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on that technology. In addition, because other payers oſten look to Medicare’s NCDs when weighing their own coverage decisions, a negative NCD could result in restricted access for non-Medicare patients as well.


Save Me the Money Ning, of the Arizona-based medical device accelerator,


says that when aiming for private insurance reimbursement, it oſten pays to keep the number of procedures done with a new disruptive device (where you might need a new code review) low—1000 or fewer a year for a couple of years—while collect- ing patient data. It’s also crucial to obtain consent that satisfies requirements of the federal patient privacy law (the Health Insurance Portability and Accountability Act, or HIPAA) from the patients undergoing those procedures. In addition, Ning says for most devices it’s necessary to do


time studies or use other techniques to demonstrate that not only does the new widget improve patient outcomes, it also saves time, and time equals money. Collecting data to show CMS or a private insurer is not


enough, though. Te next step is to publish the data; the gold standard is a peer-reviewed medical journal, whose reviewers will scrutinize everything from whose data is being collected to analysis of the results. Even the publication phase requires thought and analysis,


Ning says. It may seem intuitive to go for the major publica- tions such as the New England Journal of Medicine or the Jour- nal of the American Medical Association. Tey’re prestigious and have large staffs who can consider manuscripts quickly, but they also get a large number of submissions. So, even if a manuscript is accepted for publication, it may have to sit in a queue for months before print or online publication. A publication strategy may take up to 2 ½ years to imple-


ment, Ning says. Published evidence regarding better patient outcomes and


money saved will also add value when the entrepreneur who’s started a small medical device company wants to deploy his exit strategy in four to five years and sell the company. Small companies—with less than 50 employees—represent 80% of all device makers, and there’s not been a successful IPO for such concerns in many years, Ning says. Robust data will also help a medical device maker get his


product into the supply chain and, ultimately, into the hands of users for the benefit of patients.


To GPO or not to GPO Companies with blockbuster, proprietary devices such


as the Charite artificial intervertebral disk or the SoſtVue ultrasound device for breast cancer screening may not have to worry about getting into the supply chain. But the story is dif- ferent for commodity, or “me-too” devices, that may result in incremental improvements in patient outcomes or time saved.


Historically, the strategy has been to recruit a physician


champion who’s keen on your device. Maybe you recruited him as an adviser during the FDA approval process. Or he may have become interested aſter seeing an ad in his profes- sional journal, or stopped by a demonstration table at a medi- cal conference, or heard about it from a patient. He may even be your business partner. But his influence is diminishing. Tat is because increasing numbers of physicians are


signing employment contracts with hospitals. Where it may have once been easy to find an orthopedic surgeon or an interventional radiologist who could champion one’s new device with little thought about cost (vs. better patient outcomes), those specialists are now more likely to ally themselves with the decisions of their hospital employer and pinch pennies, says Lynn Everard , a Florida-based health care supply chain strategist. Unless your device is first-in-class, like the new bioabsorbable


blood vessel stent, with no obvious substitutes, it may have only one way to get into the users’ hands, through a group purchasing organization (GPO). GPOs emerged when groups of hospitals began consolidating their purchasing operations in order to real- ize cost savings through economies of scale. Trough the years, GPOs have grown to become giant purchasers wielding a great deal of power, and with a significant advantage. Teir advantage stems from collecting fees from members


that would be viewed as illegal kickbacks were it not for pro- tection via a safe-harbor law. Tis paradigm came under Con- gressional and investigative journalists’ scrutiny about 10 years ago, but little changed and GPOs are a fact of life for now. “Te fact that it’s protected legally doesn’t change the impli-


cations,” Everard says. Te supply chain expert maintains that it’s possible for a hospital to avoid joining a GPO, but most have more work than people to do it and want to contract out for purchasing. However, GPO contracts with hospitals are a tradeoff:


they may be very restrictive and thwart easy adoption of new devices from independent sources in exchange for outsourced purchasing and distribution. “Hospitals have to adhere to very strict thresholds to be in


compliance with GPO contracts,” says Kelli Hallas of Emerson Consultants (Minneapolis). Te Affordable Care Act also created another player that


device manufacturers will have to consider: Te Patient- Centered Outcomes Research Institute, a non-governmental institute that will conduct and contract with external organi- zations to conduct comparative research, or what treatments work best for which populations. Te real opportunities today are for medical device manu-


facturers who can figure out a way to do more with less. Tose who can demonstrate their device’s clearly identified clinical improvement with a value proposition to save money are in the best position, Everard says.


Medical Manufacturing 2013 21


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