The Wound Clinic’s Role in the Evolution of Value Analysis in the Hospital

It wasn’t that long ago that decisions about product selection for clinically differentiated medical devices in hospitals were made by physicians and were predominantly based on personal preference (often determined by the clinical outcomes of their own patient use). Typically, a sales representative would talk to a physician about his or her product, the physician would then agree to use it, the purchasing department would buy it, and … “Voila!” … the product was available for use in the hospital. The “beginning of the end” of physician-driven product selection started with the advent of the value analysis team  (VAT) in the 1970s. With the VAT’s mission to drive down costs through improved efficiencies and pricing negotiations, purchasing played a larger role, often emphasizing acquisition cost as a primary driver of product selection. Although VATs, which may also be referred to as value analysis committees or technology assessment committees, have been around in some form or fashion for more than four decades, their use and impact has grown significantly in recent years. Healthcare reform, including the shift towards pay-for-performance programs such as the Medicare Access and CHIP Reauthorization Act, penalties for readmissions, and the growth of accountable care organizations (ACOs), has increased the scrutiny of new products and the importance of the product-selection process. Combined with increasing pressure to raise profits and overall rising healthcare costs, more hospitals are using value analysis in their assessments of medical devices. With the evolving healthcare environment and role of health systems, the value analysis process, too, is evolving. Whereas manufacturers had been required to demonstrate their products’ favorable clinical outcomes and competitive pricing, now a product’s potential impact on economics and relevant non-product costs weigh heavily. VATs are not just broader, they’re deeper as well. In an effort to provide a more comprehensive suite of services to their patients, health systems have expanded beyond the traditional hospital setting into physician offices, clinics, and alternate-site settings. This has driven the purview of VATs to the outpatient setting and introduced new elements into their assessment — reimbursement being first and foremost among them. This article will educate newly opened wound clinics and existing clinics alike on how to form the VAT process in a quality-healthcare reality and/or ensure that the wound clinic is fairly represented by the VAT in systems where a wound clinic staff member is not one of this select group. 

Wound Clinic’s Role in the VAT

The composition of a VAT can vary significantly from facility to facility, but with their important charge comes the need for a generally broad representation of employees, including medical staff, administration, purchasing, finance, and nursing staff members. Since the VAT in general is expected to support an entire facility across many clinics and departments, the wound clinic may not always have representation on a particular VAT committee. As a result, it’s essential that wound clinic staff members present a compelling justification to the VAT for the approval of any new product for their department. Consider these strategies:

• Compile as many data as are available publicly or from the manufacturer (the latter should be involved in all elements of submission and review of the product to the VAT). While VATs require clinical data, many put significant weight on economic data and the product’s impact on total cost of care. 
• Implement and execute a well-designed trial and provide data that adequately support the use of the trial in the facility. This “real-world” experience may support the data provided by the manufacturer and may compensate for gaps in data. It will also demonstrate how the product will be used in the facility and the anticipated outcomes. 
• Ensure the product has a physician “champion.” It is important that both the champion and the broader wound clinic team be given hands-on experience with the product. Since many products require at least some change in practice, the
• chances of getting buy-in will be better if these physicians are exposed to the benefits of the product to determine whether or not they outweigh any change in procedure required. Many products don’t gain VAT approval because clinicians and staff never fully accepted this required change in procedure.

The majority of clinically differentiated products in the hospital setting would fall under a diagnosis-related group, for which the reimbursement is flat and based upon a patient’s diagnosis. In contrast, reimbursement for products in the outpatient setting can vary significantly from category to category (and even among products within the same category). This can provide an interesting challenge for both VATs and clinicians, as reimbursement may not be aligned with clinical practice. An example in chronic wound care is the cellular and tissue-based products (CTPs; previously “skin substitute”) category. A clinician may be reimbursed for a significant number of reapplications of a CTP while the benefit to the patient of those additional applications may not be clear. All of these factors taken into account, VATs can vary significantly from health system to health system and facility to facility. There are some common data elements considered, such as product quality, safety, effectiveness compared to alternative therapies, and cost savings. Key metrics, such as readmission rates, operating room (OR) time, time involved for physicians and support staff, and increases/decreases in utilization of other products and services, are beginning to drive VAT reviews and approvals. Although this change has been led by organizations taking on risk (eg, ACOs, health systems that are both providers and payers), it appears to be the trend. Clearly, VATs are here to stay and are expanding into more facilities, points of care, and product categories.

