goods and services from the supplier to the end user in order to enhance clinical outcomes while controlling costs.” (Burns 2006) Developer Producer Purchaser Payer Provider
Supplier Manufacturer (Pharmaceutical, Medical Devices) Physician/Clinic/ Hospital (Care Provider) Patient (Consumer) Health Care Supply Chain: Regulation and Reimbursement Perspectives Insurer FDA (Food & Drug Administration)
Diet & Exercise Drugs Devices Invasive Procedures New Biologics Travel--Tourism Payment/ Reimbursement Health Care Supply Chain: Care as a Product Bundle of …
“ Combine high-tech devices with low-tech care giving, while targeting the mind, body and spirit.” “ Most hospitals are warehouses for sick bodies…Hospitals should be healing environments built for patients.” Earl Bakken, Inventor of cardiac pacemaker and co-founder of Medtronic Inc. Source: Pioneer Press, Sept 2, 2006
Medical Device Supply Chain
Medical Device Supply Chain: As Part of the Information-Based Medicine Ecosystem
Medical Device Supply Chain: Key Drivers of Competition
Improve clinical outcomes
Reduce procedure time and operating costs
Enable less invasive procedures
Allow patients to reduce or avoid inpatient hospitalizations
Shorten recovery time
Facilitate patient care in less expensive settings
Extend life expectancy
Product performance – product reliability and physician’s perception
Pricing and contracting
Total cost of delivered products (i.e., production efficiencies and supply chain management)
Medical Device Supply Chain: Who is the Customer?
Patient (the end customer)
Physician (the care giver)
Health care provider [(hospital system and integrated delivery networks (IDN)]
Purchaser [Group purchasing organization (GPO), wholesaler and distributor]
Sales representative and independent distributor
(Burns and DeGraff 2002)
Medical Device Supply Chain: (Counterintuitive) Principles of Economics (Kruger 2005)
It is assumed implicitly that consumers of goods and services pay for the goods and services – as the price of a good rises, the demand falls.
Medical devices are largely free of this economic law – the demand for medical devices can be exceedingly inelastic (i.e., not depend on price).
Above-average profits are not sustainable, competition from new entrants drive down prices, narrowing margins and reducing profits.
Medical Devices do not appear to be subject to this general rule. Companies (e.g., Johnson & Johnson and Medtronic) have enjoyed sustained above average profits.
Growth in nearly every other industry sector slows as markets become mature and saturated.
In medical devices, growth is sustainable because it is driven by general demographic trends, the continued prevalence of diseases, and the near infinite capacity for absorbing medical technology within the practice of medicine.
Cardiovascular Disease (CVD) Care-Centric Medical Device Supply Chain
(Porter & Olmstead-Teisberg 2006)
Modes of business definition in healthcare are doctor centric, procedure centric, or institution centric, not patient centric .
Patient value in health care delivery….. can only be understood at the level of medical conditions…. Value is determined by how well a provider delivers care in each medical condition , not its overall breadth of services
The Focus on Medical Condition Cardiovascular Disease (CVD) Care-Centric Medical Device Supply Chain
The relevant business in health care delivery is medical condition seen over full cycle of care.
For example, the business is congestive heart failure , not heart surgery, cardiology, angiography, or anesthesiology.
Business definition always involves a geographic component.
(Source: World Health Organization) Cardiovascular Disease (CVD) Profile in Men DALY: Disability adjusted lost year
Cardiovascular Disease (CVD) Profile in Women DALY: Disability adjusted lost year (Source: World Health Organization)
Cardiovascular Disease (CVD) Treatment Trends in the U.S. (Source: World Health Organization)
World Health Organization (WHO) Statistics
CVD is the commonest chronic illness in both developed and developing countries , causing the most deaths and the greatest impact on morbidity.
Approximately one-third of the total deaths worldwide are cardiovascular in origin.
The CVD deaths amounted to numbers greater than those compared to the major infectious diseases (AIDS, TB and malaria).
Common perceptions about CVD are: It is a disease of the elderly, a disease of affluence, and even a pleasant way to die. Cardiovascular Disease (CVD): Perceptions vs. Facts
Cardiovascular Disease (CVD): Perceptions vs. Facts Major Causes of Death In Persons of All Ages In Low and Middle-Income Regions
World Health Organization (WHO) Statistics (contd.)
