News & Trends

Healthcare cost reduction: Challenges and Opportunities for MedTech companies

By PeekMed on May, 28 2020

Deloitte says that Medtech companies need to develop a deeper understanding of the end-user and their emerging needs and create new business models and scenarios that demonstrate how their new and existing devices not only improve patient outcomes but also create value for key health care stakeholders.

Cost, staffing and demographic challenges, combined with the exponential rate of technological change and advances in medical science are forcing a shift in the conventional model of health care provision towards value-based care.

The traditional fee-for-service health care model focuses on the volume of care, where providers are compensated by the number of tests, visits or procedures performed. 

In a value-based care (VBC) model, hospitals and health care providers are compensated based on measures such as patient outcomes and satisfaction. Today, a number of governments and other health care payers are expecting providers to adopt new VBC payment models that shift a higher level of responsibility and risk from payers to providers. 

Medtech companies have an important role to play in supporting this shift, including providing robust, reliable data and information to providers (and payers) on the downstream value that their devices, including connected products, provide. Indeed, the data and insights provided by connected medical devices can help providers improve cost, quality and productivity of care delivery, and support better patient engagement. 

Participants in a Deloitte US survey of 20 Health system CEOs say that the transition to VBC is happening, but at a slower rate than initially anticipated. Many of the CEOs report that they are developing and expanding innovative delivery and payment models.16 A successful value-based payment strategy requires payer/provider collaboration, sharing of patients’ health data, and IT and analytical support. As more providers adopt VBC models, the rate of adoption and integration of connected medical devices will also increase. While the IoMT can provide these data and insights to help improve patient care and the overall cost-effectiveness of provider operations, challenges include the extent to which provider organizations’ IT infrastructures are able to handle or process the connections and data, and whether clinicians and patients can be convinced of the safety and effectiveness of the devices. 

Medtech companies will need to address a number of systemic challenges if they are to optimize their role in the IoMT.

Get latest articles directly in your inbox, stay up to date