About 15 years ago I was working as a sales manager for a large braces company when I received a phone call from a paying patient asking me why the cost of his implants was $120,000. .
That was a great question – one I couldn’t answer.
For years, a growing disconnect has continued to grow between the cost of manufacturing braces and the prices charged by vendors to facilities and patients. Precision manufacturing has become remarkably efficient, and device design hasn’t changed much. And with that, a nail is just a nail and a screw is just a screw. But despite this trivialization, the hyper-inflated prices are kept in the air, in large part, by the exorbitant costs of deploying sales staff to be always present in the operating room. In some cases, I made more money than the attending surgeon simply because of the price of the implants.
None of this was going well with me. There had to be a better way to improve patient value. Although the financial burden of the surgery was not clinical in nature, patients certainly felt they were inevitably plagued with pain that would linger long after they recovered. Having worked with physicians and leaders in the US healthcare system over the past two decades, I know that improving value across the patient-provider-payer spectrum is a primary goal for many of us. .
Ultimately, implementing value-based care initiatives will lead to the creation of a fairer and more equitable playing field in healthcare, but progress is never linear. In health, you can gain influence and lose influence; you can only take big steps forward for a global pandemic to push it back right away. Change is slow, but there is movement. Ambulatory surgery centers (ASCs), for example, with their ability to provide cost-effective care and statistically safer clinical outcomes than inpatient facilities, are key to advancing affordable healthcare.
There are approximately 5,300 ASCs in the United States, and more than 90% are owned or partly owned by physicians. Their streamlined outpatient models provide a much-needed alternative for many elective or elective procedures – a fact that has only grown as hospitals are pushed to their limits.
According to a study by the Association of Ambulatory Surgical Centers, ASCs were able to generate $28.7 billion in savings for Medicare over an eight-year period from 2011 to 2018 and will generate over $70 billion in savings by 2028. Researchers expect advances in orthopedics, cardiology, and spinal procedures to lead to more outpatient procedures in the near future.
Research has also proven that CHWs are associated with lower infection rates than hospitals and more efficient for doctors and patients. And with a personal interest in reimbursement, physicians are motivated to further examine operational costs and protocols, thereby improving the efficiency and economy of surgical cases.
But let’s not forget the ebb and flow of healthcare in the United States.
CMS backtracked on its original proposal to eliminate a substantial portion of Medicare’s inpatient only list after receiving feedback from medical device industry stakeholders. CMS’ decision to bring nearly 300 procedures back to inpatient-only coverage flies in the face of what the industry itself sees as the most valid path forward. Additionally, it undermines CMS’s own efforts to provide consumers with alternative procedure sites and transparent pricing information, which nearly 86% of U.S. hospitals have largely ignored despite the mandate taking effect in early 2021.
It is frustrating to see manufacturers in the industry fend for themselves rather than embrace the flexibility needed to match the growth and value of UPS. Value-based care is no longer just a buzzword – it’s a quantifiable business strategy. This is evident in the cost savings that surgery centers present to Medicare and its patients. The medical device industry must do its part to provide products and cost saving opportunities that will support the sustainability of healthcare facilities, especially CHWs.
Manufacturers with a suite of complex product offerings, consulting add-ons, and many other expensive solutions will struggle to deliver successful partnerships in this space. ASCs are reimbursed up to 53% of what hospital outpatient services (HOPD) receive for identical procedures. CSAs expect suppliers to help them manage inventory levels, offer affordable alternatives, and be transparent in their pricing methods.
Most importantly, CSAs will seek to recruit reliable vendors to partner with them in a post-pandemic world. Manufacturers that innovate new business models to directly address these issues and aggressively reduce costs across the patient-provider-payer spectrum will be the first companies to find success as the market for CHWs continues to grow.
Photo: Hong Li, Getty Images