Cost Reduction: The Value of Partnerships in the Medical Marketplace: What happened after one institution committed to a single vendor for coronary artery drug-eluting stents

It’s no surprise that today’s medical marketplace is undergoing a transformation. From incentives and penalties demonstrated through the Affordable Care Act, accountable care organizations, patient-centered medical home models, and bundled payments, the formerly well-established fee-for-service model is quickly becoming antiquated. New, innovative approaches to reduce costs and optimize patient outcomes are needed to reduce overall costs of healthcare. Consulting firm Accenture Health writes, “The holy grail for today’s healthcare organizations is to improve healthcare while dramatically cutting costs. Delivering evidence-based medicine and rethinking care management are essential to this goal. By using clinical data in new ways — collecting, analyzing, aggregating, and sharing health information — organizations can turn insights into action. It’s about making better decisions faster and improving patient safety while containing the spiraling cost of care.”¹ One method proven to reduce expenses is through the creation of partnerships with host companies by committing to competitive market share. The Vascular Center of Colorado (VCC) recently engaged in a successful agreement to purchase coronary drug eluting stents (DES) with a market share commitment to a single vendor. 

The VCC is a hospital/physician joint venture established in 2005 as part of the Penrose-St. Francis Cardiovascular Center. VCC provides cath lab supplies, implantable devices, and staffing for two local hospitals in Colorado Springs. Penrose Hospital, the larger of the two centers, offers a broad scope of coronary, electrophysiology (EP), and interventional radiology (IR) services in two cath labs, two EP labs, and one IR suite. The second facility, St. Francis Hospital, has a single procedure room supporting coronary and IR procedures, including diagnostic and interventional cardiac services. 

Contrary to popular belief, the total number of DES implanted annually is growing. With the high prevalence of cardiovascular diseases, the global coronary stent market is gaining every year and experiencing a 6.6% compound annual growth rate.² Also, owing to the growth in demand for minimally invasive procedures, stents, especially DES, are finding a rapid increase in their market penetration of more than approximately 60%.² With the aging global market and influx of the baby-boomer generation, stent use is projected to reach 5.3 billion by 2016, or a 9% growth rate in the United States.² With the accelerating demand for DES on the horizon, cost-saving partnerships are integral to a hospital’s ability to control its expenditures. As the U.S. DES market matures, the competing companies include Boston Scientific, Medtronic, and Abbott. All of these vendors yield high-quality products and tout advantages specific to their product. Ultimately, cardiologists must determine the efficacy of their coronary stent selection.

Vascular Center of Colorado’s initiative

At VCC, the goal is thoughtful consideration when purchasing supplies, and cardiologists’ input is vitally important, as they are the end users. Christopher Simpfendorfer, MD, FACC, is the hospital’s medical director for cardiology services and the physician liaison for interventional cardiology services at VCC. Discussions between the VCC business manager, John Carroll, and Dr. Simpfendorfer focused on factors crucial to the selection of a single drug-eluting stent vendor, such as evidence-based practice, patient safety, confirmed outcomes, requisite physician/staff education, ease-of-use, costs, and vendor collaboration. After concentrated review of these factors, as well as others, the decision was made to investigate a market share commitment with Brand B (for the purposes of this article, specific prices and vendors are not divulged). The VCC project was scheduled to start in July 2013.

Strategies and measurement

VCC uses the CPLink Cardiovascular Database System (Cardiac Partners, https://www.cardiacpartners.com/) to synchronize with VCC’s hemodynamic monitoring system at each hospital, and provide clinical and business intelligence across the hospitals from a single platform. To establish the initial threshold of use, CPLink abstracted the prior 12 months of DES use per physician. From the report, it became evident that Brand A was the most used DES at VCC with an existing market share of 80%; while Brand B had only a 20% market share. The report also indicated individual practitioner preference for Brand A or Brand B (Figure 1). With the report in hand, one could speak intelligently with each of the cardiologists to better understand his or her preferences, and determine if the projected market share commitment was realistically attainable. A threshold of 70% utilization of Brand B was established. This was a lofty goal, since the initiative would need to reverse the baseline 80%-20% preference for Brand A, and change it to 30%-70%.

