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How medical device makers can adapt to emerging health trends

on May 08, 2012 Source:

Forget the device tax. It’s the healthcare industry’s new focus on keeping patients healthy and out of the hospital that will hurt medical device makers most.

Analyst David Lewis of Morgan Stanley believes that managed care companies are strengthening their disease management programs, which in turn will affect the sales of medical devices, typically associated with acute care.

“Near-term risk (to medical device utilization) is modest, but more intense disease management, greater focus on mechanisms to prevent catastrophic events or acute intervention and sustained efforts to move care to lower cost delivery models is likely,” Lewis wrote in a research report on April 23.

As an example, Lewis pointed to CareMore, a Medicare healthcare company based in California that is focused on the health of seniors.

“CareMore has reduced hospital admissions in ESRD (end-stage renal disease) by 50 percent by instituting preventative strategies and in congestive heart failure by 56 percent over three months by equipping each patient with a wireless scale and scheduling a same-day visit with a clinician if overnight weight gain exceeds a certain threshold,” Lewis wrote in the report.

And yet, all is not lost.

Lewis has a few recommendations that can help medical device makers adjust to the new reality.

  • Develop relationships with primary care physicians as managed care companies are looking at primary care to reduce their medical costs.
  • Shift R&D investment from developed to emerging markets.
  • Consider developing device therapies that may be administered in the home and in lower cost outpatient centers.
  • Develop alternative sales and distribution models that may include large employers focused on wellness and chronic disease management channels.

However, for all this to occur, medical device companies need to have a cultural shift as well. Lewis suggests that they need to increase the “appreciation that a cost-effective device can be as powerful as one that expands a market.”

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