FEATURED: Point of View
Shaden Marzouk, MD MBA
The U.S. healthcare system is undergoing fundamental change. Consumers are increasingly focused on lower costs and more convenient access to care. Healthcare delivery stakeholders have to work toward expense reductions without compromising quality. All of this is occurring within an atmosphere of declining reimbursements, pay-for-performance metrics, and a shift from acute sites of care to outpatient centers and the home. Employers are also driving expenditure-conscious practices. Despite this milieu, CMS is projecting health spending to grow at an average rate of 5.8% from 2012-2022 – 1% faster than expected average annual GDP growth – to be 19.9% of GDP by 20221.
It is becoming apparent that additional ways to curb expenses are needed. Cost and operating efficiencies – while maintaining the highest levels of quality – can be achieved by retooling existing business models. Various devices with historically high physician preference actually have lower clinical differentiation. Many of these devices have received incremental innovation over time, often without evidence for the value of these changes. Yet, device prices and a high-cost sales and service model have not kept pace with the healthcare environment. Is there a better approach to medical device selection? Can we learn from what occurred in the pharmaceutical space after the introduction of lower cost, clinically acceptable substitutes?
There are some parallels between the wide acceptance of generic pharmaceuticals and opportunities in the medical device industry. Generic pharmaceutical penetration was driven by expenditure concerns, waning innovation, legislative acts and consumer incentives. This confluence of factors fueled the development of comparable drugs at a lower price. Currently, systemic economic pressures, increasing consumer healthcare burdens, and incremental innovation are all opening the door for clinically equivalent devices.