Benefits of VATs & Challenges They Face

In some cases, product decisions may still be largely clinically driven, while they are price-driven in other cases, and economics and total cost of care indeed appear to be the drivers of VAT decisions. Many clinicians will agree with and support the “noble intent” of the VAT. At the same time, they may struggle with their implementation and execution. As stated, individual VATs are at various stages of the evolutionary process, and VATs generally reflect the culture and environment of the facilities in which they operate. Many of these facilities “operate in silos.” For example, if the OR’s only concern in the assessment of a product is the impact on its own budget, it will not account for the favorable or unfavorable impact in the utilization of other products or services outside of the OR. A small premium in unit cost may be funded tenfold by reductions in the OR’s or the clinician’s time, just as a small product savings could significantly increase costs in other areas. Only a VAT with a holistic view across the organization will correctly value and weigh these broader economic benefits. While VATs have evolved, their primary charge is, has been, and likely will remain savings. To help achieve that, these groups develop criteria that are believed to ensure that the approved products are those that best meet VAT needs. Products are “guilty until proven innocent,” and the burden of proof rests squarely with the manufacturers to justify the value of their products compared to therapeutic alternatives. This certainly impacts the approval timeline, which can range anywhere from 3-6 months to several years. The longer it takes, the more challenging it is to keep clinical champions engaged and supportive. Ultimately, many products don’t get approval as a result.  

AIDING THE VAT PLAN THROUGH DATA

Frankly, if you’ve seen one VAT, you’ve seen one VAT. As a result, there’s no single key to cracking the VAT “code” — it’s more like a combination lock, as each VAT may have somewhat unique criteria, weighting, and challenges. That said, manufacturers can take actions to help navigate these changing waters by ensuring they are delivering the appropriate data with well-designed studies containing clear, relevant endpoints. Manufacturers must know the clinical and economic metrics that are meaningful to hospitals and health systems, and incorporate these figures into all studies. (And it’s up to VAT members to hold them to this.) Key factors include reductions in surgical site infections, readmission rates, length of stay, need for additional products or services, and decreases in OR and clinician time. The Centers for Medicare & Medicaid Services’ (CMS’) new Quality Payment Program (QPP) incentivizes physicians to report data related to quality of life and outcomes to CMS so that the numbers can be analyzed in relation to “resource use” (ie, cost). CMS has developed the PROMIS (Patient-Reported Outcomes Measurement Information System), but none of the measures in PROMIS are relevant to wound care patients. As a result, there is currently no way for wound care practitioners to collectively report the impact of wound care or, for example, the use of CTPs on patients’ quality of life or wound outcomes, even though we’d all most likely agree that doing so is essential. Thus, despite the fact that our products can provide good clinical outcomes and reduce the overall economic burden of wounds, we cannot demonstrate that to Medicare under the QPP until the necessary quality measures have been developed. Until that happens, some of the most important outcomes and quality data we have are those collected by individual facilities, often as part of the VAT process. Still, the world is changing. The days when a manufacturer could launch a product that doesn’t have a compelling value proposition with both a clinical and total-cost-of-care benefit are clearly numbered. Those products that can provide good clinical outcomes and favorable patient experiences while reducing the economic burden on individual facilities, health networks, and the overall healthcare system will ultimately be the ones sought by VATs, clinicians, and administrators, assuming that we are moving toward that metric.

Jon Zalk is chief commercial officer at Harbor MedTech Inc., Irvine, CA. Among other leadership roles, he previously led marketing, sales training, and strategic accounts for Acelity/KCI. He holds a bachelor’s degree in economics from the University of California at Santa Barbara.