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Value Analysis Committees, EU’s MDR to be Highlighted in OMTEC Surgeon Keynote

Posted in Health Reform Watch | Apr 2017 | Comments (0)

Tags: Editor's Choiceorthopaedic implantorthopaedic implant costsclinical challengesomtecinnovationconsolidation

Increased regulatory scrutiny and payor power continue to affect healthcare globally, leading companies to create cross-department teams and seek collaboration amongst customers within the supply chain in order to remain innovative and competitive. The change that this shift brings about is certainly more complex than can be contained in one sentence! In seeking expert voices to better understand the cause of this swing and what it means for you, we’ve tapped John Pracyk, M.D., Ph.D., to provide the OMTEC 2017 Keynote.

We were first introduced to Dr. Pracyk in 2013. At the time he was a neurosurgeon, institute medical director, strategic healthcare consultant and one of our authors. Now, he is Franchise Medical Director for DePuy Synthes Spine, providing clinical insight to colleagues across R&D, marketing, clinical affairs, regulatory affairs and business development. His career path is indicative of the orthopaedic industry’s path in recent years. And his perspective is unique as he helps us understand the trends upon which orthopaedic companies must capitalize to ensure company and customer value.

Two themes that Dr. Pracyk will highlight in June relate to innovation: the advancement of integrated delivery networks and value analysis teams, and the stringency of the European Union’s regulations. We’ve written repeatedly about these topics since nearly the beginning of the decade. They’ll continue to be important drivers beyond 2020.

We call out value analysis teams in particular because the premise of these committees is a good reminder that, while price pressure is felt throughout the supply chain, there are myriad ways to react. In 2014, Dr. Pracyk wrote about value analysis teams:

    


“The fundamental objective is to drive quality by reducing variation. This is a manufacturing definition of quality, now being applied to healthcare. It’s typically accomplished through two methods:

     •  Develop a capitated price structure to determine what the hospital will pay for each implant. 

     •  Then, if needed, reduce the number of products available through manufacturer consolidation.


It’s not all one-sided, as manufacturers can benefit substantially from this situation. If they can deliver exceptional patient outcomes and service at a competitive price, they will capture the lion’s share of business. Some manufacturers may opt out altogether if they are not guaranteed a certain percentage beforehand. Others are more open-minded and will voluntarily participate, in hopes the hospital will use their product preferentially.” 


And we call out the European Union because last week, Parliament adopted the proposed Medical Device Regulation (MDR)—the final hurdle for the regulations. MDR is expected to be published in the Official Journal of the European Union in May and take effect three years from that date. Much has been discussed about the stricter requirements, specifically around spine device classification and clinical evidence collection. In our conversations with Dr. Pracyk, he has said that MDR may be the driver that switches implant innovation from the EU back to the U.S., as companies seek faster regulatory pathways and fewer burdens to market entry.

Dr. Pracyk will cover a handful of trends impacting device innovation and, ultimately, company sales. Orthopaedics is being hit by a convergence of several headwinds. Like us, Dr. Pracyk believes there to be no shortage of opportunities to capitalize on these trends and continue to meaningfully innovate.

 

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