… would you take a moment and help a young man in our group who wants to learn how you make some decisions. He asks,

1. How does per-procedure reimbursement work from your perspective?
2. How do you decide reimbursement rates?
3. How do you calculate value of a new diagnostic device relative to your costs?
4. What factors are considered when reimbursement rates are being negotiated with hospitals?

Thanks for any help you can lend this fellow group member.

Nicholas Anderson: It’s a big question with a big answer.

When I’m reviewing a technology, I usually have to take questions 2 through 4 into account but it depends on the product.

In short, the answer to all 4 questions depend on the product, what the standard of care is, how much clinical evidence the new company has to substantiate their claims and, at the end, how much they’re charging and how that compares to the cost of the standard of care.

It sounds like the product is a diagnostic. They have their own unique challenges, vis-a-vis devices, that I have to account for.

An example could be, does a more acute diagnosis lead to a more acute treatment or is is diagnosis for diagnosis sake?

What is the sensitivity and specificity? How many patients need to be tested to identify one patient with the disease?

What is the tx odyssey after the test comes back?

As you can see, there is a lot here. We’d just have to talk to sort it all out.