1. A Collaborative Effort Hayes, Inc. TriMedx Catholic Health
Medical Equipment Planning AHRMM SEPAC, November 15, Presentation Objective -Provide a High-Level Overview of Medical Equipment Planning
A Collaborative Effort
Hayes, Inc.
TriMedx
Catholic Health

2. Panel Company Overview - Objective!
Hayes, Inc.
Internationally recognized health technology research and consulting company, serving hospitals, health systems, health plans, employers, and government agencies.
Employ highly qualified and experienced clinicians, analysts, and consultants (35+).
Mission is to improve healthcare quality through the use of evidence.
TriMedx
TriMedx, a subsidiary of Ascension Health, has helped 500+ healthcare providers reduce expenses, increase patient throughput, and drive profitability through innovative management programs centered on medical technology assets. Delivering 99% uptime, around-the-clock response and unbiased, total-cost-of-ownership equipment data, TriMedx has saved its clients nearly $150 million to date.
Catholic Health
Catholic Health in Buffalo, NY is a non-profit healthcare system that provides care to Western New Yorkers across a network of hospitals, primary care centers, imaging centers and several other community ministries (8,200 employees, 1,200 Physicians). \

3. Medical Equipment Planning
Strategy
Business Drivers
Clinical Outcomes
Performance
Scope of the Buy
Equipment Warranty
Software
Training
Medical Equipment Acquisition
Impact of Healthcare Reform
Physician Preference
Recent Trends – Emerging Technology
Interoperability
Network Security
Total Cost of Ownership
Budget Development
Equipment Functionality
Operations Issues
Regulatory Compliance Strategies

4. Healthcare Reform Impact
CHANGE
IMPROVE QUALITY
REDUCE COSTS
Handout provided: Healthcare Reform and The Supply Chain
Volume Based to Valued Based
Be Evidenced Based - Data Driven!
Demonstrate Value!
“A hospital will need to generate $11,700,000 in new revenue to have the same impact as a $100,000 reduction in operation costs. ”The Source Book Comparative Performance in US Hospitals -Deloitte Touche

5. Comprehensive Lifecycle Management - Business Model
Right Technology
Capital Equipment and Technology Planning
Selection and Procurement
Implementation
Management and Support
End of Life Management
Right Time
Alignment with strategic plans
Evidenced Based Clinical Outcomes
Evidenced-Based Equipment Performance Data
Current State/Gap Analysis
Efficient capital planning
Replacement scheduling
Right Cost
Right Place
Limit the Scope of the Buy
All-inclusive ROI
Competitive capital sourcing process
Tracking and management
Metrics
Optimizing asset utilization
Technology redeployment

6. Total Cost of Ownership
Total Cost of Ownership: CT Scanner
Purchase Price - $1.5M
Total Cost of Ownership $3,432,546
Total Cost of Ownership: Breast MRI
Purchase Price – $1.5M
Total Cost of Ownership - $3,740,457
Total Cost of Ownership: CyberKnife
Purchase Price - $3.2M
Total Cost of Ownership - $8,502,505
Handout: Understanding Total Cost of Ownership in Capital Equipment Planning

7. Evidence-Based Medical Technology Planning
AHRMM SEPAC,
November 15, 2011
Evidence-Based Medical Technology Planning
Jennifer E. Van Pelt
Senior Research Analyst
Senior Hospital Consultant
Hayes, Inc.

8. Does This Happen In
Your Hospital?

9. Is an expensive new medical technology worth the cost?
In the “healthcare crisis” and “healthcare reform” debates, two themes that underlie every other issue appear to be…
QUALITY
COST
Is an expensive new medical technology worth the cost?

