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Barriers to genuine service collaboration with OEMs are hurting hospitals

From the May 2019 issue of DOTmed HealthCare Business News magazine

By Patrick Flaherty

In the aftermath of my recent participation in the annual Federation of American Hospitals conference, I find myself reflecting on basic beliefs and assumptions that influence and inhibit what is possible in Healthcare broadly, and specifically in the Healthcare Technology Management (HTM) space specifically. For those not in attendance, the keynote speaker was Joe Grogan, director of the Domestic Policy Council and a former lobbyist. The latter work experience was most apropos in this conference, which is a celebration of the disproportionate power of industry lobbying in framing the discussion of the economics of care delivery. Although Mr. Grogan mentioned the need for regulating drug prices, the resonating message he delivered was that providers are the problem; providers who nest hidden charges, providers who are not transparently competitive on prices and, my favorite, providers who are consolidating and creating an anti-competitive market through such consolidation. Not one mention, not one, of medical equipment and device manufacturers… Clearly a distorted perspective is being created, one that, if permitted to persist, creates impermeable barriers to collaborative efforts. Let me be perfectly clear, collaboration between suppliers, payers, and providers is the only path to a sustainable reordering of the business of healthcare.

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Given a goal of collaboration, let’s explore some of the undiscussed barriers blocking a revisioning of the supplier-provider relationship. The lack of a common contractual definition of value creates a fundamental dilemma and creates a foundational issue for all parties. Providers typically measure value inside a given fiscal year; if a supplier intentionally creates longitudinal value that does not directly accrue to the provider intra-fiscal year, it is difficult for the supplier to do anything other than build the value into the cost at the point of sale, leading to acute care providers carrying costs that are not sufficiently offset by the supposed value improvement present. In fact, despite the billions spent in the diagnostic imaging space, both manufacturers and providers are hard-pressed to show any objective metrics of differentiated performance in the use of a particular modality; it is not easy to tell the difference between excellent and below average use of the equipment let alone advanced notions of “value”. Objective and contractually usable data to establish minimum deliverables is superficial at best, and clinical equipment value is too often relegated to simple measurements of availability.
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