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As originally asked by Mahesh Kumar B.C.

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Robert Trinka, MBA
Senior Management: Sales | Marketing | Business Development
Interesting article on front page of NY Times today:
A Health Provider Finds Success in Keeping Hospital Beds Empty, By ANNIE LOWREY — “The experience of a health system in Chicago shows just how hard it will be to expand its approach, known as “accountable care,” and keep costs from resuming their relentless rise….” The article continues to explain how, Advocate Health Care, based in Oak Brook, Ill — uses novel ways to keep their patients healthy and out of the hospital, thus helping to control healthcare costs.

Abraham (Nick) Morse
Vice Director of Urogynecology at Guangzhou Women and Childrens Medical Center 广州市妇女儿童医疗中心
The focus on ACO’s per se may be a bit narrow for this conversation. With or without Medicare ACO’s, I think we are close to reaching the tipping point where most stakeholders will be moving to integrated care models. This means those who provide care have incentives and risk around maximizing outcomes and minimizing cost for THE ENTIRE episode of care (or a fixed period of time for a patient with a chronic condition). This means two things for medical device value propositions:
1) It will be increasingly difficult to sucessfully market a device or procedure that increases cost based on its appeal to consumers or health care providers or its promise of marginally improved experience of care
BUT
2) With costs and resource use being seen in a more longitudinal view, devices that may require initial outlay of cash, but significantly decrease cost over the entire episode of care (someone mentioned a device for knee surgery that the hospital might pay for but decreases rehab costs) will have a clearer value proposition.

Burrell (Bo) Clawson
I research patents & design products to get a patented competitive position: Over 30 patents.
Reina, your article rings true with what I’ve read.

For companies offering savings through better care with reduced costs, I see more sales coming through the door.

The article noted “80% of hospitals planning to or having adopted one (an ACO).”

Can you tell us if this is 80% of the hospitals in the country, as I wasn’t exactly sure?

If that is true, we are on our way to a major shift.

Reina S.
Executive assistant
I have actually written about a recent report regarding ACOs and medical devices for MD+DI. Check it out:

[http://www.mddionline.com/blog/devicetalk/aco-hospital-model-will-influence-medical-device-makers|leo://plh/http%3A*3*3www%2Emddionline%2Ecom*3blog*3devicetalk*3aco-hospital-model-will-influence-medical-device-makers/fz8Q?_t=tracking_disc]

Robert Trinka, MBA
Senior Management: Sales | Marketing | Business Development
Mahesh, good question an dialog that you have started. Very good, relevant comments above. I agree with the general comments that ACOs will be important to the Medical Device industry and in addition, to the effective delivery of medical care in the US. In my field, IVD Diagnostic assays, many leading laboratories are embracing the concept of ‘Test Utilization’, where diagnostic tests are ordered according to ‘rules based medicine’ as Terrell mentions. I believe that there will be a philosophy of ‘working smarter’ in the delivery of health care in the US, and ACOs and Medical Device suppliers will be among the partners in this trend.

Barbara Duck
Health Care It Consultant/Blogger
Medical device companies are joining insurance trade associations and lobbying groups so this would also indicate partnerships of some sort growing here, again with perhaps pricing and exposure as the insurers make decisions on what devices they pay for. My post below on this topic,

[http://ducknetweb.blogspot.com/2013/04/medical-device-companies-joining.html|leo://plh/http%3A*3*3ducknetweb%2Eblogspot%2Ecom*32013*304*3medical-device-companies-joining%2Ehtml/HSV1?_t=tracking_disc]

