Hospital purchasing has changed since the ObamaCare health reform in addition to current economic constraints due to the COVID-19 pandemic. An American Hospital Association report estimates the four-month impact on the US health system is a $202.6 billion loss, an average cost of $50.7 billion per month.[1] Hospitals are charged to decrease costs across the board, including the cost of supplies and such requirements will expedite the transition to evidence and value analysis-based purchasing for technology selection.
Medical facilities face increasing pressures in formulary selection as healthcare leadership works diligently to control costs. Administrators face pressure to reduce treatment costs and avoid retreatments, or move treatment to less costly locations for episodes of care such as the clinic or home. Where once the market only required a technology that addressed a significant unmet need with a safe and effective solution along with regulatory approval, the added requirement of substantiated evidence of how the technology will lower costs and improve outcomes is now critical. The good news is that hospitals continue to acquire innovation that cost effectively addresses unmet needs and improves patient care; the requirements are for emerging tech innovators to prepare for the hurdles in the final mile for product acceptance.
What is Value Analysis?
Value Analysis is a formal evaluation process made individually by each medical facility to evaluate their product purchasing and manage costs by streamlining product availability. To review their current product offerings and newly available technologies alike, medical institutions have implemented Value Analysis Committees (VAC) comprised of physicians, nurses, purchasing agents, supply chain management, hospital administrators, and more. The teams are tasked with approving technology offerings through a comparative evaluation process, considering safety, efficacy, cost, outcomes and other delimiters.
Why do I need to know?
While it was once sufficient to direct a marking strategy towards clinician leaders, health systems now weigh less the influence of a physician champion recommendation and rely more on clinical outcomes and health economic data. This is the winning strategy; a strategy preparing for the changing purchasing review process becomes, not just beneficial, but essential early in the development process. Health technology value analysis teams now require increased evidence of improved outcomes with reduced budgetary impact. New innovation adoption will likely be expedited for technology demonstrating the highest value, as determined by improved outcomes and reduced total cost of care. It is necessary to understand the structure of Value Analysis Committees, what are their requirements and how to best address them.
How can I be prepared?
Here at Strategy Inc. we can help you to identify the appropriate Value Analysis materials specific to your technology and target clinical area to support the VAC review and expedite formulary acceptance of your products. We consider the hurdles presented by the value analysis review process and build them into market strategies by performing a robust competitive positioning analysis, outlining the specific documentation that will be required by clinical area or specific technology, and discuss the required components for a successful launch. Having the appropriate Value Analysis tools and strategy in place are key to expediting the sale of new products in the United States.
For more information about how a Value Analysis Strategy can help you visit our website strategyinc.net or contact us directly: info@strategyinc.net
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[1] Hospitals and Health Systems Face Unprecedented Financial Pressures Due to COVID-19. American Hospital Association, May 2020. https://www.aha.org/guidesreports/2020-05-05-hospitals-and-health-systems-face-unprecedented-financial-pressures-due