Medical Equipment Planning
AHRMM SEPAC, November 15, 2011
Presentation Objective -Provide a HighLevel Overview of Medical Equipment
Planning
A Collaborative Effort
Hayes, Inc.
TriMedx
Catholic Health
Panel Company Overview - Objective!
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Hayes, Inc.
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TriMedx
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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, 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
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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).
Medical Equipment Planning
Scope of the Buy
Strategy
Business Drivers
Clinical Outcomes
Performance
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
Equipment Warranty
Software
Training
Healthcare Reform Impact
 CHANGE
 IMPROVE QUALITY
 REDUCE COSTS
Handout provided: Healthcare Reform and The Supply Chain
Comprehensive Lifecycle Management Business Model
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Capital Equipment
and Technology
Planning
Alignment with strategic plans
Evidenced Based Clinical Outcomes
Evidenced-Based Equipment
Performance Data
End of Life
Management
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Current State/Gap Analysis
Efficient capital planning
Replacement scheduling
Selection and
Procurement
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Tracking and management
Metrics
Optimizing asset utilization
Technology redeployment
Management and
Support
Implementation
Limit the Scope of the Buy
All-inclusive ROI
Competitive capital sourcing
process
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 - $8,502,505
Handout: Understanding Total Cost of Ownership
in Capital Equipment Planning
AHRMM SEPAC,
November 15, 2011
Evidence-Based Medical
Technology Planning
Jennifer E. Van Pelt
Senior Research Analyst
Senior Hospital Consultant
Hayes, Inc.
Copyright © 2011 Winifred S. Hayes, Inc.
Does This Happen In
Your Hospital?
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Copyright © 2011 Winifred S. Hayes, Inc.
In the “healthcare crisis” and “healthcare
reform” debates, two themes that underlie
every other issue appear to be…
QUALITY
COST
Is an expensive new medical technology
worth the cost?
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Copyright © 2011 Winifred S. Hayes, Inc.
Rising Costs
Projected U.S. Healthcare Costs
5.0
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
Total health spending
($trillion)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
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Copyright © 2011 Winifred S. Hayes, Inc.
Are We Getting Our Money’s
Worth?
Americans spend more of their economy for healthcare
than any other developed country.
Healthcare Statistics
Canada
% GDP for
Healthcare
(2008) 1
10.4
Life Expectancy
at Birth (2010
est.) 2
81.29 yrs
Infant Mortality (Per
1000 Live Births) (2010
est.) 2
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
Country
OECD Health Data – Frequently Requested Data , 2010
2 Source: CIA – The World Factbook. , 2010
1 Source:
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Copyright © 2011 Winifred S. Hayes, Inc.
Why Are Costs Rising?
Factors Contributing to Growth in Healthcare Spending Per Capita
Factor
Aging of the Population
2
Changes in Third-Party Payment
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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
Source: Smith, Heffler, and Freeland in CBO (2008)
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%
Copyright © 2011 Winifred S. Hayes, Inc.
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.
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Copyright © 2011 Winifred S. Hayes, Inc.
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.
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Copyright © 2011 Winifred S. Hayes, Inc.
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
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Copyright © 2011 Winifred S. Hayes, Inc.
Levels of Evidence
Higher
STRENGTH OF
EVIDENCE
Lower
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
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Copyright © 2011 Winifred S. Hayes, Inc.
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”
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Patients Saw It on TV and Want It
(Perceived Revenue Generator)
Copyright © 2011 Winifred S. Hayes, Inc.
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
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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
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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+?
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Copyright © 2011 Winifred S. Hayes, Inc.
Robotic Surgery
2121
Copyright © 2011 Winifred S. Hayes, Inc.
Clinical Applications
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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
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Copyright © 2011 Winifred S. Hayes, Inc.
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
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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
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Copyright © 2011 Winifred S. Hayes, Inc.
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
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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
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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?
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Copyright © 2011 Winifred S. Hayes, Inc.
It’s All in the Advertising. . .
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Our Fascination with the
Technology—
Many physicians and patients consider robotic
surgery to be superior despite the lack of clinical
evidence.
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Robotic Surgery Drivers
Despite current lack of strong clinical and cost rationale,
patient demand and market competitiveness are
driving adoption of this technology.
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Copyright © 2011 Winifred S. Hayes, Inc.
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.
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Copyright © 2011 Winifred S. Hayes, Inc.
Where Does EBTA Fit in
Your Hospital?
Product
Users
Value
Analysis
Committee
Technology
Assessment
Committee
EBTA
Finance
Purchasing
New Technology
Committee
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Copyright © 2011 Winifred S. Hayes, Inc.
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.
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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.
Acknowledge when evidence is lacking and why.
Make better new technology and supply chain
decisions!
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Copyright © 2011 Winifred S. Hayes, Inc.
Catholic Health
Medical Equipment Planning
The Reality
Total Cost of Ownership
Edward Lanthier, MBA, CBET
Catholic Health
Buffalo, NY
We are Buying new Equipment!
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But what is it really going to cost us?
What we will consider
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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?
What we will consider?
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Reagent Rentals
What about Fee per Case?
Are there Disposal costs?
Will it be Utilized?
Sale of Assets
(con’t)
Is it the Right Technology?
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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?
What is the Purchase Price?
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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?
Installation Costs
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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?
Service Costs
(BIG Money in Service)
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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?
Service Options
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Manufacturer Point of Sale Agreements
10% to 20% of List Purchase price per year
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Third Party Service Contracts
6% to 8% of Inventory Value (but what basis – List)
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In-House
4% to 6% of Inventory Value (what basis – List)
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Hybrids
Service Options
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Service Contracts – Beware the details
98% uptime – A very low bar
Coverage Hours
Power Quality
What exactly is “Abuse”
“Genuine Parts” or “Accepted Vendors”
IT Considerations
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Does this need to be connected to the
Network? Wired/Wireless Add?/Upgrade?
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Software Licenses? VPN Access for Vendor?
Will it work with the EMR? Or does it need middleware?
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Can you buy “Best in Class”
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Or will you need to buy “End to End Solution”
Consumables/Disposables
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Disposable Contracts
Proprietary Technology
Limiting Technology
Lack of Substitutes
Fee per Case
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Option for fast changing costly
technology
MRI Trailers
Specialty Lasers
Common with Endoscopy
Reagent Rentals
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This is the mainstay of Lab Analyzers
Can include service
Based on Estimated workload
Disposal Costs
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Can’t just throw it away
PC’s, Computer Monitors, Electronics
X-Ray rooms – Lead, Oils, X-Ray tubes
Batteries
Mercury Thermometers,
Syphmomanometers
Utilization
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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?
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May work perfectly – But no longer useful
Single slice CT
Sale of Assets
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Can the Retired Equipment be Sold?
Harvested for Parts?
Donated for Mission?
Sold to Recyclers for Scrap Value?
Independent Information
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ECRI Institute – Membership
MD Buyline – Subscription
Hayes, Inc
TriMedx Consulting
Thank you
Future Questions: carol.sysak@trimedx.com
jvanpelt@hayesinc.com
elanthier@chsbuffalo.org