Value-Based Pricing: The Good, The Bad, and The Ugly

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Value-Based Pricing The Good, The Bad, and The
Ugly

• What Does Value Mean To Hospitals?
• March 27, 2008
• Jeffrey C. Lerner, Ph.D.
• President and Chief Executive Officer
• ECRI Institute
• 5200 Butler Pike
• Plymouth Meeting, PA 19462

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ECRI InstituteThe Discipline of Science. The
Integrity of Independence.

• The Institute is an independent nonprofit that
  researches the best approaches to improving
  patient care.
• It is designated as  an Evidence-based Practice
  Center by the U.S. Agency for Healthcare
  Research(AHRQ), and is assigned to work on
  projects on behalf of CMS. Its assessments are
  also used by Medicaid programs and private
  insurers.
• ECRI Institutes brand and model laboratory-based
  evaluations of medical devices are used by
  thousands of hospitals and health agencies
  worldwide. The institute maintains offices in the
  U.K., Malaysia and The United Arab Emirates.
• ECRI Institute is a Collaborating Center of the
  World Health Organization.
• Its more than 300 staff members include
  professionals from a great variety of
  scientific/clinical disciplines, as well as from
  the legal profession, health care planning and
  business.

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Provider Technology-related Processes
Strategic
Operational
Capital Budget Planning
Strategic Planning
Value Analysis
Pharmacy Therapeutics
Technology Assessment
IT Planning Committee
Medical Equipment Planning
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Value Analysis/Technology Assessment Synergy
Strategic
Operational
- Existing- Product-centric - Cost-focus
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TA Case Study Deep Brain Stimulation for
Parkinsons Disease

• Key discussion points
• Quality of life evidence
• Medication therapy v DBS
• Total care requirements (e.g., follow-up)
• Cost to transition from clinical trial to
  practice
• Result
• Recommended approval for a defined subset of
  Parkinsons patients not Essential Tremor
  patients

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Integrated Health Technology Decision-making
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Some Best Practices for consideration

• Build bridges between strategic operational
  activities
• Strategic technology planning
• Engage the empirical nature of physicians
• Evidence-based data driven
• Standardize criteria across assessment functions
  (e.g., PT, IT, TA, VAC)
• Ensure transparency of process decisions
• Perform retrospective reviews of decisions

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Some Best Practices for Consideration

• Approve key technologies by indication helps to
  limit (or begin to ID) off-label use
• 360 assessment considerations
• Patient safety
• Risk management
• Credentialing/Privileging
• Purchasing
• Contracting
• Reimbursement