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Thinking Differently About Healthcare Materials Management CAHPMM Annual Meeting

Thinking Differently About Healthcare Materials Management CAHPMM Annual Meeting. October 25, 2007 Teri Louden, President The Louden Network www.louden.net. Thinking Differently About Healthcare™. Today’s Lineup…. What Hasn’t Changed? 2. What Is Changing? 3. WIIFY?.

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Thinking Differently About Healthcare Materials Management CAHPMM Annual Meeting

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  1. Thinking Differently About Healthcare Materials ManagementCAHPMM Annual Meeting October 25, 2007 Teri Louden, PresidentThe Louden Network www.louden.net Thinking Differently About Healthcare™

  2. Today’s Lineup… • What Hasn’t Changed? 2. What Is Changing? 3. WIIFY?

  3. What Hasn’t Changed…or “Back to the Future!” • Healthcare Cost Pressures • Quality of Care and “Best Practice’’ Focus (remember TQM?!) • Physicians Wanting “The Latest and Greatest!” • 47 million Americans lack health insurance • Ever-Laborious Legal and Regulatory Pressures

  4. Healthcare costs continue to skyrocket • Premiums for employer-sponsored health insurance plans rose an average of 7.7% in 2006, a rise that was more than double the inflation rate of 3.5% and the 3.8% gain in wages. • HMO premium rates will increase by approximately 14.1% in 2008-the highest increase in four years. _U.S. Comptroller General’s Office

  5. And The Train Keeps on Coming! _ In the next decade U.S. Healthcare spending will double from today’s level to $4.1 trillion, one fifth of our nation’s economy. _ By 2030 one fifth of Americans will be 65 or over. Instead of three workers paying into Social Security and Medicare for every one beneficiary, there will be just two.

  6. The Revenge of the Acronyms • The CMS, the CBO, the GAO, the OMB are all looking at healthcare costs. So are the presidential candidates from both parties. So are employers. • A recent report by the Leapfrog Group says there are now 155 pay for performance programs in place this year, compared with only 39 in 2003.

  7. Researchers looked at 10 different pay-for-performance programs and found they used almost 60 different physician performance indicators, that no one indicator was used by all 10 programs; and no two programs rewarded providers the same way. _Pricewaterhouse Coopers

  8. The Voters Weigh In: • What are the most important issues facing the U.S.? • War in Iraq 43% • Healthcare 21% • Immigration 18% • Economy 13% • Gas Prices/energy 12% • Terrorism/security _Kaiser Health Tracking Poll June 2007

  9. Americans’ Biggest Healthcare Concerns • How much do I have to pay out of pocket? 38% • Cost of Medicare/Medicaid 18% • Cost of Healthcare overall 18% • Increases in employer costs 13% _Kaiser Health Tracking Poll, June 2007

  10. Do you think the government should provide a national health insurance program for all Americans, even if this would require higher taxes?” • Yes: 64% • No: 35% • Not sure: 2% _CNN/Opinion Research Poll, May 2007

  11. Physician-Hospital-Vendor Relations Scrutiny…A Given! • HHS OIG’s office: Stark II Phase 3 • Department of Justice • Federal Trade Commission • IRS • CMS/Congress crackdown on specialty hospitals • FDA • JCAHO random surveys

  12. Health Care: A $Trillion + Industry! Financial Services Healthcare Trade Payors Alternative Associations Medicine Disease/Condition Vendors/ Focused Associations Suppliers Foundations Healthcare Retailers The DotComs Providers Consumers

  13. No Matter the Challenges or Opportunities… . Never Forget Why We Are Here… There is the Word “Care” in Healthcare!

  14. Today’s Lineup… • What Hasn’t Changed? 2. What Is Changing? 3. WIIFY?

  15. Healthcare Provider Industry Consolidation • Fewer and fewer independent hospitals • Multi-Billion$ Health Care System Providers with Multi-Billion$ Budgets and Buying Power!

