Procurement Start-up is Just One More Sign of Pressure to Come on Med Tech Pricing and Value

August 8, 2012 — Leave a comment

It’s not as if Med Tech companies need another sign that the future will bring many challenges.  After all, there has been a growing trend of payers and providers becoming more savvy evaluators and buyers of medical technologies over the past decade.  The more sophisticated buying is showing up in comparative effectiveness evaluations, aligning incentives with physicians, cost-effectiveness studies, and value analysis committees at providers.  Healthcare reform in the USA, with Accountable Care Organizations (ACOs), will likely accelerate this trend.

In yet another sign,  Procured Health, a healthcare start-up that aims to help hospitals better discover, evaluate, and adopt quality medical devices, announced it has raised seed funding.  It’s estimated that hospitals spend $125B on medical supplies every year.  With tens of thousands of supply items to purchase, it must be an overwhelming challenge for hospitals to make well-informed decisions on all of these purchases.  Procured Health would like to help hospitals discover comparable and more affordable products to help reduce hospital expenses.

All of these signs point to the need for medical technology companies to reassess their product development and commercialization strategy.  While there will always be room for new, innovative technologies that provide meaningful improvements in patient outcomes, there is also a big need to consider new solutions that bring “good enough” outcomes at substantially lower costs.

Procured Health is another sign of the growing transparency on value and prices for medical technologies.  Ultimately, greater transparency should help payers and providers make more informed decisions.  Just think about how the internet and transparency has helped you as a consumer.  Whether it is in deciding which movie to see or what car to purchase, transparency has helped consumers make more informed choices.  The same should apply for medical technologies.  For unprepared medical technology companies, more transparency could be a big threat.

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