Reimbursement Strategy and Economic Modeling

Most hospitals now have policies and procedures in place which require the review of new technologies prior to their use or purchase by the hospital. This has resulted in an expanded number of individuals who are involved in the decision making process and a greater focus on the cost impact of the technology to the hospital. Having evidence that a new medical technology provides a clinical benefit to patients is often not sufficient to gain entry into the hospital and many hospitals are now requesting cost justification analyses which demonstrate the economic impact of the adoption of the technology at their institution.

 Prior to launch, marketing needs to understand the economic factors at an institutional/provider level for their new technology. An analysis of coding, coverage, and reimbursement for the Company’s technology, as well as competitive products, should be conducted early in the product development cycle to insure appropriate steps are taken to develop a comprehensive reimbursement strategy if required for market entry since this process often takes a protracted period of time.

Keep in mind that if the new medical technology carries a higher price tag, demonstrating both a clinical and economic benefit of the product (from the customer’s viewpoint) versus alternative options is required in order to gain early market adoption of the technology.  Demonstrating cost savings at a payor level (e.g. reduced overall healthcare costs over time) typically does not influence the decision making process at a hospital level since they would not usually share the benefit of this cost savings. Exceptions to this are closed systems such as HMO’s or governmentally run medical facilities.

In order to demonstrate the economic value associated with a new technology, marketing must provide both the background training and the appropriate tools to empower the sales organization to communicate this type of information to customers. A typical tool is a pro-forma economic model where variables can be inputted based on clinical results associated with the products use and either standardized or customer specific cost data. Potential indirect cost savings associated with the use of the new medical technology is an important variable to include in these models. Examples are reduced operating room time, reduction in the use of pharmaceuticals, and decreased length of stay.

The Atticus Group has significant experience with the assessment of the reimbursement landscapes for new medical technologies and the development of economic models which support the creation of economic messages which can augment efforts to obtain approval for the use of the technology at an institutional or governmental level. Utilizing this information in combination with clinical outcomes data which support the benefit of your technology can reduce barriers to entry and improve the likelihood of technology adoption.

Most hospitals now have policies and procedures in place which require the review of new technologies prior to their use or purchase by the hospital. This has resulted in an expanded number of individuals who are involved in the decision making process and a greater focus on the cost impact of the technology to the hospital. Having evidence that a new medical technology provides a clinical benefit to patients is often not sufficient to gain entry into the hospital and many hospitals are now requesting cost justification analyses which demonstrate the economic impact of the adoption of the technology at their institution.

 Prior to launch, marketing needs to understand the economic factors at an institutional/provider level for their new technology. An analysis of coding, coverage, and reimbursement for the Company’s technology, as well as competitive products, should be conducted early in the product development cycle to insure appropriate steps are taken to develop a comprehensive reimbursement strategy if required for market entry since this process often takes a protracted period of time.

Keep in mind that if the new medical technology carries a higher price tag, demonstrating both a clinical and economic benefit of the product (from the customer’s viewpoint) versus alternative options is required in order to gain early market adoption of the technology.  Demonstrating cost savings at a payor level (e.g. reduced overall healthcare costs over time) typically does not influence the decision making process at a hospital level since they would not usually share the benefit of this cost savings. Exceptions to this are closed systems such as HMO’s or governmentally run medical facilities.

In order to demonstrate the economic value associated with a new technology, marketing must provide both the background training and the appropriate tools to empower the sales organization to communicate this type of information to customers. A typical tool is a pro-forma economic model where variables can be inputted based on clinical results associated with the products use and either standardized or customer specific cost data. Potential indirect cost savings associated with the use of the new medical technology is an important variable to include in these models. Examples are reduced operating room time, reduction in the use of pharmaceuticals, and decreased length of stay.

The Atticus Group has significant experience with the assessment of the reimbursement landscapes for new medical technologies and the development of economic models which support the creation of economic messages which can augment efforts to obtain approval for the use of the technology at an institutional or governmental level. Utilizing this information in combination with clinical outcomes data which support the benefit of your technology can reduce barriers to entry and improve the likelihood of technology adoption.