California researchers receive InHealth grant to evaluate device-intensive procedures

The Institute for Health Technology Studies (InHealth) has awarded a $263,000 grant to a research team at the University of California, Berkeley, to identify and analyze the strategies that hospital systems employ to evaluate and purchase implantable medical devices for cardiac, spinal, and orthopedic procedures. Investigators will then examine how these complex, device-intensive procedures impact the overall economic performance of the hospitals.

Medical devices are often key differentiators in the reputation and financial stability of hospitals. The quality of care offered in cardiac and orthopedic service lines-including joint replacement and spine surgery-is inherently tied to a hospital's success and patient access to medical technology in the community. Study findings are expected to shed light on the ways hospitals can select medical devices that balance innovation and affordability, especially as policymakers attempt to expand coverage and promote cost-saving initiatives.

"There is increasing pressure for hospitals to purchase implantable devices that receive reimbursement, but still allow the hospital to thrive in a technologically dynamic and competitive market," says Martyn Howgill, InHealth's executive director. "While hospitals depend on the medical device industry for the continued innovation that makes possible new medical procedures and attracts patients, the effects of different strategies for selecting and adopting medical technologies have not been examined closely."

For the study, "Hospital Economic Performance in Device-Intensive Service Lines," researchers will use a combination of qualitative and quantitative approaches to document and analyze the strategies of five hospital systems in Southern California.

Case studies examining the current strategies of the hospitals, including health technology assessment and value-based purchasing initiatives, will make up the qualitative arm of the study. Researchers will interview senior hospital executives, supply-chain managers, and key practicing surgeons about adoption, implementation, and self-reported experiences in:

• Technology assessment committees at the hospital and health-system level.
• Supply-chain management and purchasing strategies for implantable medical devices.
• Gainsharing and other alignment initiatives with affiliated surgeons.
• Contractual and reimbursement relationships with health insurance plans.
• Growth and profitability of the orthopedic, spine, and cardiac service lines.

Researchers will also interview medical device and health insurance executives outside of the hospital for an expanded perspective, according to lead researcher James C. Robinson, PhD, MPH, Kaiser Permanente distinguished professor of health economics at Berkeley's School of Public Health.

For the quantitative component, investigators will analyze data--including total surgical costs, device costs, length of stay, reimbursements, and profitability--from device-intensive procedures performed between 2006 and 2010 to determine the impact on overall hospital economic performance.

The team chose procedures that are significant from a cost perspective, prevalent across all ages, covered by both private insurance and Medicare, and occur in high volume: total knee replacement, total hip replacement, lumbar spine fusion, cervical spine fusion, coronary angioplasty with drug-eluting stent, cardiac valve replacement, and cardiac rhythm management device implantation.

"Hospitals are forging a closer set of relationships with their physicians and, as part of that, are seeking a new structure of relationships with the device industry," says Robinson. "Our study will help hospital executives, medical device firms, health insurance executives, and policymakers understand these evolving relationships, as well as the economic dynamics of device-intensive service lines, much to the benefit of patients."