Organizations that strive for "best practices" aren’t afraid to look in the mirror. And as fearlessly as they look inward, they also shift their gaze outward. Because by its nature, getting to best practice involves comparisons: Good, better, best. As good as you may be, others will be better and still others are the best.

Conducting an ongoing process to control medical device costs is, in itself, a best practice. It requires the willingness and discipline to keep doing the following:
• analyze current trends
• identify relevant issues
• benchmark
• network

Analyze current trends
What is happening in the universe of medical devices? More specifically, what is happening in that corner of the universe that is your hospital or IDN?

An outward look indicates that the pace of new technology is swift and unrelenting. The new artificial spinal disc, currently manufactured by only one vendor, is a good example. The disc is a motion-sparing device that serves as a stabilizer rather than a fusion device.

In short, clinical indication for use includes patients ages 18 to 60 with at least six months of unsuccessful conservative treatment for degenerative disc disease. The benefits to patients include preservation of spine movement, potentially less pain, and the possibility of reducing the risk of degeneration at adjacent levels. There is little argument that this technology could be beneficial for the appropriate candidate.

The reimbursement and cost implications of this technology, however, are staggering. If used indiscriminately it could place hospitals in financial harm’s way. According to the January 2005 edition of "Orthopaedic Network News" ("ONN"), Centers for Medicare and Medicaid Services (CMS) has approved 10 procedure codes (84.59-84.69) for the implantation of spinal prostheses, but these currently fall into the same DRGs as disc excisions (DRGs 499 and 500) with average Medicare reimbursement of approximately $4,700-$7,200. The DRG coding and resulting reimbursement is not sufficient to compensate the hospital, at least for Medicare patients, for the expense (reported by "ONN" to be as high as $11,500) of such a cutting-edge procedure.

But the trend is to adopt this technology. With just one vendor in the marketplace, there is no price competition. Controlling cost will rely on appropriate patient selection.

A "best practice" response to such a trend is a prospective technology review process. This is a committee involving specialty physicians and program administrators. Their charge is to evaluate new technologies for their relevance to local patient populations. This is the group that sets the ground rules for how and whether new products are introduced into the clinical program. A structured review process to evaluate new products according to their financial and clinical benefits to the program is needed to ensure that the decisions are made objectively, with credible financial and clinical analysis.

This group should also ensure that the specialty implements guidelines for clinically appropriate utilization when the technology warrants it, and reviews practice patterns accordingly.

Identify relevant issues
What is rocking your world? An inward look is likely to reveal issues beyond product pricing that impact medical device costs.

Examine your organization’s policies regarding vendor access to procedure areas. Is access unrestricted? By appointment? One day a month? Most organizations believe that a vendor’s presence in clinical areas should be controlled.

What role do vendor representatives play in a case? Are they providing clinical expertise or selling product? If the former, can the hospital staff assume that clinical role, given the same rigorous training that brought the vendor representative up to speed?

The issue is to understand the cost of relying on outside vendors for clinical support. The appropriate analysis can demonstrate whether the hospital would spend less by having trained employees perform clinical tasks associated with a certain technology, and limit vendor participation to sales visits conducted in an office rather than in the procedure room – particularly when the case is routine and the technology familiar. Physicians simply want good outcomes. If the hospital can’t support that, then physicians look elsewhere for support.

What’s happening with your medical staff is always a relevant issue. Perhaps there is a "changing of the guard" of the specialty physicians. Older physicians are retiring; newer physicians are taking up the slack and increasing their procedure volumes.

The practice habits and product choices of the new generation are going to determine program profitability a year from now. If the pattern is undesirable today, it’s time to open up a data-based dialogue with the physicians.

Benchmark performance
When it comes to controlling the cost of medical devices, benchmarking is a necessary component of the strategy.

Benchmarking typically involves comparing key aspects of clinical programs. Benchmarking helps a hospital understand its place among its peers. Comparisons of patient severity, length of stay, and comorbidity conditions are essential to understanding how well the program controls its device costs.

Obviously, comparing pricing is also a part of the benchmarking process. Hospitals will want to use their purchasing data, including product mix, vendor mix, and price paid, to assist them in identifying opportunities for improved cost management.

Vendors may try to make this difficult. They may propose unreasonable restrictions on a hospital’s use of its own purchasing information, even going so far as to attempt to limit a hospital’s ability to discuss product pricing with other hospitals within the same health system.

In response, materials managers should work closely with the hospital legal counsel to ensure that the hospital does not contract away its right to use its own data as it chooses.

Network with peers
Networking is an outward look and may prove to be more difficult. Pressed for time, it’s difficult for hospital managers to stay in touch and compare notes with their colleagues in the industry.