The product design is flawless. The clinical trial endpoints were met. FDA has given the green light to begin marketing. Manufacturing has ramped up and can accommodate distribution deadlines. The plan is perfect; what could possibly go wrong?
Bottom line is this…no matter how unique or innovative a product, no matter how fine-tuned your internal processes, no matter how great the initial demand, in order to be successful in today’s marketplace, everybody needs to be paid. As the spine and orthopaedic industries continue to invent and innovate, it is more critical now than ever before to ensure that these emerging technologies are appropriately reimbursed.
The past decade has witnessed the establishment of reimbursement as a critical influencer to the success of a technology. Suddenly, navigating the maze at FDA seems elementary when compared to the reimbursement conundrum. This presents new challenges for both spine and orthopaedic device manufacturers.
Payors, both government and commercial, have become more stringent with their coverage guidelines. What was considered reasonable and necessary in the past is now under scrutiny for long-term data and cost-effectiveness outcomes. Medicare has been tasked by the Federal government to contain costs. As a result, our end-user customers suffer. Hospitals, Ambulatory Surgery Centers and physicians have experienced steadily declining payments.
Companies that understand these challenges, and take a proactive approach of integrating the reimbursement strategy into the business plan during the development phase, will be well positioned for success. Build it and they will come has become an anomaly in the spine and orthopaedics industry. Even some of the most promising technologies have failed because of lack of reimbursement.
There is often a stark contrast in the perception of what companies think they know about reimbursement and what they really understand. Not all new technologies will have favorable reimbursement at the onset. This is to be expected, so don’t panic. A well-thought-out reimbursement plan, considering the needs of the key economic stakeholders, will position a technology for future success in this cost-conscious healthcare environment.