  16. Boston Scientific/Guidant Deal of the Century! • $27 billion dollar acquisition • Largest medical device M&A transaction ever • Medical device M&A long characterized by many small deals vs. large transactions • Industry consolidation: fewer large companies as acquirers

  17. Medical Device Companies by Size • Less than 20 employees: 3,377 • 20-99: 1,022 • 100-499: 373 • 500+: 324 Source: US. Dept of Commerce

  18. Understanding Vendors The Consolidators The Innovators

  19. Medical Product Industry Sectorsby FDA Regulations • Pharmaceutical/Drug • Manufactured by a chemical process • Regulated by Center for Drug Evaluation and Research (CDER) • Bio-pharmaceutical/Biologic • Manufactured by a biological process (biotechnology) • Regulated by Center for Biologics Evaluation and Research (CBER) • Medical Device • Neither chemical nor biological • Mechanical, Electrical, Information Technology, etc. • Regulated by Center for Devices and Radiological Health (CDRH)

  20. What is a Medical Device?* • Diagnostics and therapeutics • Surgical and medical and dental and equipment and supplies • Ophthalmic products • Laboratory apparatus • Veterinary instruments But…The World is Converging!!! *NAICS codes

  21. Combination Products • A product comprised of two or more regulated components • Drug, Device, Biologic • Physically/chemically combined • Drug-eluting stent (drug/device) • Orthopedic implant with growth factors (device/biologic) • Co-packaged or kit • Pre-filled syringe • Metered dose inhalers • Separate cross labeled products • PET imaging (diagnostic with a radiopharmaceutical) • Hyperthermia device with chemotherapeutic drug

  22. CARDIONET: HEARTBEAT BY HEARTBEAT SURVEILLANCE AT HOME OR AWAY 24/7/365 CARDIONET ANALYSIS, RESPONSE, REPORTING MD DAILY AND URGENT TELEMETRYREPORTS INTERNET, PHONE, FAX, MAIL AUTOMATED EVENT DETECTION/TRANSMISSION And…The Emerging Convergence of Device/IT/Wireless Technologies

  23. The Future: Medical Technology Converging Across Many Disciplines New Learnings for product developers coming together • Physicians + other clinicians + engineers + biologists + material scientists + nanotechnology experts + IT + optical scientists + data mining experts + statisticians + biotechnicians +++ Along with new IP, regulatory and Reimbursement issues to be addressed Plus, new learnings for manufacturing

  24. Major MedTech Market Trends • Convergence of technologies • Global research and market launches • Off-shore manufacturing (esp. for less technical products) • Industry consolidation • Disease management focus • IT as a key success factor

  25. Advanced Medical Technology: A Robust Market Today and Positive Future Prospects • Environment • Explosive growth in elderly population • Continued need for cost-effective health care solutions • Trends • Early diagnostic emphasis • Alternative-to-drug therapeutics gaining popularity

  26. Advanced Medical Technology: A Robust Market Today and Positive Future Prospects • Capital Markets • 1st Quarter 2007, record vc investments of $1.1 billion in medical devices, surpassing IT investments • 2006: investments up 20% to $2.63 billion; record year in number of deals and amounts invested • 2004-2006: • 44 device IPOs, most with high after-market performance • 92 acquisitions of venture-backed device companies

  27. Medical Technology… Follow The $ 1965 • Disposables • Diagnostics • Less Invasive Surgery • Miniaturization • Imaging • Digital Age/IT • Biotech and Drug Delivery • The “Big” Diseases • Support for Labor Realities • Combination Products • Genomics Future?

