About 15 years ago, when I was a sales manager at a large orthopedic device company, I got a call from a self-paying patient asking why his implants cost $120,000.
This is a good question – I can’t answer it.
Over the years, there has been a growing disconnect between the cost of manufacturing orthopedic devices and the prices providers charge facilities and patients. Precision manufacturing has become very efficient without much change in equipment design. In this way, nails are just nails and screws are just screws. But despite this commoditization, over-inflated prices remain high, due in large part to the high cost of deploying salespeople responsible for an always-on presence in the operating room. In some cases, I actually make more money than the attending surgeon just because of the implant price.
None of these work for me. There must be a better way to increase patient value. While the financial burden of surgery is not clinical in nature, it does feel like the patient is inevitably saddled with pain that persists long after recovery. Having worked with physicians and leaders in the U.S. healthcare system for the past two decades, I know that increasing value across the patient-provider-payer spectrum is a primary goal for many of us.
Ultimately, the implementation of value-based care programs will drive a fairer and more level playing field in healthcare, but progress is by no means linear. In healthcare, you can gain leverage and you can lose it; you can take a big step forward, but a global pandemic will push it back. Change is slow, but there is movement. Ambulatory surgery centers (ASCs) are just one example, and their ability to provide cost-effective care and safer clinical outcomes than inpatient facilities is key to moving affordable healthcare forward.
There are approximately 5,300 ASCs in the United States, more than 90% of which are owned or partially owned by physicians. Their streamlined outpatient model provides a much-needed alternative to many elective or non-urgent procedures — a fact that will only become more necessary as hospitals have reached their limits.
According to a study by the Association of Ambulatory Surgery Centers, Over the eight-year period from 2011 to 2018, ASC saved Medicare $28.7 billion and will save more than $70 billion by 2028. The researchers expect that advances in orthopaedics, cardiology and spine surgery will lead to more outpatient procedures in the near future.
Research has also proven that ASC is Associated with lower than hospital infection rates More effective for both doctors and patients. Because of the personal benefits in reimbursement, physicians are motivated to further review operational costs and protocols to improve the efficiency and economy of surgical cases.
But let’s not forget the ebb and flow of American healthcare.
After receiving feedback from medical device industry stakeholders, CMS withdrew its original proposal to remove the bulk of Medicare’s inpatient list. CMS’ decision to revert nearly 300 procedures to inpatient-only coverage runs counter to what the industry itself sees as the most rewarding path forward.In addition, it sandbags CMS’s own efforts to provide consumers with alternative program sites and transparent pricing information, which is nearly 86% of U.S. hospitals largely ignore Although the mandate will go into effect in early 2021.
It’s frustrating to see industry manufacturers go their own way instead of embracing the flexibility needed to match ASC’s growth and value. Value-based care is no longer just a buzzword—it’s a quantifiable business strategy. The cost savings that surgery centers bring to Medicare and its patients are obvious. The medical device industry must do everything in its power to provide products and cost-saving opportunities to promote the sustainability of healthcare facilities, especially ASC.
Manufacturers with a comprehensive portfolio of complex products, consulting accessories and many other high-cost solutions will struggle to provide a successful partnership in this area. ASC’s reimbursement rate is 53% of the same procedure at the Hospital Outpatient Department (HOPD). ASC expects suppliers to help them manage inventory levels, provide affordable alternatives, and be transparent in their pricing methods.
Most importantly, ASC will seek to recruit reliable suppliers to work with in a post-pandemic world. As the ASC market continues to grow, manufacturers that innovate new business models to directly address these issues and aggressively reduce costs across the patient-provider-payer spectrum will be the first to see success.
Photo: Li Hong, Getty Images