10. Projected U.S. Healthcare Costs
Rising Costs
Projected U.S. Healthcare Costs
I’m going to start with the big picture. At its current rate of increase, US total spending on health care will double in the next 10 years, growing from 16% to 20% of GDP. That means that in 2017, 1 out of every 5 dollars spent in the US economy will go through the health sector. That leaves only 4 out of 5 dollars for EVERYTHING ELSE. There is growing consensus among economists and health policy experts that this is not sustainable.
20-50% of that increase in spending is due to new medical technology – 256 slice CT scans, silver dressings, drugs, etc. Given that new medical technology is the single biggest driver of increases in unsustainable healthcare costs, and given that we haven’t been seeing 20-50% improvements in healthcare outcomes, questions are starting to be raised as to whether we are really getting our money’s worth.
So that’s the big picture. Now I’m going to switch to what it looks like from the hospital point of view.
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2007-Health spending 16% of GDP, 2017-(projected) 20% of GDP (CMS data, reported in Bending the Curve, Commonwealth Fund))

11. Are We Getting Our Money’s Worth?
Americans spend more of their economy for healthcare than any other developed country.
Healthcare Statistics
Country
% GDP for Healthcare (2008) 1
Life Expectancy at Birth (2010 est.) 2
Infant Mortality (Per 1000 Live Births) (2010 est.) 2
Canada
10.4
81.29 yrs
4.99 deaths
France
11.2
81.09 yrs
3.31 deaths
Germany
10.5
79.41 yrs
3.95 deaths
Switzerland
10.7
80.97 yrs
4.12 deaths
U.S.
16.0
78.24 yrs
6.14 deaths
1 Source: OECD Health Data – Frequently Requested Data , 2010
2 Source: CIA – The World Factbook. , 2010

12. Factors Contributing to Growth in Healthcare Spending Per Capita
Why Are Costs Rising?
Factors Contributing to Growth in Healthcare Spending Per Capita
Factor %
Aging of the Population 2
Changes in Third-Party Payment 10
Personal Income Growth
11–18
Prices in the Health Care Sector
11–22
Administrative Costs
3–10
Technology-Related Changes in Medical Practice
38–62
As pressure builds to rein in the unsustainable rise in US healthcare costs, new technology is coming under increasing scrutiny and government, payers, and the public are starting to ask the question:
********
Estimating share - R&D as proxy, vs residual
If asked about the fact that Cutler thinks it is money well spent, point out that he analyzed a few carefully chosen technologies. If he had analyzed cardiac cath for stable angina instead of cardiac cath for actual myocardial infarction, he would probably have gotten a different cost-benefit ratio.
Source: Smith, Heffler, and Freeland in CBO (2008)

13. EBTA versus EBM
EBM
Evidence-based clinical decision making combines the best available research evidence with clinical experience and patient values with the goal of improving quality of patient care.

14. EBTA versus EBM
EBTA
Evidence-based technology decision making considers the best available research evidence along with other factors (cost, local market, business plan) with the goal of improving the new technology acquisition process.

15. Systematic Use of the Best Available Evidence to:
What Is EBTA?
Systematic Use of the Best Available Evidence to:
Acquire the best available technology
Avoid acquiring ineffective or unsafe technology
With the Goals of:
Improving patient care
Better managing new technology costs
(slide) Simply put...
Key features are systematic – EBTA takes into account all the relevant evidence, not simply what is convenient or nearest to hand
And objective – EBTA makes decisions based on data that everyone can look at and use to draw conclusions, rather than on opinion or fashion

16. Levels of Evidence Higher Lower STRENGTH OF EVIDENCE
Large, multicenter RCTs
Meta-analysis of grouped data
Smaller, single-site RCTs
Prospective studies
Retrospective studies
Studies with historical controls
Case series or reports
Consensus/expert opinion
Not all reports or journal articles should carry the same weight. Large multicenter randomized controlled trials, if well done, are more reliable than a case series. At the same time, a poorly designed trial may give misleading results. For these reasons it is important not to rely on single study or a manufacturer’s website for important decisions
Several systems for grading evidence (ho)
Grades of Recommendations, Assessment Development and Evaluation (GRADE)
United States Preventive Services Task Force (USPSTF)

17. Trade Journals Say “It’s A Must Have”
Reality??
Sales Rep Says It’s the
Latest Greatest
Competing Hospital Has It
Costs Less
Docs Want It—Now
New Technology Acquisition
Trade Journals Say “It’s A Must Have”
Patients Saw It on TV and Want It
(Perceived Revenue Generator)

18. Elements of HTA Definition of the Question(s)
Systematic Literature Search
Critical Appraisal of the Evidence
Analysis of the Body of Evidence
Conclusions about Safety, Efficacy, Clinical Effectiveness

19. New Technology Example: 256-Slice CT
Emergency Department Imaging
Marketed as:
Significantly faster and better image quality
Improved imaging of obese patients, pediatric patients, trauma, and complex cardiac and neurologic cases

20. New Technology Example: 256-Slice CT
Emergency Department Imaging
Published evidence:
No studies directly comparing with 64-slice CT
No studies on emergency department imaging and patient outcomes
256-slice CT costs 2.5 to 3 million or more. 64-slice CT costs approx. 1.7 million
Is it worth the extra $1 million+?

