There’s a term in healthcare — hospitals, in particular — for a situation that should never, ever under any circumstances occur. It’s known as the “never event.”
And if it sounds a bit ominous to you, it absolutely should.
That’s because “never events” are seriously problematic for everyone involved—patient, physician and healthcare facility. Specifically, we’re talking about situations in which a recent patient needs to be readmitted to the hospital within 30 days of a surgery due to unexpected complications.
For the patient, it’s an obvious quality-of-life issue. I mean, seriously, the last thing a patient wants to do is delay the return to optimal health. Meanwhile, physicians thrive on knowing they “got things right” the first time and are understandably frustrated when the scenario plays out differently. And for hospitals, it’s problematic for a variety of reasons—the least of which is a lack of reimbursement. That’s why hospitals are doing everything in their power to avoid these “never events.”
Ironically, these efforts have created a spinoff “never event” for those who may be holding the next great MedTech innovation but are swimming upstream in their efforts to showcase it.
In the past, healthcare companies enjoyed relatively easy and open access to hospitals—specifically surgeons, critical care nurses, and pharmacists. Sales professionals were able to present the need in a particular unit of the hospital for their innovation and demonstrate how its use would improve patient outcomes—and achieve greater cost efficiencies without negatively impacting physician workflow. Said innovation would go a long way toward preventing complications and eliminating “never events” involving patients.
Ah, the not-so-long-ago, good ol’ days…
In today’s healthcare environment, you’re more likely to stroll into Fort Knox than to gain easy access to key influencers, decision-makers, and potential beneficiaries of your great new innovation. Frustrating, yes. Maddening, absolutely. But that’s the reality.
But, there’s encouraging news.
There is another way for companies—particularly healthcare start-ups or small-to-medium-sized companies—to effectively launch their product. The key is to prioritize three important data-related investments right from the get-go so when the time comes for your representative to “meet the keeper of the gate”—more commonly known as the Value Analysis Team—they’ll be 100% prepared to give it their best shot.
Before we address those three things specifically, let’s take a look at Value Analysis Committees [VAC] and how they work.
The “why” behind value analysis committees
As healthcare reimbursement has migrated to new and different payment formulations, hospital profit margins have been squeezed tighter than a Florida grapefruit. Most people would be shocked to learn that hospitals, on a good day, post a profit margin as low as 3%.
First and foremost, these facilities and their teams are focused on providing high-quality care and value for their patients, but they’re also businesses, and matters such as supply-and-demand, cost efficiencies, workflow, product satisfaction, and bottom-line profit matter to them as much as the owner of the clothing boutique on the corner.
For obvious reasons, avoiding the aforementioned [and costly] “never events” of post-surgical infection, device malfunction and others, has always been a priority and is particularly so in today’s financially precarious environment. To survive in these times, hospital systems have taken a comprehensive supply chain approach to product adoption coupled with clinical standardization.
VACs facilitate this process of discovery, assessment, negotiation and approval. There’s your “why.”
Why healthcare companies should care
It is clear the value analysis process not only enhances the likelihood of improved patient outcomes but also allows for greater efficiencies for all involved. However, there exists a disconnect between innovative healthcare companies struggling to bring their product to market and the market itself [specifically, the hospital].
I cannot overstate the importance of seeking to understand Value Analysis [VA] and its importance. When you understand VA, you understand the needs, desires, and priorities of the buyer—which, in turn, empowers you to put together your own plan to position your product as the ultimate solution to that hospital’s need state.
Simply put, Value Analysis is the process that hospital systems use to analyze sets of data and information to thoughtfully assess the relative value of a particular item or service being offered. Seems simple enough. So, what is the problem?
Unfortunately, small companies often, understandably, focus solely on producing evidence for Food & Drug Administration approval of their product—which is a critically important priority in the linear journey to market. But in the process, they often go light, or not at all, on producing data that will ultimately gain them entrée to the marketplace. While their device can boast FDA approval, if it never leaves the shelf, it never generates a profit or benefits a patient, physician, or hospital.
What’s a company to do? Glad you asked…
What hospitals need
If you’re wondering what hospitals—and specifically their VACs—need from these healthcare hopefuls, I can give it to you in three words: Data, Data, Data.
Yes, having the requisite safety, clinical, and efficacy data required by FDA is very important, but companies need to invest concurrently in producing the sort of data that hospital systems care about. While FDA focuses on product performance and safety, hospitals take matters a step further and focus on supply chain reliability, product value, impact on physician workflow, and ultimately, improved outcomes and better margins.
It’s fair and understandable for hospitals to expect you to clearly understand your clinical value to them, what your economics are, and the total cost of care. If you can’t do this, you’re spitting into the wind.
Here are the three buckets of data that hospitals and VACs need:
- Data: Patient population Patient population data is evidence that includes a multitude of variables: Ethnicity, age, environment, and gender [to name a few]. Hospitals want specific evidence that pertains to all segments of their current patient population.
- Data: patient Outcome What is the realistic outcome expected for the patient? How does the product impact workflow systems? Does it create additional steps for clinical teams or will it save them time? Is there a learning curve? Give them data that supports each of your product claims.
- Data: Financial outcome Data needs to be provided around hard cost as well as the projected financial outcomes. Essentially, is the investment worth it? In the world of acronyms, ROI means a lot to VACs.
The data challenge
The biggest hurdles for healthcare start-ups and small companies to clear are always time, money, and resources. With pre-seed funding drying up in today’s volatile economic times, it’s especially true.
Additionally, Value Analysis is not a standardized process across the industry. Some say, “If you’ve presented to one Value Analysis Committee, you’ve presented to one Value Analysis Committee.” They’re all unique in their approaches and expectations, and the seller must be attuned to that reality because a one-size-fits-all is a fast pass to “Thanks, but no thanks.”
So how do companies even know they’re investing in mining the right data? Sadly, many don’t. Hence the need to clearly understand the mindset and specific priorities and needs of the buyer, as mentioned earlier.
Those that try to preserve resources by waiting until after FDA approval will lose even more time and money and potentially their competitive edge. Companies must work simultaneously to gather data that passes FDA muster, as well as data that will enhance their chances of product adoption and commercialization. Get in the minds of people at FDA and the specific hospital you’re targeting. Only then will you know whether you’re gathering and presenting the right data.
Smart companies preemptively make the case to their investors around the need to fund a parallel track of evidence: One for FDA and one for the market, with both being developed from the start. They find a lead investor who can help the company meet reasonable benchmarks to bring in more investment, and they know that doing this well not only sustains them but ultimately lead to adoption and improved patient outcomes. Choosing an alternate course means your future is full of roadblocks, poor preparation, and having your innovation stymied.
Companies who do all the right things along the path to FDA approval while simultaneously doing all the right things for hospital/VAC approval are the companies that help hospitals avoid “never events.” Taking the right approach to funding, product development, data gathering, understanding the specific expectations of each individual VAC, and putting your best foot forward when you showcase your innovation should be an “always event.”
Photo: atibodyphoto, Getty Images