Erin Hayes
Director of Risk Management at St. Mary’s Health System
To be honest, I don’t think that anyone has given much thought as to how medical devices will fit into the ACO model and this is where there is a huge disconnect. Bo is right, we love to sell expensive procedures. And our hospital systems are not educated enough to be able to understand how to compare cost and safety and effectiveness of these devices. Now, when I think of medical devices, I think of the specific industry that my company deals with which is rapid tests for infectious disease. This is a huge cost to patients that no one is even looking at right now (other than taxation). The physicians who request the testing for their patients have no idea which type of test is being performed and trust me, there are many manufacturers that they can choose from and many types of tests (rapid, molecular, etc.). The doctors and the people running the tests in the lab are are not the decision makers though. So yes, for some procedures, they can make decisions such as ‘No, we will not have an MRI right now or an invasive heart procedure’ but they do not have any say in which test is purchased to be run on the patient. So they do not know if the best (inexpensive or most effective or sensitive or specific) test is being performed. This will be a huge gap and I’m not sure it will be one bridged for a very long time. The system needs to make huge changes for payment and structure in addition to looking at ALL of the tests being performed on a patient. The systems also need to look at how everyone works together and perhaps focus some quality improvement efforts on how labs and physicians work together. I think this may bright light to the huge market of medical devices that are being ignored by the changing healthcare system.

Now, I say this all knowing that anyone looking at our tests and how effective they are could cause a shift in the purchasing of these tests and not help our company. This means that in addition to having the conversation with the lab and doctor, this needs to also happen with the medical device manufacturer. Having companies focus on making better tests to help the patient would be great for ACOs/healthcare. But at this point, it’s just wishful thinking on my part.

Mahesh Kumar B.C.
Practice Lead Agile and DevOps at Cognizant
Thanks all.

Tom Meinert
Product Leader @ Imprivata | Patient Identity Solutions
I personally have asked this question the other way around… How do medical devices fit into the ACO model? ACO’s are a shift in the business model of healthcare organizations. As such the technologies a ACO uses must support these models. The focus of ACO’s are on a system of processes and technology(s) supporting & improving quality of care and cost reductions. When I think of this, I ask myself how can medical devices participate most effectively as part of the system. This answer will differ depending on the type of device in question. However I think you’ll see an increase in the requirement for a device to be able to integrate with the Hospitals IT system as a necessary requirement and become a decision point when choosing a device to buy. Whereas in the past a purchasing decision for a device may have been more focused on the device itself (best of breed), now the decision will include integration capabilities favoring those devices that can integrate with the hospitals EMR/EHR. You’ve seen a similar trend in these large hospital organizations as well with regards to their IT systems that have favored integration over functionality. So whereas at one time the question was how good is your device, now the question will evolve to how good is your device and how well does it integrate into my EMR/EHR network.

Terrell Williams
Founder, Pacemaker Patient Advocacy Group, Inc.
Thanks, Jerrold, for your response. Yes, the full article has a table on page 2934 showing that patients with >90% ventricular pacing had 12% heart failure hospitalization, while those paced in the apex of the right ventricle <10% had only 2% heart failure hospitalization within the few months of the study. This suggests that bypassing the ventricular conduction system leads to heart failure; and the mechanism can be found in the publications on the Q&A page of PacemakerPatientAdvocacy. Burrell (Bo) Clawson
I research patents & design products to get a patented competitive position: Over 30 patents.
Jerrold, where are Mr. Hendren’s slides, if they are available?
Thanks much – Bo

Burrell (Bo) Clawson
I research patents & design products to get a patented competitive position: Over 30 patents.
Terrell, et al, “Preventive Education” rings hollow, even though we have ample evidence that reliance on fats, high fructose sweetened drinks, salt, sweet & fat laden ‘snacks’ and overabundance of overcooked red meat along with accumulation of 40+ pounds of extra weight are enough to kill off most anyone early, but after the imposition of countless hundreds of thousands of dollars in extra medical costs.

If there are no consequences from eating ones way to an early death, there will be no consumer change in their lifestyles.

Jerrold Shapiro
President and CEO, Fem-Medical LLC
Terrell, I was quoting from one of David F. Hendren’s slides, not making my own statement.