21. Robotic Surgery
205,000 procedures performed with da Vinci System in 2009
Tripled since 2007 (80,000 procedures)
In 2007, 800 total systems in use in U.S.; by 2009, 1400 systems in use
Outside the U.S., 200 systems in 2007; 400 by 2009 21

22. Clinical Applications
Robotic prostatectomy
Robotic hysterectomy
Robotic cystectomy
Robotic coronary artery bypass
graft (CABG)
Robotic valve repair and replacement
Robotic nephrectomy
Robotic endovascular/vascular surgery
Pediatric surgery (Nissen fundoplication, pyeloplasty, patent ductus arteriosus closure)
Robotic thyroidectomy
Robotic colorectal surgery

23. Robotic Surgery Issues
Quality of evidence an issue—data from limited number of treatment centers, overlapping study populations, small studies, lack of long-term follow-up
Definitive evidence-based conclusions not possible due to lack of randomized comparative studies with laparoscopic equivalents
In some cases, less blood loss, fewer complications, more precision, overcome technical limitations of conventional surgery

24. HTA Reveals Other Implications
Longer operative times for certain procedures (e.g., artery harvesting)
Substantial training requirements for surgeons
High acquisition cost , > $1 million
Renovation of OR suite may be required
Longer preprocedure set-up times
Expensive accessories, annual maintenance, consumables

25. In the U.S., Changing Clinical Practice…
From 2005 to 2008, the number of hospital discharges for prostatectomy increased > 60%, despite decrease in incidence of prostate cancer.
Number of robotic prostatectomies increased substantially from 2005 to 2008.
Medicare data shows that patients diagnosed with prostate cancer in 2005 were more likely to undergo surgery by 2007 than patients diagnosed from 2001 to 2004.
Barbash and Glied, NEJM, August 2010

26. In the U.S., Changing Clinical Practice…
Robotic surgery may have caused shift from nonsurgical to surgical treatment, increased surgical case volumes, and costs of procedure.
Emerging evidence suggests that, despite short-term benefits, robotic surgery may not improve patient outcomes or quality of life over the long term.
One study reported, “Patients who underwent robotic prostatectomy were more likely to be regretful and dissatisfied, possibly because of higher expectation of an ‘innovative procedure.”
Barbash and Glied, NEJM, August 2010; Lowrance et al., Journal of Urology, April 2010; Schroek et al., European Urology, 2008

27. In the U.S., if evidence is insufficient and inconclusive, and costs are high, why are robotic surgery systems being acquired by so many hospitals?

28. It’s All in the Advertising. . .

29. Our Fascination with the Technology—
Many physicians and patients consider robotic surgery to be superior despite the lack of clinical evidence.
Our fascination with technology—robots!!
Page 1

30. Robotic Surgery Drivers
Despite current lack of strong clinical and cost rationale, patient demand and market competitiveness are driving adoption of this technology.

31. Value Analysis Example
Should we adopt a recently approved embolic protection device instead of currently used devices?
Literature search—PubMed, Medline, Embase)
Two nonrandomized studies, 25 patients, 34 patients
FDA approval via 510(k) process (substantial equivalence)
First study reports outcomes with new device are similar to other devices (not specified); second study reports similar debris capture to 3 other devices, but no final patient outcomes measured
Conclusion: Insufficient evidence to recommend replacing existing devices with new device.
the available studies do not provide sufficient evidence to accurately determine the efficacy and safety of the FiberNet device relative to other embolic protection devices. Therefore, hospitals and other providers should not consider adopting this technology except on a provisional basis with regular reviews of the clinical literature to determine whether new studies support its continued use.

