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2009 IDN Fall Summit Presentation
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2009 IDN Fall Summit Presentation Presentation Transcript

  • 1. How Clinical Advancements Change the Business of Healthcare A Conceptual Approach William McIlhargey and John Murray
  • 2. Desirability of “New Technologies”  Irrefutable value of technological breakthroughs  The Upside/Downside of these innovations  Potential for high impact products  Rarely do they come with financial justification 2009 IDN Fall Summit 2
  • 3. No Cornerstone on Innovation  Innovation is fundamental to U.S. medicine (vaccines, antibiotics, advanced cardiology, surgical advances, cancer care, etc.)  Product innovations now stemming from multiple technologies – combination products  Cross-over application from many sciences – (automotive, space exploration, agricultural, military, etc)  Development activities tend to focused on quality of care, rather than cost of care 2009 IDN Fall Summit 3
  • 4. Challenge of New Technology  Healthcare spending is 17.6% of GDP  40% - 50% of annual cost increases traced to new technologies  Providers compelled to remain competitive, while avoiding the legal action of inadequate care  Attracting quality personnel is viewed as an issue without participating new technology 2009 IDN Fall Summit 4
  • 5. National Agencies (AHRQ)  Evidence-based Practice Centers  BC/BS, Duke, ECRI, Johns Hopkins, McMaster U., MetaWorks, NEMC, Oregon U., RAND, Research Triangle Institute/UNC, UCSF/Stanford, U. Texas  Assessments include scientific literature, meta-analyses and cost analyses  National Guideline Clearinghouse  U.S. Preventive Services Task Force  Research and Evaluation 2009 IDN Fall Summit 5
  • 6. The Reality  FDA approval does not provide for the efficacy of new technology  Widespread usage of electronic clinical databases is non existent  Third party agencies proving to be ineffective in handling the volume of new technologies  Reimbursement issues have limited impact on local assessments 2009 IDN Fall Summit 6
  • 7. Hospital Technology Assessment Local Committee Issues  Limited representation of physician clinicians  Lack of objective financial information on ROI expectations  Final decisions made outside of committees  New technology is political currency 2009 IDN Fall Summit 7
  • 8. Which Sets the Stage  Employ clinicians to “drill down” on value of new products  Demand automatic/arbitrary discounts  Committee request to assess effectiveness of new technology  In all cases . . . . it’s a push-back 2009 IDN Fall Summit 8
  • 9. Historical Fragmentation of System A long history of differing views and motivations that hinder collaboration Let Us Consider . . . .  A Buyer’s Perspective  A Physician’s Perspective  A Suppliers Perspective 2009 IDN Fall Summit 9
  • 10. A Buyer’s Perspective  Supplier’s clinical relations undermine hospital efficiencies  Lack of an economic profile with new technology impact good business decisions  Instituting best practices requires quality and economic realities  Difficulty in collaborating on standardization with surgeon community 2009 IDN Fall Summit 10
  • 11. A Physician’s Perspective  Bears the burden of liability  Wants' to work with the “latest & greatest”  Historical underlying tension with hospital providers  Standardization equates to restricted access  Looking for efficiencies to off-set payment reductions 2009 IDN Fall Summit 11
  • 12. A Supplier’s Perspective  Focus on procedural issues  Not enamored with the prospects of retooling their sales forces.  Has been little volume movement through price concessions  Corporate pressure on local reps to address supply chain issues 2009 IDN Fall Summit 12
  • 13. Polarized Environment With the underpinnings of this fragmented and seemingly hostile environment, there is little acceptance for the advantages of new technologies. 2009 IDN Fall Summit 13
  • 14. A Walk on a Different Side Collaborate via Trial Assessment Sim plify an I ndustry Standard
  • 15. A Conceptual Approach  Collaborate verses dictate  Consider opening a platform to utilize new technology  Control processes via quantifying projected results  Establish success and failure expectations  Predetermine outcomes based on contractual agreement 2009 IDN Fall Summit 15
  • 16. Building a Trial Program  Physician/Surgeon champion determines level of impact from new technology  Interview supplier on expected outcomes  Create “plug-in” financial decision model  Develop contracting template of expectations  Ascertain “innovation fee”  Obtain stakeholder acceptance  Evaluation Timeline 2009 IDN Fall Summit 16
  • 17. Triage Innovation Level I – Cosmetic cost neutral objective Level II – Incremental notable reductions in expenses Level III – Breakthrough above plus revenue enhancement Level IV – Game Changing above plus additional advantages 2009 IDN Fall Summit 17
  • 18. Determine and then Quantify  Supplier interview provides features & benefits of technology  Determine what costs are being affected by these benefits  Assign quantitative value to each  Obtain Physician/Surgeon agreement  Review Interview Questions – Handout 2009 IDN Fall Summit 18
  • 19. Transition to Decision Model  Interview converts features to quantitative benefits  Benefits “plug in” to a financial decision Model for report tracking  Consider Pro forma Model assembled as a contracting component  Review one-page pro forma model - Handout 2009 IDN Fall Summit 19
  • 20. Decision Model Elements  Concept requires simplicity  Tailored for acceptance locally  Basic components required  Incremental revenue considerations (DRG, 3rd Party Reimbursement, etc)  Incremental cost considerations (facility, personnel, supplies)  New tech product differential issues  Possible changes to std variable costs  Resulting contribution  Consider ignoring fixed/overhead costs  Model determines “innovation fee” 2009 IDN Fall Summit 20
  • 21. Predetermine Outcomes  Program Success  Continuation of pricing  White Paper Creditability (fee)  Proof of Concept Promotion  Program Failure  Pre-determine discounts  Added cost off-set  Possible removal of technology  Further Assessment  Retrospective agreement of extenuating factors 2009 IDN Fall Summit 21
  • 22. Contracting Template Key Components  Establish outcome valuations  Formalize “innovation fee”  Sign-off by both supplier & physician sponsor  Timeline with milestone  Include your standard T & C  Review items of interest - Handout 2009 IDN Fall Summit 22
  • 23. Stakeholder Input & Acceptance  Selling Platform – “economic trial”  Internal Path of Choice  Administration  Physician/Clinical  Technology Assessment Committee  Promote Communications  Internally  Externally  Suppliers 2009 IDN Fall Summit 23
  • 24. Q and A A Learning Discussion What’s Good – What’s Wrong 2009 IDN Fall Summit 24
  • 25. Presentation Copies For copy of presentation wpm@wpmenterprise.com THANK YOU 2009 IDN Fall Summit WPM Enterprise 25 wpm@wpmenterprise.com