2009 IDN Fall Summit Presentation

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2009 IDN Fall Summit Presentation

  1. 1. How Clinical Advancements Change the Business of Healthcare A Conceptual Approach William McIlhargey and John Murray
  2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 14. A Walk on a Different Side Collaborate via Trial Assessment Sim plify an I ndustry Standard
  15. 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. 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. 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. 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. 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. 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. 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. 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. 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. 24. Q and A A Learning Discussion What’s Good – What’s Wrong 2009 IDN Fall Summit 24
  25. 25. Presentation Copies For copy of presentation wpm@wpmenterprise.com THANK YOU 2009 IDN Fall Summit WPM Enterprise 25 wpm@wpmenterprise.com

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