What to know:

Healthcare has become increasingly consolidated in the U.S. as more and more large hospital systems emerge. Such consolidation has the potential to stifle competition among providers. In the summer of 2018, the Centers for Medicare and Medicaid Services (CMS) proposed a sweeping change to its reimbursement model that could help boost competition by driving business away from hospitals toward smaller healthcare facilities that provide similar services, such as office visits and outpatient surgeries.

Rather than allowing hospitals to charge higher prices than out-of-hospital settings for the same service, CMS has proposed lowering reimbursement for hospital outpatient department services to match rates set by the physician fee schedule for clinic visits. CMS is also proposing a longer list of procedures that are covered if they’re performed at ambulatory surgery centers.

Because patients’ co-payments will be lower at less-costly out-of-hospital settings, these two proposals could dramatically increase business at ambulatory surgery centers and other outpatient clinics.

If these proposals pass, they will significantly open nontraditional markets for medtech companies in 2019. Because marketing efforts for many companies are currently focused mostly or solely on hospitals, marketing strategies will need to change to appeal to the nonhospital market as well.

What to do:

  • Consider how to market products differently to out-of-hospital settings. Outpatient clinics and ambulatory surgery centers tend to pull in less revenue compared to hospitals, so they may seek more value in purchasing. Offering discounts or other incentives may help positively influence decision makers.
  • Provide additional support along with products. Hospitals have systems in place to track inventory and process purchases, but nonhospital settings may not. To make purchases more attractive, some medtech companies are now offering these services along with their devices, increasing profits by charging for them.

 

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