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A Collaborative Effort Hayes, Inc. TriMedx Catholic Health

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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. ************************** 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:

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