32. Where Does EBTA Fit in Your Hospital?
Product
Users
Value
Analysis
Committee
Technology
Assessment
Committee
EBTA
HTA is a collaborative tool that could be used anywhere within a Value Analysis process and could assist the Value Analysis Teams (VATs) to determine if strong evidence exists within the literature to proceed with a financial and internal business analysis.
By using this evidence-based approach to build a case in support of, or to justify the reason that an entity should not move forward with a process change and/or purchase acquisition will only serve to strengthen AVHAP’s mission “…of evaluating healthcare services for clinical quality and cost effectiveness”.
Finance
Purchasing
New Technology
Committee

33. New Medical Technology Acquisition Physician Preference Items
EBTA Can Be Applied To:
Value Analysis
New Medical Technology Acquisition
Capital Purchases
Strategic Planning
Physician Preference Items
Whenever the impact of a technology or procedure can be predicted by clinical evidence.

34. Integrating Evidence Analysis
Add evidence review early in your technology evaluation process.
Apply health technology assessment methods depending on technology type.
Acknowledge when evidence is lacking and why.
Make better new technology and supply chain decisions!

35. Catholic Health
Medical Equipment Planning
The Reality

36. Total Cost of Ownership
Edward Lanthier, MBA, CBET
Catholic Health
Buffalo, NY

37. We are Buying new Equipment!
But what is it really going to cost us?
Equipment Costs go way beyond the quote the vendor gave you.

38. What we will consider Is this the right technology?
What is the Purchase price?
Are there Installation costs?
What are the Service costs?
Are there IT considerations?
Are there Consumables/Disposables?
Is it too much technology…or too little.

39. What we will consider? (con’t)
Reagent Rentals
What about Fee per Case?
Are there Disposal costs?
Will it be Utilized?
Sale of Assets

40. Is it the Right Technology?
The Evidence often can not support the Claims
“Billboard” items are often more motivated by Marketing than Clinical need.
Will you get reimbursement using this technology?

41. What is the Purchase Price?
Does anyone Pay List anymore?
To GPO or not to GPO?
Are there any promotional discounts?
Can I use a trade in for additional discounts?
Can I get better pricing using my GPO’s contracts?

42. Installation Costs
Get the Utility Requirements and Installation package ASAP?
Power, Water, Cooling, Drains, Medical Gases, UPS, Conditioned Power.
Construction Costs? Environmental concerns, Generic vs Specific, Rigging?

43. Service Costs (BIG Money in Service)
Are you Required to Sign a Point of Sale Service Agreement?
Are Service Manuals and Service Training Available? Why not Free? At what Cost?
Is the Service Software Available? If so at what cost?
Are Parts Proprietary?

44. Service Options
Manufacturer Point of Sale Agreements 10% to 20% of List Purchase price per year
Third Party Service Contracts % to 8% of Inventory Value (but what basis – List)
In-House
4% to 6% of Inventory Value (what basis – List)
Hybrids

45. Service Options Service Contracts – Beware the details
98% uptime – A very low bar
Coverage Hours
Power Quality
What exactly is “Abuse”
“Genuine Parts” or “Accepted Vendors”

46. IT Considerations
Does this need to be connected to the Network? Wired/Wireless Add?/Upgrade?
Software Licenses? VPN Access for Vendor?
Will it work with the EMR? Or does it need middleware?
Can you buy “Best in Class” Or will you need to buy “End to End Solution”

47. Consumables/Disposables
Disposable Contracts
Proprietary Technology
Limiting Technology
Lack of Substitutes

48. Fee per Case Option for fast changing costly technology MRI Trailers
Specialty Lasers
Common with Endoscopy

49. Reagent Rentals This is the mainstay of Lab Analyzers
Can include service
Based on Estimated workload

50. Disposal Costs Can’t just throw it away
PC’s, Computer Monitors, Electronics
X-Ray rooms – Lead, Oils, X-Ray tubes
Batteries
Mercury Thermometers, Syphmomanometers

51. Utilization Leading Edge vs Bleeding Edge
Tried and True vs End of Life
More than is needed Does a Community Hospital need a 64 slice CT?
May work perfectly – But no longer useful Single slice CT

52. Sale of Assets Can the Retired Equipment be Sold? Harvested for Parts?
Donated for Mission?
Sold to Recyclers for Scrap Value?

53. Independent Information
ECRI Institute – Membership
MD Buyline – Subscription
Hayes, Inc
TriMedx Consulting

54. Thank you Future Questions: carol.sysak@trimedx.com