Contrary to the conventional wisdom, 78% of the CVD deaths occurred not in the high income countries of the world but in the lower and middle income countries.
In sub-Saharan Africa , CVD is a major cause of death in the age range 15-60 years, killing more persons than infectious diseases, and the probability of death from a non-communicable disease is higher that in established market economies.
In India and China , socio-economic changes with individuals moving from a rural community into the cities have resulted in greater prosperity but at the cost of an increase in CVD related disabilities and deaths.
Cardiovascular Disease (CVD): Perceptions vs. Facts
WHO (2003, p. 70) reports “marked disparities in the quality of treatment can be seen in groups of different race, ethnicity, sex, and socioeconomic status. In essence, many patients who could benefit from treatment remain untreated, or inadequately treated,” highlighting the unserved and underserved global demand for CVD care.
WHO’s call for action: “In future, increased emphasis needs to be placed on the appropriate use of proven treatments for everyone with coronary heart disease or stroke.”
Perspectives on Cardiovascular Disease (CVD) Treatment
Diet & Exercise Drugs Devices Invasive Procedures New Biologics Travel--Tourism Cardiovascular Disease (CVD) Care As a Product Bundle of …. Payment/ Reimbursement Pacemakers Implantable Defibrillators Coronary Stents Prosthetic Valves Coronary artery bypass Balloon Angioplasty Valve Repair & Replacement Heart Transplant Cellular Therapy
Cardiovascular Disease (CVD) Care As a Product Bundle of ….
Physician Rankings of the Top 10 Most Beneficial “Medical” Innovations
MRI and CT
ACE Inhibitors to treat high blood pressure
Balloon angioplasty to open blocked blood vessels of the heart
Statins to improve lipid metabolism and reduce risk for coronary heart disease and other vascular diseases
Coronary artery bypass graft
Proton pump inhibitors and H2 blockers to treat gastro-esophageal reflux disease
Selective serotonin reuptake inhibitors and new non-SSRI anti-depressants
Cataract extraction and lens implant
Hip and knee replacement
(Fuchs and Sox 2001)
CVD Care-Centric Medical Device Supply Chain: Some Considerations
Linking the development and delivery of care for cardiovascular (CVD) diseases: Designing medical device supply chains for the unserved and underserved global economies
Estimating the demand for CVD care emerging from the unserved/undeserved global economies for which medical devices can be an appropriate and effective part of the treatment – assessing the true market potential.
Examining strategies for product design and supply chain design (delivery infrastructure – diagnostic and treatment capability, physical infrastructure ) to meet the demands of unserved/underserved global economies
CVD Care-Centric Medical Device Supply Chain: Some Considerations
Patient-Centric Design & Delivery of Cardiovascular Disease (CVD) Care Policy Contingencies: Regulation – Reimbursement – Recall CVD Care-Centric Medical Device Supply Chain: Some Considerations Low High Access/ Awareness Low High Affordability E.g., Sub-Sahara E.g., Oil Rich Middle-East E.g., Major Metro Cities in India E.g., Urban U.S.
Demand t = f (Affordability t , Access t , Awareness t ) 1 “Given either a lack of facilities and operators for percutaneous interventions or long distances to such facilities in many developing countries, we did not evaluate this procedure.” (Gaziano et al. 2005, p. 651) CVD Care-Centric Medical Device Supply Chain: Some Considerations Awareness
Patient: Cultural and educational
Physician: Education and training
Physician & allied health professional capability
Physical infrastructure: Quality and capacity
Access 1 Affordability
Out of pocket
Financing and leasing
Low cost product design/re-design
Drivers Typical Types Future Considerations
In closing …. “ Healthcare is a peculiar beast where in spite of all the new technology, costs keep going up all the time. That is a strange paradox. We are out to buck that trend. We cannot afford to let the masses be deprived of top class tertiary care .” (Dr. Devi Prasad Shetty in “Narayan Hrudayalaya Heart Hospital: Cardiac Care for the Poor,” HBS Case April 2006) Thank you!