by Joe Camaratta
How can your medical technology company capitalize on changes expected in 2015? Continued implementation of value-based reimbursement will make this year one of change and opportunity for medical technology adoption. Companies are sure to benefit from these changes if they understand and proactively prepare for them. This article discusses top payments trends predicted to impact healthcare providers in 2015, and outlines 4 steps for medical technology companies to address those trends.
The 800-lb Gorilla
CMS continues to push for improved safety and quality by rewarding and penalizing healthcare systems based on assigned metrics. The federal government demonstrated the implications of not reducing high rates of infections and patient injuries by cutting payments to over 700 hospitals within the United States. This is the strictest government effort to reduce patient harm to date. Programs implement by the CMS, such as Value-Based Purchasing and the Hospital-Acquired Condition Reduction Program, continue to drive the future of hospital payments and mandate performance improvement.
Just this week, CMS announced that it would accelerate another major piece of the Affordable Care Act: Accountable Care Organizations (ACOs). ACOs are responsible for facilitating high quality care to their Medicare patients. The ultimate goal in 2015 is to have a greater quantity of payments linked to quality and value, and they plan to achieve this goal by making at least 85% of Medicare’s hospital payments through programs like the Hospital Value-Based Purchasing and Hospital Readmissions Reduction Programs by the end of 2016.
To address these changes, healthcare providers focus on lowering operating costs, expanding their patient base, investing in outpatient facilities and ambulatory care, acquiring medical groups and physician practices, and reducing costs of care. But this is a transformation, and technology can help providers accelerate this change if positioned correctly.
Change Brings Opportunity
These changes create an opportunity for medical technologies to position their products and services at helping healthcare providers address this transformation. Here are 4 steps that your company can take to improve product development and marketing activities to address value-based reimbursement:
- Understand CMS metrics for quality, patient satisfaction and hospital-acquired conditions, and which buyers are responsible for these outcomes. CMS recently published updates to its Hospital Value-Based Purchasing Program. Efficiency (Medicare Spending Per Beneficiary) joins existing measures in the areas of Clinical Processes of Care, Patient Experience of Care and Outcomes of Care to determine payment adjustments for healthcare systems accepting Medicare patients.
- Identify opportunities to help healthcare systems innovate care delivery and increase revenue based on reimbursement changes. CMS is expanding reimbursement for telehealth services delivered to Medicare recipients. They added seven new procedure codes for these telehealth services, and coverage under these new codes is beginning in 2015. To date, 22 states have some form of telehealth reimbursement, and the states that have yet to implement reimbursement are considering it. A new program utilizing telehealth services is Kaiser Permanente, which recently released a teledermatology service. This allows dermatologists to look at patient images of skin conditions and decide whether an in-person appointment is needed to further diagnose and treat the condition. Similar opportunities exist care coordination for physicians who care for Medicare patients with two or more chronic conditions.
- Leverage tools such as jobs-to-be-done to identify opportunities to lower costs.Jobs-to-be-done is a framework to better understand and prioritize problems that customers are trying solve. It can be used in healthcare to document provision of patient care, and identify opportunities for improved information flow, automation and materials management. Results of a jobs-to-be-done analysis can used for product development, marketing strategy and business model innovation. An entertaining introduction to this concept is provided by Professor Clayton Christensen in this video.
- Target, target, target. Writer William Ford Gibson coined the phrase “the future is here, it’s just not evenly distributed.” While reimbursement is always a good thing to support adoption of a new technology, there are segments of healthcare providers who are further along in value-based reimbursement and have a higher interest in improved quality and reduce costs of care delivery. These segments serve as excellent “early adopters” for technologies that support value-based reimbursement, and will allow medical technology to demonstrate the impact of their innovations. Examples include:
- Accountable Care Organizations
- Medicare Advantage Participants
- Providers engaged with commercial insurers on bundled payments or other such programs.
- Providers participating in CMS Innovation Center programs. The Innovation Center develops and tests new model for care delivery and payment through specific demonstration projects. A list of current projects and participating healthcare providers can be found here: http://innovation.cms.gov/initiatives/index.html#views=models
Ultimately, 2015 is a year of change. If medical technology companies are informed about the trends and transformations of the healthcare industry, and take the time to understand the impact on their customers, they will be able to better implement new ideas and benefit from these changes.
About the Author: Joe Camaratta specializes in medical technology innovation and commercialization, taking products from concept to clinical adoption. He led marketing for a $2B+ products and services organization, and built businesses with revenues in the $35 to $300 million range. He started MedTech Playbook to help medical technology companies understand changes in procurement and adoption of innovative technologies at healthcare systems, and provide them with tools that will result in commercial success. He brings extensive experience in product development and launch, as well as business development and customer focus in a range of business environments, including startup, turnaround and expansion situations.