Insurers cut back on medical device coverage payments
Medical device marketing has always occupied a secondary position behind pharmaceutical sales when it comes to revenue production. However, a recent report from IHS Technology indicated that the U.S. consumer medical device market is poised to grow, potentially topping $10 billion by 2017.
To grab a slice of that profit, medical device marketers must contend with other market forces, such as dwindling reimbursement payments from private payers. According to a recent study conducted by researchers at the Analysis Group, Inc. and published in the Journal of Medical Economics, a majority of payers reported that they had become more selective over recent years and expect to grow more stringent with payments in the future. This could place medical device marketers in a difficult spot, as providers may be unwilling to purchase devices for which they might not receive reimbursements.
A changing industry
Very few aspects of the healthcare industry remain the same for very long, and the medical device sector is no exception. The transition to value-based care and a pay-for-performance system has forced some private insurers to revisit the cash they send to providers for medical devices.
The Analysis Group interviewed executives from nine leading private payers that cover more than 110 million people in current or future pay-for-performance formats. The researchers found that pay-for-performance treatment models are exploding in popularity: Where less than 50 percent of patients were insured under such a plan in 2011, nearly 66 percent are in one today.
In their responses, the private payers reported that 55 percent had become more selective since 2011 when it came to approving medical devices. An additional 44 percent believed that medical device marketers would be held to a higher evidentiary standard when seeking approval for devices, and the same number of organizations said that tighter budget restrictions will make it more difficult for effective but expensive devices to make much progress.
"The medtech industry generally supports the movement toward new payment models that encourage providers to reduce costs through greater coordination of care, as it continues to develop advanced technologies that will facilitate better health and reduced costs," Stephen Ubl, chief executive officer of medical device manufacturer AdvaMed, told Forbes magazine.
In response to more restrictive budgets, marketers may want to refocus their sales techniques. The National Association of Medical Sales Representatives recently released a report that indicated organizations are spending on average 24 percent more in 2014 compared to the previous years on training new sales representatives.
Throwing money at the problem is not likely to address the financial issues facing the medical device marketing industry, but effective training methods that emphasize leveraging physician access into sales might help.