Medical Equipment Planning

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

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).










\


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

Healthcare Reform Impact


CHANGE


IMPROVE QUALITY


REDUCE COSTS



Handout provided: Healthcare Reform and The Supply Chain

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
-


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

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

Copyright ©
2011
Winifred S. Hayes, Inc.

Does This Happen In

Your Hospital?

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

Copyright ©
2011
Winifred S. Hayes, Inc.

0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Total health spending
($trillion)
Projected U.S. Healthcare Costs

Rising Costs

11

Copyright ©
2011
Winifred S. Hayes, Inc.

Are
We Getting Our
M
oney’s
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

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

Americans spend more of their economy for healthcare
than any other developed country.

1
Source: OECD Health Data
–

Frequently Requested Data , 2010

2
Source: CIA
–

The World Factbook. , 2010

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Copyright ©
2011
Winifred S. Hayes, Inc.

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

Source: Smith, Heffler, and Freeland in CBO (2008)

Why Are Costs Rising?

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

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

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

Copyright ©
2011
Winifred S. Hayes, Inc.

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


Levels of Evidence

17

Copyright ©
2011
Winifred S. Hayes, Inc.

Reality??

Costs Less

Docs Want It
—
Now


Competing Hospital Has It

Sales Rep Says It’s the

Latest Greatest

Patients Saw It on TV and Want It

(Perceived Revenue Generator)


New Technology Acquisition

Trade Journals Say “It’s A
Must Have”

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

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

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

Copyright ©
2011
Winifred S. Hayes, Inc.

Robotic Surgery

21

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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

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

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

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 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

In the U.S., Changing Clinical
Practice…

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

Copyright ©
2011
Winifred S. Hayes, Inc.

In the U.S., if
e
vidence is
insufficient and
inconclusive
,
and costs are
high, why
a
re
r
obotic
s
urgery
s
ystems
b
eing
a
cquired
b
y
s
o
m
any
h
ospitals
?

It’s All in the Advertising. . .

28

Our Fascination with the
Technology
—



Many
physicians and patients consider robotic
surgery to be superior despite the lack of clinical
evidence.













29

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

Copyright ©
2011
Winifred S. Hayes, Inc.

Value Analysis Example


•
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.

Should we adopt a recently approved
embolic protection device instead of
currently used devices?

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

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

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.


Catholic Health


Medical Equipment Planning


The
Reality

Total Cost of Ownership

Edward
Lanthier
, MBA, CBET

Catholic Health

Buffalo, NY

We are Buying new Equipment!


But what is it really going to cost us?

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?

What we will consider?
(
con’t
)


Reagent Rentals


What about Fee per Case?


Are there Disposal costs?


Will it be Utilized?


Sale of Assets


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?

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?


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?

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?

Service Options


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)


In
-
House









4% to 6% of Inventory Value (what basis
–

List)


Hybrids

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”

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”

Consumables/Disposables


Disposable Contracts


Proprietary Technology


Limiting Technology


Lack of Substitutes




Fee per Case


Option for fast changing costly
technology


MRI Trailers


Specialty Lasers


Common with Endoscopy


Reagent Rentals


This is the mainstay of Lab Analyzers


Can include service


Based on Estimated workload

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

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

Sale of Assets


Can the Retired Equipment be Sold?


Harvested for Parts?


Donated for Mission?


Sold to Recyclers for Scrap Value?

Independent Information


ECRI Institute
–

Membership


MD
Buyline

–

Subscription


Hayes, Inc


TriMedx Consulting


Thank you

Future

Questions:
carol.sysak@trimedx.com


jvanpelt@hayesinc.com


elanthier@chsbuffalo.org