Outcomes analysis can win over tough audiences

The medical device industry isn't usually thought of as a high-fashion business. It's a long way from orthopedic implants and intra-aortic balloons to Bill Blass and Calvin Klein. Even so, the medical device industry has its own "fashions"--trends that gather momentum and buzzwords that hang in the air. And the trend of the moment is "outcomes."

There's good reason for this, of course. The rise of outcomes analysis is the product of two interwoven revolutions under way in the health care industry. The first is the emphasis on cost and performance. The second comes from advances in information technology. As we become more adept at digital manipulation, our understanding of the health care landscape becomes sharper and more sophisticated. And it is here that cost and performance concerns intersect with data-gathering ability. The development of information-based health care delivery allows opportunities to be pinpointed with greater precision than ever before. To think in terms of outcomes--of the cost and success rate of a complete course of therapy rather than the price of its individual components--is a natural extension of this point of view.

So it is that the health care vendor today finds himself or herself in a transitional environment that requires skillful navigation. For while there may be agreement in theory regarding the benefits of an outcomes approach, as with so many things the actual practice lags behind. "It's very easy for a purchasing agent to look at a 10% discount and grasp immediately what he is getting," Joseph Laptewicz, president and CEO of Empi, a manufacturer of neurological and urological devices, told me recently. "Selling him on a new therapy that represents up-front expense but a 30% to 40% reduction in total therapeutic cost is more difficult."

That there should be resistance in the face of such a payoff is a frustrating predicament, but not without its reasons. A large part of the problem is rooted in the fact that it is much more difficult to sell a new therapy than a new product. It involves not just making space on the stockroom shelves, but changes in the treatment protocol--the "operating manual" that lies at the heart of the customer's business. Prescribing a pain management device means more than incurring the $500 cost of the product--it means asking physicians to adopt a more time- and labor-intensive approach than writing the traditional prescription for narcotic medication. Calling for such a fundamental shift is a tall order--and one that requires winning over people at all levels within the network, from M.D.s and RN.s to plan administrators and medical directors--each of whom has a natural loyalty to "tried and true" methods. "It's easiest not to change," explains Laptewicz. "And at times it seems like there are a thousand people who can say no, and no one who can say yes."

The key to convincing such a tough audience lies in taking their "show me" attitude and turning it to your advantage. Empi solved that problem by developing a limited outcomes trial that providers can conduct at one of their sites. "It's easier to convince an HMO to try our incontinence devices at one of their locations than to change over the entire network at once," says Laptewicz. "After the providers see cost and performance data on a group of 30 of their own patients over a six-month period, they are much more receptive to our message."

Indeed, while the emphasis on outcomes may be the result of new thinking, today's vendor will do well to be guided by the old and reliable standard of customer needs. For if hospitals are beginning to judge by outcomes, so too are they being judged--by payers and patients. Customer education also plays a key role, as sophistication on this issue will vary greatly from account to account. There is no uniform measurement for outcomes, after all, and as the health care industry gropes toward standards for various indications, there is an opportunity for the device maker to contribute its expertise to the dialogue. "An institution may want to claim that it can wean patients off ventilators within a certain period of time. We need to give them support to help them make that claim," says Jim Hickey, president and CEO of Aequitron Medical, whose products include sleep apnea equipment and infant monitors. Doing so means designing devices that provide the raw information that makes such a statement possible. For while there will always be debate on how to define an outcome, you can't even begin the discussion unless you have the data. Thus, customers are placing a greater premium on remote monitoring and recording functions. Hickey lists two things he wants his sales force to be able to offer: a positive outcome at a competitive cost, and the data to support those cost and performance claims. As medical software houses develop increasingly complex clinical decision support systems, the value of such data will only increase.

Ultimately, the focus on outcomes is part of a larger matrix of factors controlling health care purchasing, including patient compliance, cost and quality of life. But as Aequitron's Jim Hickey points out, these are just a modified version of the factors that we already use when buying something for ourselves. "If you are thinking about buying a car, for example, you ask four things: 'How much will I use it? How much does it cost? How well does it work? and How much will it improve my quality of life?' It's becoming the same with buying a medical device."

Michael T. Kelly, a former vice president at St. Paul, Minn.-based St. Jude Medical, is a managing director of Russell Reynolds Associates, a global executive recruiting firm.

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