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New Challenges/Opportunities for Medical Device Manufacturers Forged by the ACA

Tue, 06/03/2014 - 4:04pm
Claudio Bellini, COO, COSMED USA

Amid all the back-and-forth political discussion and controversy surrounding the Affordable Care Act, one fact is clear: more people will have access to traditional healthcare services than ever before. 

And with that reality, it has become game-on for medical providers to establish an “assembly line” healthcare system that effectively delivers quality care to millions of newly-insured people, not to mention the aging population. For medical device manufacturers in particular, it’s a brave new world demanding greater efficiency, yes, but one that is more importantly spurring innovation in the quest to provide better patient care. 

Spearheading the next wave of medical technology will be a drive to design streamlined, smarter, and more personalized devices that are less invasive and that allow for simplified remote care. For patients and providers alike, raising the bar in this way will change the healthcare equation, delivering savings across the board by decreasing the amount of time people spend in hospitals, reducing readmissions, and improving recovery times.

Device manufacturers able to focus on personal diagnostic and monitoring, health and medication maintenance, quality control, and high-end therapeutic devices, as a means of preventing chronic diseases and improving public health, will benefit the most from this evolution. At the same time, a number of device manufacturers, unable to make the transition, will fall by the wayside — consolidation being a natural by-product of transformative change.

Large companies, used to the practice of minimizing internal product development in favor of outsourcing products to small companies, will instead look to directly acquire those smaller manufacturers as a means of adding patented instruments with FDA approval and established methods of reimbursement to their fold. Last year for example, my company COSMED acquired LMI and its BOD POD product, with the specific intent of expanding our portfolio.

There will also be a weeding of the percentage of dealers selling second-tier devices designed by smaller companies and delivered at marked-up prices to cover the indirect path from manufacturer to physician or hospital. The Affordable Care Act, with its underlying theme of quality preventative care, will discourage the production and pricing of such instrumentation.

How you ask? The key is measurable quality. By holding care providers more accountable for treatment, revenue will have less to do with patient volumes and more to do with clinical outcomes. Providers with the most positive patient results and tangible cost savings delivered through quality care will rule the day, receiving performance bonuses for their efforts. Those that fail to meet certain set standards will face financial penalties that will impact their bottom lines and tarnish their credit profile. In other words, an ounce of prevention really will be worth a pound of cure in body, mind, and cost.

Additionally, the Affordable Care Act will inspire a much greater level of teamwork within the industry. Accountable Care Organizations (ACO), for instance, will build in incentives for hospitals, physicians, and nurses to work together in a more integrated way. By bundling payments to these organizations, ACOs will place hospitals, specialists, and primary care organizations together in one single lifeboat where quality of care will directly impact the amount of reimbursements to be divided between parties.

In terms of device manufacturing, preventative care will also trickle down to how providers purchase equipment. Expect a much more rigorous process in vetting instruments with a greater emphasis on efficient, diagnostic, and proactive solutions.

The bottom line is that all roads leading to prevention will run through those companies driving innovation in the industry. One form of that innovation will come by bridging the connected world. Doctors, practices, specialists, and facilities will look for solutions that enable them to more easily interact and access information, here’s a few ways we see this happening:

  • Healthcare on the go – smartphones and tablets will offer more and more mobile medical applications that caregivers and patients can use for wireless patient testing, patient monitoring, and health management technology.
  • Enhancing efficiency – this capability can relate to the procedure the instrument performs or as a by-product of what the instrument can measure.
  • Self-monitoring diagnosis – more and more, you will find patient portals in hospitals where people can use diagnostic instruments to monitor their own health.
  • The rise of 3D printing – in the past, you had to go back and forth with a supplier to design and revamp an instrument, adding significant cost and time to the process. With 3D printing, you can create new shapes and structures and combinations of materials for products while slashing prototype costs.

We are truly witnessing an amazing era in medicine. A stronger primary care system in the United States based on preventative medicine will improve the quality of health care services and slow the rate of health care spending. People will be more likely to receive recommended and timely care for medical problems before they become serious and more costly to treat.

While it remains to be seen the full impact of the Affordable Care Act, we are now getting a glimpse into how the technology of today and tomorrow could impact the efficiency and delivery of medicine and drive preventative care for years to come.

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