Is this the MOST trial you refer to? [http://circ.ahajournals.org/content/107/23/2932.full|leo://plh/http%3A*3*3circ%2Eahajournals%2Eorg*3content*3107*323*32932%2Efull/kQ3f?_t=tracking_disc]

Terrell Williams
Founder, Pacemaker Patient Advocacy Group, Inc.
If, as Jerrold suggests there may be, ” a shift from intuitive and empirical to predictive, rules-based medicine,” involving devices, the tens of thousands of patients who have been paced into heart failure in the US (see MOST Trial, Sweeney et al and do the math) have little hope. It is intuitive that the His bundle of the cardiac conduction system is the only way to restore natural physiological contraction of the ventricles, yet standard of practice allows pacemaker implanters to avoid taking the time to learn to use recent advances in catheter lead delivery so that “it takes no longer to place the lead at the His bundle than any other place in the right ventricle.” All of the patients that I know of who have been paced at the His have been cured from iatrogenic heart failure. Karen’s story is typical (Goggle PacemakerPatientAdvocacy). Yet, there is no one in the world who has the incentive/money for the clinical to move this into rules based medicine, to force doctors to avoid pacing patients into heart failure. I hope India is smarter than that.

Jim Bloedau BSMT, RRT, CPHIMS
Founder Information Advantage Group
The general idea of ACOs is to deliver care at a lower cost for Medicare patients while maintaining quality. It is administrative in purpose and calls for administrative and operational structure and over site to manage the provision of care and the disbursement of funds to the member providers of the ACO…steps similar to an insurance company. However, you can’t just look at ACO without considering the HITECH legislation that promotes the use of EHRs, data communications and weighted quality measures. Add to this the emerging models of care like PCMH and you might think that the incentive for the provider is not just sharing in the money saved as in the ACO model. Increasingly and from a competitive stand point, addressing each of these in your products background story and how it delivers benefits, savings and better branding is the new normal.

Burrell (Bo) Clawson
I research patents & design products to get a patented competitive position: Over 30 patents.
No matter how you cut it they have risen in the last dozen years at large rates. I do not disagree that outcomes are not better than Europe.

I don’t know the numbers, but am suspecting the US is centered on getting the latest, greatest,most expensive procedures to the largest audience of people who don’t take care of themselves with much preventive care. The healthcare system loves to sell $30,000 corrective procedures.

The ACA through ACOs emphasizes prevention & keeping people well at lowest cost and maybe that will work.

But healthcare organizations are going to have to start emphasizing prevention and early detection “or else” (my prediction coming from WDC is penalties if you don’t), which is not the norm today.

Ted Lazakis
CEO and CTO of Alpha Tekniko
Bo,

By “astonishing rise in insurance premiums” do you mean pre or post Obamacare? Kaiser Family shows them to be pretty much on the historical track.

The shocking chart is the one that shows our per capita spend is 10x other countries with similar outcomes.

[http://www.forbes.com/sites/danmunro/2012/12/30/2012-the-year-in-healthcare-charts/|leo://plh/http%3A*3*3www%2Eforbes%2Ecom*3sites*3danmunro*32012*312*330*32012-the-year-in-healthcare-charts*3/NxZe?_t=tracking_disc]

The focus on providing value is key to reining in these costs. There is no way our system is 10x better in any metric. That plus being strategic on whom we spend public money. 3% of medicare patients use up 50% of the cost.

Burrell (Bo) Clawson
I research patents & design products to get a patented competitive position: Over 30 patents.
Last I heard, Accountable Care Organizations created by the ACA/Obamacare were up to about 400 in the U.S.

By memory, I seem to recall that Cleveland Clinic was an ACO.

Given the broad mess existing in trying to start up the ACA, and the astonishing rise in insurance premiums, I don’t see anyone spending much time trying to figure out how ACOs are proceeding. Given that the ACOs are supposed to look a maintenance for chronic disease patients and “preventive care”, we will have a long lag time before we can figure out whether ACOs are actually accomplishing what was intended.