How hospitals can cope with costs of medical device innovations: 5 notes

Alia Paavola - Print  | 

While novel medical devices offer the promise of advanced treatment options and better outcomes for patients, the high costs associated with the devices and the lagging reimbursement structure create financial challenges for hospitals.

Hospitals often take a loss on new medical devices, which almost always carry a premium price and are rarely reimbursed adequately upon market introduction, according to a new Vizient report analyzing the costs of medical device innovation.

The report, "The Cost of Medical Device Innovation: Can We Keep Pace?," looks at the pricing of new cardiovascular medical devices and how hospitals can develop processes to evaluate and adopt these and other technologies on a budget.

Five findings from the report:

1. New cardiovascular devices saw an average 273.3 percent increase in price over the predicate medical device, also known as the older device already on the market.

2. Price premiums for innovative devices range from two to 10 times those of predicate therapies.

3. In some cases, the cost of the new device consumed a high proportion of the overall reimbursement for the entire procedure, causing hospitals to lose money on each procedure performed with the new device.

"This leaves little to cover the extensive costs that come with device implantation, such as hospital stays, surgery and anesthesia," said Craig Lukowski of Vizient.

4. For most of the medical devices studied, the time from market introduction to having a proper reimbursement code from CMS has averaged about six months. This rate has decreased since CMS implemented new technology add-on payments for select devices in 2001, which allows some products to be eligible for reimbursement if they can demonstrate clinical benefit over existing technologies. But even after reimbursement approval, a gap between pricing and reimbursement often still exists, according to the report.

5. Vizient suggests hospitals work with multidisciplinary teams to create a systematic process to determine which technologies provide value without breaking the bank.

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