Market forces (COVID, the seesaw of elective care procedures, etc.) are expected to drive further consolidation and redistribution of acute care assets in the US healthcare business. The most obvious horse in this race is the trend towards value-based care (VBC). What impact will this have on the medical device industry?
In U.S. healthcare, COVID-19 hit our public healthcare system unexpectedly and with force. This is the root cause for the US hospital system’s dramatic reduction of elective surgeries, which caused the furlough or dismissal of thousands of healthcare workers. Many physicians believe that changes in care delivery such as services like telemedicine are accelerating the trend of the ‘commoditization’ of physicians. This means that our champions, the clinical buyer, may not have the vote in the use of medical devices that they (or we) are accustomed to.
For the past 10 years, the transition to value-based care (VBC) has been the source of contentious discussion within U.S. healthcare. The investment in VBC has been immense and has soaked up enormous financial, strategic and operational assets with minimal change in lowering costs and improving outcomes. Approximately 39% of healthcare disbursements made in 2018[i] were under fee-for-service (FFS). An additional 25% were FFS with links to pay-for-performance or pay-for-reporting incentives. That means that two-thirds of hospital-based care delivery systems are based on FFS reimbursement.
COVID may change the math. Hospitals can respond by accelerating the change to VBC delivery. One way is to have hospital management repurpose acute care capacity excess through consolidation, another, to transition to VBC delivery and payment. Both may be required to weather this storm, and both will be painful for the medical device industry.
A strategy to consider is to partner with hospital administrators to learn about the new pain points COVID has scraped clean. Medi-Vantage has a seasoned practice in talking to hospital administrators and uncovering opportunities to succeed. Find out how your medical device can provide increased value for the hospital system so that, when the next cuts come, as we know they will, your medical device will not be among them.
[i] https://revcycleintelligence.com/features/entering-the-next-phase-of-value-based-care-payment-reform
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