Pharmacy & Therapeutics - June 2008 - (Page 357)

Evaluating and Standardizing Medical Devices physician–supplier relationship is important.4 The relationship between physicians and manufacturers may change with more aggressive standardization efforts as well as with the introduction of creative physician incentives offered by hospitals.4 This model may therefore lessen the burden on physicians to change their preferences, because it preserves a wider range of product choices for them.4 However, if vendors do not agree to meet a price ceiling, a physician’s product choice may be restricted when that product is no longer purchased by the facility.4 Therefore, physicians might still be requested to agree to product equivalencies, and thus they must be committed to abandon their preferred product choice if its price is not compliant.4 Hospitals have little chance of implementing cost reductions and decreasing their dependence on suppliers without this commitment.4 Hospitals that use a payment cap strategy have reported success, and they have noted that, ultimately, vendors tend to comply with the established price ceiling.4 Group Purchasing Organizations. Hospitals are mindful that when they can choose among competing products, they may have more opportunities to negotiate with vendors for better prices.4 Yet hospitals seem to differ in their ability to negotiate prices for medical devices, because costs for the same device can vary dramatically.4 In a survey of 100 hospitals, the prices for the same device ranged between $2,000 and $9,000.4 Many hospitals in the U.S. have tried to gain leverage in negotiating and controlling supply expenses through creative contracting with manufacturers, either through group-purchasing organizations or local contracting bodies.4 Manufacturers often offer more favorable pricing exchange for the commitment of an organization to purchase a specific volume of a product—a process known as “contract compliance.”4 However, whereas hospitals can commit to purchase a specified volume of bandages and syringes, this type of arrangement is not usually possible for medical devices, because physician preferences vary widely.4 Alternative Models That Support Cost Containment Value Analysis Teams Many hospitals are developing value analysis teams (VATs) to evaluate new technology and to justify the purchase and expense of these products.2 These teams facilitate decision making and standardization regarding medical devices and other supplies.4 The establishment of VATs is growing despite the fact that they face unique challenges in determining product equivalencies for medical devices that P&T committees do not confront when they are evaluating drugs.4 VATS, like P&T committees, are designed to assess products in terms of patient outcomes, safety, and relative costs.4 Such assessments of comparability are then used to make contracting and other tactical decisions about product equivalencies.4 However, VATs are very diverse in their composition and function, so the VAT model has not become standardized in a way that can be easily adopted throughout all health care facilities. Sometimes hospitals use a group-purchasing organization to assemble influential clinicians for the process; in other instances, VATs are created and work within an individual facility.4 VATs also differ from P&T committees in terms of permanency. Some teams are ad hoc committees formed at the end of a contract period, or the teams might be created to evaluate new products as they are introduced into the market. Other teams are permanent committees that are responsible for a particular product category.4 Other Models Hospitals can follow other models to standardize or limit medical device purchases to certain manufacturers or products (the formulary model) or to set price ceilings for certain categories of items (the payment cap model).4 Different decisions are required for these models in terms of product choice, price, and equivalency.4 Formulary Model. The formulary model may be more difficult than the payment cap model to institute because of the potential for physician resistance to dictates by upper management.4 Because this model limits physician choice, it places a greater burden on physicians to adjust to restricted options.4 Consequently, physicians might need to change their practice decisions to comply with the availability of products on the formulary, or they might need to frequently request exceptions.4 Payment Cap Model. The payment cap model may be more feasible because it preserves physician choice but restrains manufacturer influence.4 It does not restrict particular products or manufacturers; instead, it restricts the prices paid for products in a particular category.4 This strategy relies on competitive pricing between manufacturers of similar products below a price ceiling established by the hospital for that item.4 This approach places the burden on suppliers to alter pricing strategies in order to satisfy hospital price ceilings.4 Value-Added Manufacturer Services May Assist in Decision Making Medical device manufacturers can help hospitals by offering value-added services in numerous areas. Companies that have a value-added approach rather than a single-minded focus on product sales might also gain a competitive advantage.5 Manufacturers often provide physicians and clinical support staff with specialized knowledge and train them in the selection and use of products for specific patients.4 Some companies even offer on-site expert advice and technical assistance with instrumentation and calibration during procedures in the operating suite.4 Vendors often assist with a hospital’s inventory management, an invaluable service for products with a short shelf life.4 Many vendors deliver products on a “just-in-time” basis on the day surgery is scheduled.4 Vendors also help hospitals keep current by providing updates on FDA approval status and new product availability.4 Most hospitals and their clinical staff consider these services to be essential, recognize their dependence on them, and therefore want to maintain vendor involvement to some degree.4 It has been suggested that manufacturers provide additional value by becoming accredited by the Joint Commission on Accreditation of Healthcare Organizations (JCAHO).5 Accreditation and pay-for-performance initiatives could be supported by suppliers that link their physical products to factors such as reduction in mortality, complications, and average length of Vol. 33 No. 6 • June 2008 • P&T® 357

Table of Contents Feed for the Digital Edition of Pharmacy & Therapeutics - June 2008

Editorial Aliskiren Reduces Plasma Renin Activity Medication Errors Prescription: Washington New Drugs/Drug News/ New Medical Devices Drug Forecast Challenges in Evaluating and Standardizing Medical Devices in Health Care Facilities California e-Pedigree Rules Pose Challenges For Pharmacies Pharmaceutical Approval Update American Psychiatric Association At a Glance: Dermatology Trends in Managed Care

Pharmacy & Therapeutics - June 2008

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