Decreasing the cost of care
As a result of its huge cost, the U.S. Healthcare ecosystem is now seeking solutions that will
(ii) decrease the cost of care and
(iii) improve outcomes.
In this post, we are going to focus on (ii) decrease the cost of care.
The growing burden of healthcare costs has been discussed earlier and the cost reduction benefit of a new MedTech product/solution is of the utmost importance. Not only do cost/benefit rationales need to be established to support the introduction of new technologies, but they must be substantiated in a significant way that will convince any disciplined healthcare accountant or CFO to bring them into their system – for instance, savings need to directly “connect” with the Profit and Loss statement of the Healthcare institution.
These cost benefits must have a short term (less than 1 year) economic impact to appeal to most commercial insurance companies.
As a result, MedTech entrepreneurs must develop a comprehensive, detailed and documented understanding on how their new product / technology impacts the cost structure and the balance sheet of a hospital, surgical room, nursing center or retirement home – just to name a few. They also must understand how their value proposition fits into the business model of such institutions, which can significantly vary from a traditional non-profit hospital to one of the newly created Accountable Care Organizations.
In the same way clinical outcomes are measured in clinical trials, economic outcomes must be proven in “real life” and in the relevant U.S. operational context. In a 2013 paper published in the MIT Technology Review, Jonathan Skinner writes on the “costly Paradox of Health-care technologies”, pointing out that healthcare is one of the rare industries where technology increases costs. Quoting that only 0.5% of medical studies actually look at cost saving technologies, the challenges the MedTech community have is to rethink the way it looks at technology R&D for healthcare.
One of the emerging best practices – and one of our recommendations – is to include relevant economic measures as secondary outcomes in every clinical trial, or to amend ongoing trials (most of which have been designed and launched with primary clinical outcomes only). The robust analysis of clinical outcomes and economic outcomes will prepare for a robust product launch and commercialization. The selection of these economic outcomes is intimately linked to the target segment(s) where the product will be offered, and must include effects/ improvements that can be seen either upstream or downstream in the care delivery workflow that is impacted by the product.