  28. Synecor: A Unique MedTech Incubator Concept, and an Amazing Launch! • Raised $24.3 million since 2000 • Second financing was by J&J; valuation was $200mill • In 2007, Synergy Life Science Partners $150 mill fund being launched to further support Synecor device launches (source: In Vivo) • In 6 yrs, has launched 4 companies, 2 in NC, with one already sold to Guidant *Source: In-Vivo magazine article

  29. Major MedTech Growth Sectors • Ortho • Cardiology • Obesity • Diabetes • Ophthalmic • Cosmetic • Non and least-invasive • Wireless monitoring

  30. It’s a Global World Now! • Medical Technology Launches & Research Outside the US • World Population age 20-34: • By 2010, • 4% US • 60% Asia • World GDP • 50% will be in Asia in the next 20 years

  31. We Can Hardly Imagine the Future IMPACT OF THE WWW!!! • Virtual Dr. Visits • Patient Compliance Measurement and Reminders…with Incentives • Gaming Technologies for Health Care Worker and Patient “Edutainment” • Patient’s Seeking Out “Technology Access” vs. Just a Dr. or Hospital • Global Learnings

  32. Continued Explosion of… • Healthcare Facilities Building • Medical Technology Advances • Wireless Technology Applications in Healthcare • Aging Population

  33. Baby Boomers and the Health System: “It’s the Workforce, Stupid!” • “Hospitals have read the demand side of the baby boomers wrong!” • “Technology will continue to reshape the demand for hospital care” • “While they wait for years for baby boom health services demand to crest, hospitals will experience a human resource crisis of unprecedented magnitude!” Source: Jeff Goldsmith

  34. Today’s Lineup… • What Hasn’t Changed? 2. What Is Changing? 3. WIIFY?

  35. ? W I I F Y 1. “Think Differently” About the Role of Materials Management 2. 3. 4. 5.

  36. Thinking Differently Take Time Out To Think Strategically!! • “Radical” innovation is needed to change the healthcare business model-today it is incremental at best • The “Radical” Solutions are not always in all our newfound data and information….

  37. The “Radical” Solutions Will Come From Creativity • Value time to “think strategically and creatively” and stretch your thinking! • “Where Is The Wisdom We’ve Lost In Knowledge? • Where Is The Knowledge We’ve Lost In Information?” T.S. Elliot

  38. “Imagination Is More Important Than Knowledge” Albert Einstein

  39. Who Moved Our Cheese? IT’S TIME TO THINK… TOTALLY DIFFERENTLY!!

  40. How Do You Want to Be Perceived? What is Your Value? • Purchasing • Logistics and Materials Management • Expert Contract Negotiator • Product and Technology Cost, Reimbursement, and Finance Expert • Medical Technology Management • Advanced Medical Technology Expert • All of the Above??? Plus More?

  41. How Are You Perceived By… • Senior Management? • Physicians? • Nursing? • Other Clinicians? • Your Staff? • Your Peers? How Do You Want to Be Perceived??

  42. Be a Part of the Senior Executive Mgmt. Team • More and More MM Reporting to CFO’s…it’s a sign of the times! • Billions of $ Under Your Control • Represent Solutions Not Just Expenses! • Talk The Language…analysis, numbers, reimbursement, ROI • Add Professional Development to your time management list of priorities

  43. ? W I I F Y 1. “Think Differently” About the Role of Materials Management 2. Focus Your Time With The 80/20 Rule 3. 4. 5.

  44. Where is Your Biggest Return for Your Time Going to Be? • What Product Lines to focus on and why eg. Pharma, Capital Equipment, Physician Preference Items….other? • Priority of Focus by Functional area: eg. purchasing, inventory mgmt, costing analysis, new medical technology assessment

  45. ? W I I F Y 1. “Think Differently” About the Role of Materials Management 2. Focus Your Time With The 80/20 Rule 3. Make Vendor Relations a Key Strategy 4. 5.

  46. Finding The Perfect Partners! What A Vendor Wants and What They Can Deliver What You Want and What You Can Deliver

  47. Vendor Relations • 80/20 Rule…It’s a Balancing Act • Watch and take control of contracts and price information sharing • It’s not just about the Big Players…Don’t forget emerging advanced medical technology companies and university tech transfer as well • More and more need for vendor partners with IT solutions and data/cost analysis capabilities

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