Addressing the value-based reimbursement challenge in medtech

November, 2017
By Umio team

To have a better chance of securing reimbursement for a novel medtech device, we argue that innovators must refocus and recalibrate their innovation approach or process along eight critical tasks or dimensions. In brief, these are:

1. Define Health Value. Develop actionable frameworks that define health value more expansively, consisting of a broader set of constituent outcomes or measures of value to guide the search for innovation opportunities.

2. Identify Payer Types Early. Define upfront the types of payers they plan to target in different settings and markets and the specific criteria or measures they apply to product evaluation – as well as how that criteria varies – in relation to their definition of health value.

3. Determine Payment Models. Identify the range of payment models currently preferred by payers as well as consider the potential for new emergent models such as shared risk and payment for outcomes that target payers are likely to shift towards in the future (or may be persuaded to adopt).

4. Improve Early Ecosystem Actor Engagement. Gather solid evidence of value-creation opportunity through greater ecosystem actor collaboration, particularly with patients, and find novel ways to balance the oft-conflicting goals and measures of value held by separate actor groups as well as actors within groups.

5. Add Rigour to the Front-End. Develop new front-end of innovation processes that facilitate earlier needs and opportunity discovery, evaluation and selection decision-making ideally before research and development resources are committed to an idea or technology.

6. Understand context sensitivity. Learn and consider the important contexts that influence how and why local or regional, as well as national, care ecosystems differ in terms of environment, actors, resources, capabilities, structure, diversity and values, and how these in turn influence different reimbursement policies. 

7. Avoid Early Solution Bias. Avoid pushing ahead too soon with a solution, concept, technology or idea before properly capturing evidence to determine its health and indeed commercial value. It’s great to come up with solutions, ideas and prototypes then focus on speeding them to market yet it's not so good when they fail because they provide insufficient value to enough actors. The “build it, trial it, iterate it” approach deployed to varying degrees of success in consumer tech does not translate readily to health markets and contexts. Here, the value-equation is more nuanced, multi-dimensional, actor-variable and ecosystem-dependent. Having a clear definition of such value before developing ideas and solutions reduces risk and adds more certainty to the innovation task. Regardless, in many circumstances, it is simply not possible to prototype and test-out a solution due to patient safety issues.

8. Build Integrated Value-Propositions. Build value-propositions consisting of integrated bundles of products-with-services that appeal equally to different groups of actors – payers, practitioners and patients.

As the sequence of the above implies, a good place for a health innovator to start is to rethink and have a clear idea of what actually constitutes health value for their market of focus; how is it made up, what are the new measures of value or outcomes defined by actors including payers, which are priority for them, how and why are they changing? Then, the next task is to determine how to identify, quantify and address priority outcomes within a particular disease area, and/or a patient group, within a particular health setting (such as a hospital or community) or an entire geographical health market such as a specific country.

For more information on how we can help with all the above, please contact us.