By Rick Ferreira
What would happen if you asked your auto dealership to manage the routine servicing of your car, no questions asked? Number one, your car would always run great. Number two, this would most likely involve spending thousands of dollars more than necessary paying for the newest technologies and gadgets, — which don’t really make your car run better than the less expensive ones.. And, the parts used are all the same brand… What if you let Martha Stewart run your kitchen? Or had Converse manage all your shoe needs? You would eat well and be fashionable, but at the price of a massively inflated budget and a brand stickiness that is unlikely to make your food more nutritious or your footwear more functional.
Yet, this is how hospitals currently manage their medical technology utilization. The current medical technology delivery system is outdated at best, characterized by market imperfection and inflated prices. Systemic change is overdue; the urgency strengthened by healthcare reform, which essentially asks hospitals to do more with fewer resources.
This is how it looks from the hospital’s perspective: Reimbursement is falling, more patients are entering the system, and the Centers for Medicare and Medicaid Services (CMS) is calling for transparency and accountability throughout the episode of care. At the same time, medtech manufacturer reps are freely roaming the halls of the hospital and dictating device utilization to the surgeon. As a result, the hospital not only overpays for devices and accessories, it also is unable to control the surgical episode from a financial, quality and efficiency perspective.
It is reasonable to suggest that the high prices of implants and other technologies are due to the very high salaries of manufacturers’ reps (many earn far more than the surgeons). Typically, medtech manufacturers spend up to 40 percent of their revenue compensating their sales reps. That’s (theoretically) 40 percent that the hospital could ask be deducted from the price if they accepted “no-service pricing” – pricing without the sales rep in the hospital.
This is why reducing the influence of the manufacturer’s rep is a necessary goal for hospitals today. Sustaining the current system will make it much more difficult for hospitals to make it through healthcare reform. Mind you, simply asking the rep to leave the building is not enough, and will not work. Instead, going rep-less is a step-by-step journey to ultimately optimize the surgical episode from a resource and quality perspective. To achieve this, clinical and operational initiatives must be combined:
Step One: Readiness assessment
Every hospital is different, so embarking on the rep-less journey first requires an assessment of its level of readiness in terms of reduced sales rep influence. This involves analyzing operating room (OR) routines, sales rep roles, surgical staff education and skill levels and more. The readiness assessment is necessary to understand what needs to be done to prepare for minimized sales rep involvement.
Step Two: Process Transformation
OR processes and routines are rarely optimized in terms of timeliness, resource utilization and flow, and the absence of the sales rep means that routines need to change. Surgery times, throughput, costs and outcome quality can typically be improved significantly through careful mapping and transformation of processes.
Step Three: Intra-operative, clinical support
Process change is a wholesale service, and it does not work in and of itself. Somebody needs to replace the sales rep’s level of clinical knowledge. Utilizing highly qualified surgical first assistants not only bridges the knowledge gap, it also places a resource in the OR that can record and manage OR efficiency – essentially monitoring and managing the efficiency level of the OR.
Step Four: Optimizing supply chain
It is a common misunderstanding that fixing the implant prices will optimize the surgical episode from a cost perspective. There is more to it, as indicated above. However, implant/medtech contracting and supply chain optimization remains a very important step in the rep-less journey. This is where transparency and consistency can be integrated into the resource consumption pattern.
Step Five: Realizing the advantages of a rep-less OR
The end goal of the rep-less journey is to cut spend on medical devices in an optimized surgical environment. With the first four steps completed, what remains is to access less expensive, but comparable technology. Some of the legacy medtech manufacturers have introduced so-called “no-service” solutions. However, more importantly, value-based medtech (read: generic) manufacturers have emerged as a lower-cost-parity-quality alternative in key implant/technology areas like orthopedics and spine.
Going rep-less is an important strategy in healthcare today, and it is necessary to address this market imperfection for hospitals to successfully navigate healthcare reform. However, easy shortcuts are not recommended. Minimizing the role of the sales rep requires clinical, operational and resource optimization before these benefits can be realized.