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Medical Equipment Planning AHRMM SEPAC, November 15, 2011 Presentation Objective -Provide a High- Level Overview of Medical Equipment Planning A Collaborative.

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Presentation on theme: "Medical Equipment Planning AHRMM SEPAC, November 15, 2011 Presentation Objective -Provide a High- Level Overview of Medical Equipment Planning A Collaborative."— Presentation transcript:

1 Medical Equipment Planning AHRMM SEPAC, November 15, 2011 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 Acquisition Strategy Business Drivers Clinical Outcomes Performance 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 Scope of the Buy Equipment Warranty Software Training Medical Equipment Planning

4 Healthcare Reform Impact CHANGE IMPROVE QUALITY REDUCE COSTS Handout provided: Healthcare Reform and The Supply Chain

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

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

8 8 Copyright © 2011 Winifred S. Hayes, Inc. Does This Happen In Your Hospital?

9 9 Copyright © 2011 Winifred S. Hayes, Inc. 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 10 Copyright © 2011 Winifred S. Hayes, Inc. Projected U.S. Healthcare Costs Rising Costs

11 11 Copyright © 2011 Winifred S. Hayes, Inc. Are We Getting Our Moneys Worth? 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 yrs4.99 deaths France yrs3.31 deaths Germany yrs3.95 deaths Switzerland yrs4.12 deaths U.S yrs6.14 deaths Americans spend more of their economy for healthcare than any other developed country. 1 Source: OECD Health Data – Frequently Requested Data, Source: CIA – The World Factbook., 2010

12 12 Copyright © 2011 Winifred S. Hayes, Inc. Factors Contributing to Growth in Healthcare Spending Per Capita Factor% Aging of the Population2 Changes in Third-Party Payment10 Personal Income Growth11–18 Prices in the Health Care Sector11–22 Administrative Costs3–10 Technology-Related Changes in Medical Practice38–62 Source: Smith, Heffler, and Freeland in CBO (2008) Why Are Costs Rising?

13 13 Copyright © 2011 Winifred S. Hayes, Inc. 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. EBTA versus EBM EBM

14 14 Copyright © 2011 Winifred S. Hayes, Inc. 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. EBTA versus EBM EBTA

15 15 Copyright © 2011 Winifred S. Hayes, Inc. 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 What Is EBTA?

16 16 Copyright © 2011 Winifred S. Hayes, Inc. HigherLower 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 Levels of Evidence

17 17 Copyright © 2011 Winifred S. Hayes, Inc. Reality?? Costs LessDocs Want ItNow Competing Hospital Has It Sales Rep Says Its the Latest Greatest Patients Saw It on TV and Want It (Perceived Revenue Generator) New Technology Acquisition Trade Journals Say Its A Must Have

18 18 Copyright © 2011 Winifred S. Hayes, Inc. 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 Elements of HTA

19 19 Copyright © 2011 Winifred S. Hayes, Inc. 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 20 Copyright © 2011 Winifred S. Hayes, Inc. 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 Is it worth the extra $1 million+?

21 21 Copyright © 2011 Winifred S. Hayes, Inc. Robotic Surgery 21

22 22 Copyright © 2011 Winifred S. Hayes, Inc. 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 23 Copyright © 2011 Winifred S. Hayes, Inc. Robotic Surgery Issues Quality of evidence an issuedata 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 24 Copyright © 2011 Winifred S. Hayes, Inc. 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 25 Copyright © 2011 Winifred S. Hayes, Inc. 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 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 Barbash and Glied, NEJM, August 2010 In the U.S., Changing Clinical Practice…

26 26 Copyright © 2011 Winifred S. Hayes, Inc. 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 27 Copyright © 2011 Winifred S. Hayes, Inc. 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 Its All in the Advertising... 28

29 Our Fascination with the Technology Many physicians and patients consider robotic surgery to be superior despite the lack of clinical evidence. 29

30 30 Copyright © 2011 Winifred S. Hayes, Inc. Robotic Surgery Drivers Despite current lack of strong clinical and cost rationale, patient demand and market competitiveness are driving adoption of this technology.

31 31 Copyright © 2011 Winifred S. Hayes, Inc. Value Analysis Example Literature searchPubMed, 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. Should we adopt a recently approved embolic protection device instead of currently used devices?

32 32 Copyright © 2011 Winifred S. Hayes, Inc. Product Users Finance EBTA Purchasing Where Does EBTA Fit in Your Hospital? Value Analysis Committee Technology Assessment Committee New Technology Committee

33 33 Copyright © 2011 Winifred S. Hayes, Inc. 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. EBTA Can Be Applied To:

34 34 Copyright © 2011 Winifred S. Hayes, Inc. Integrating Evidence Analysis Add evidence review early in your technology evaluation process. Apply health technology assessment methods depending on technology type. Make better new technology and supply chain decisions! Acknowledge when evidence is lacking and why.

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? But what is it really going to cost us?

38 What we will consider Is this the right technology? Is this the right technology? What is the Purchase price? What is the Purchase price? Are there Installation costs? Are there Installation costs? What are the Service costs? What are the Service costs? Are there IT considerations? Are there IT considerations? Are there Consumables/Disposables? Are there Consumables/Disposables?

39 What we will consider? (cont) Reagent Rentals Reagent Rentals What about Fee per Case? What about Fee per Case? Are there Disposal costs? Are there Disposal costs? Will it be Utilized? Will it be Utilized? Sale of Assets Sale of Assets

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

41 What is the Purchase Price? Does anyone Pay List anymore? Does anyone Pay List anymore? To GPO or not to GPO? To GPO or not to GPO? Are there any promotional discounts? Are there any promotional discounts? Can I use a trade in for additional discounts? Can I use a trade in for additional discounts?

42 Installation Costs Get the Utility Requirements and Installation package ASAP? Get the Utility Requirements and Installation package ASAP? Power, Water, Cooling, Drains, Medical Gases, UPS, Conditioned Power. Power, Water, Cooling, Drains, Medical Gases, UPS, Conditioned Power. Construction Costs? Environmental concerns, Generic vs Specific, Rigging? 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 you Required to Sign a Point of Sale Service Agreement? Are Service Manuals and Service Training Available? Why not Free? At what Cost? Are Service Manuals and Service Training Available? Why not Free? At what Cost? Is the Service Software Available? If so at what cost? Is the Service Software Available? If so at what cost? Are Parts Proprietary? Are Parts Proprietary?

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

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

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

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

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

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

50 Disposal Costs Cant just throw it away Cant just throw it away PCs, Computer Monitors, Electronics PCs, Computer Monitors, Electronics X-Ray rooms – Lead, Oils, X-Ray tubes X-Ray rooms – Lead, Oils, X-Ray tubes Batteries Batteries Mercury Thermometers, Syphmomanometers Mercury Thermometers, Syphmomanometers

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

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

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

54 Thank you Future Questions:


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