The initial implementation had only modest success. The market share shift from Brand A to Brand B was occurring, but proved slow to materialize. Some physicians changed their product selection for a period of time, but would fall back to Brand A. The results were inconsistent and showed no trend toward sustainability at the 70% market share commitment. The project leaders met and decided to develop a more comprehensive and monitored approach. Though some of the ideas and strategies seem simple, they proved to be valuable. Specific strategies employed include:

• Physical location: Brand B stents were moved to the most convenient location in the facility for the clinical staff to easily pull product for each procedure.
• Consignment: Consignment levels of Brand B were increased to assure ample availability of diverse sizes. 
• Staff education: The staff was formally educated regarding the goals of the project, as their buy-in was vitally important to the endeavor’s success. It was made clear to those staff members participating in stent procedures that the facility and physician leadership preferred Brand B. To help the staff support the process, they were guided toward how to best message their conversations with the physicians. For example, if the physician requested a particular size DES, but did not specify the brand, then the staff should confirm, “Yes, Dr. ____, a __ by __ [size] Brand B.” The staff was instructed to make the other products available if specifically requested by the physician, but to default to Brand B for instances where the physician expressed no preference.
• Vendor access to the lab: Policies regarding vendor access to the procedure labs were reviewed and modified to allow for a reasonable balance to keep staff and physicians informed about new developments, but to avoid use of a product prompted primarily due to a vendor’s presence. For VCC, the policies affecting vendor access to the facility were amended as follows: 

1. Vendors are not permitted to come to the facility unless contacted and invited by the lab manager; 
2. Vendors must schedule visits in advance, and confirm the date and time with the cath lab manager; 
3. Vendor access was restricted to the lunch or meeting area; and 
4. Vendors were restricted from the procedure room or recording area without prior invitation from the physician. 

Having more clearly defined guidelines regarding vendor influence enabled the physicians to engage their vendor of choice if they so desired. It prevented inadvertent influence of competitors. 

• Personal relationships: The Brand A sales representative at VCC was well liked by physicians and staff. Out of respect for him, the difficult discussion was broached to apprise him of the need to move toward his competitor’s stents. After explaining why this project was necessary for VCC, he acknowledged that he understood and appreciated our being forthcoming. Those working in this profession recognize that the tables may turn in the future, and he will have the opportunity to receive favored treatment.
• Timely tracking and reporting: VCC used CPLink to create a weekly report that showed per-physician use of Brand B, the preferred item, and Brand A. For each Brand A device used, the weekly report documented the physician’s reason for using that device. The weekly report was sent to all interventional cardiologists every Monday at noon, focusing on DES implants performed the week prior (Figure 2). Designing a formal reporting process ensured everyone was informed, aware, and engaged in the project. Although all of the above strategies were helpful, the content and timeliness of this report seemed to cement VCC’s success in achieving the 70% market share commitment of Brand B.

Conclusion

VCC saw a marked increase in the use of Brand B and reduction in the use of Brand A over time (Figure 3). The 100% compliance in using Brand B in December 2013 was the result of five months of implementing the above strategies, and providing timely feedback to the physicians. The successful implementation of this initiative produced a net savings of several hundred thousand dollars to VCC, which was the intended purpose of the project. Many of these successful strategies will be utilized in future market share partnerships with others.

As health care providers, one must be prudent and deliberate in supply selection. Identifying opportunities to streamline product use has a significant, comprehensive impact on our ability to contain costs in the global, medical marketplace. The savings potentially achievable from systematic, comprehensive, and cooperative pursuit of even a fractional reduction in waste are far higher than from more direct and blunter cuts in care and coverage.³ Becoming good stewards by consolidating product selection through committed partnerships without impacting value-added patient care is one easily attainable method to lessen the financial burden our practice places upon the health care system. 

Adele Serio, MSN, RN, RCIS, can be contacted at aserio@vasc-center.com

References

1. Insight driven health: responding to skyrocketing health care costs. Accenture. 2014. Available online at https://www.accenture.com/us-en/Pages/service-health-reducing-healthcare-costs.aspx. Accessed February 19, 2014.
2. Global coronary stents market (drug eluting & bare metal) is expected to reach USD 8.3 billion by 2016: Transparency Market Research. PRWeb. September 11, 2013. Available online at https://www.prweb.com/releases/2013/9/prweb11112353.htm. Accessed February 19, 2014.
3. Berwick DM, Hackbarth AD. Eliminating waste in US health care. JAMA. 2012 Apr 11; 307(14): 1513-1516. doi: 10.1001/jama.2012.362.