A New Era Dawns in Physician-Device Industry Relationships
The push for transparency in the health care industry has moved beyond initial regulations focused on hospital safety disclosures and is now taking on longstanding marketing practices by manufacturers. This time, money trails are the focal point, and if medical device manufacturers start to feel as if someone is spying over their shoulders, it may be more than paranoid imaginations at work. A growing list of regulations and "codes of conduct" are popping up with guidelines for any type of gratuity passing from manufacturers to physicians or hospitals. These new laws and rules are meant to be stringent and they will impact every manufacturer in the device industry.
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Erinn Hutchinson, a Philadelphia-based health industries risk consultant with PricewaterhouseCoopers LLP, talked to Medtech Insight about how she advises medical device companies – big and small – trying to market devices in a dynamic legal compliance environment.
This February, Medtronic. announced it was canceling five cardiovascular and orthopedic contracts-reported to be worth $2 billion a year-with GPO Novation, which negotiates deals on behalf of more than 1,600 hospitals. The action has the potential to change how product contracts with hospitals are negotiated, but at this point, it is hard to say if it represents a burgeoning trend that others will follow or just another mêlée in the long history of turbulent device manufacturer/GPO relations.
The product selection process at many hospitals has become a much more complicated process, something that actually pleases hospital executives, but may cause some problems for device manufacturers. The changes are targeted at high-priced medical devices such as orthopedic implants, which traditionally have been bought and sold based almost completely on physician preference. However, in the current tough economy, a combination of data and physicians willing to work with hospitals to keep costs down is making the supply chain a different market than it has been in the past.