Five steps to help medtech succeed in a value-based care context
For too long, the relationship between healthcare payers and providers and medtech firms has felt tense. While care providers and payers focus increasingly on health outcomes and efficiencies, medtech product developers seek market access for the products and solutions they have developed, and fair reward for innovation. It’s a classic example of customer needs shifting and suppliers failing to keep up. This has led to payers seeking cheaper generic alternative product options, with medtech product manufacturers suffering in terms of top line growth and margin pressures.
But there’s now a growing recognition on both sides that value-based care (VBC) – that is care built around patients and their quality of life – can achieve more lasting results. This is driving alignment on incentives and perspectives, as medtech suppliers recognise the bigger picture in terms of the cost of care delivery and the role their products play within that. More established medtech firms are beginning to catch up to this new world order. And, for some newcomers who have seen the opportunity to engage in the new dialogue, offer solutions which go beyond product and meet customers’ changing needs, this is already a reality.
Working to an outcomes-based prime provider contract, Circle MSK in Bedfordshire, UK actively horizon-scanned for new technologies that could improve the experience and outcomes of patients with musculoskeletal problems. Medtech companies able to demonstrate the value of their solution were adopted straight into the clinical pathway. Circle MSK then worked with these companies to develop the evidence base and better define their solution’s value, ultimately incorporating some technologies and letting others go. As a result, adoption of effective innovation happened much quicker and at greater scale than would have happened in a traditional NHS environment.
So how can medtech companies reorient themselves to offer outcomes-based solutions to support their clients to deliver VBC? Based on our experience, we‘ve identified five core steps:
- Know your markets: identify which clinical segments would be most accessible for an outcomes-based proposition, their strategic ‘fit’ with your solution and who the key people are in those markets. Be aware that, as in the Circle MSK example above, new players are emerging all the time.
- Understand your potential customers, what their value chain is, and where the key pressure points and opportunities are. In our experience, this is best achieved through segmenting customers by their desired outcomes, then undertaking customer journey mapping, looking at the way care is delivered from the perspectives of the patient, the clinician and the payer.
- Articulate the value you can offer and test its attractiveness to customers.This will be most powerful when expressed using language that resonates with your customer based on insight into their needs and wants. The attractiveness of any offer should consider how end-to-end business technology solutions can be deployed to create useful intelligence for your customer.
- Consider the most effective commercial model. Innovation can extend beyond products and service solutions into contracting mechanisms to drive value. There are a variety of value-based pricing techniques, including straightforward price discounting, managing predictable budgets, price capitation and various risk-share financing arrangements. The concepts are simple but contracting and execution can be complex. The devil is in the detail and making this a win-win for all parties is likely to require additional commercial capabilities.
- Work out the skills you need, those you have and those you must acquire to develop and provide your solutions, particularly given the data analytics needed to provide evidence to support your value claims and customer insight generation. Think about potential partnerships that can increase the attractiveness of your solution to customers and accelerate time to market.
Following these five steps means that medtech firms can engage in the provision of value-based care and ensures desired patient outcomes are achieved.