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Minnesota’s medical-device companies nervously eye D.C. ‘health-care reform’

Health-care reform is a perennial issue in Washington, where elected candidates routinely arrive with sweeping ideas about how to change the way hospitals and insurers care for — and bill — patients.

Health-care reform is a perennial issue in Washington, where elected candidates routinely arrive with sweeping ideas about how to change the way hospitals and insurers care for — and bill — patients.

Usually, not a whole lot happens once they’re in office. But this time around could be different, and the decisions newly elected and appointed leaders make may have significant implications for Minnesota’s many medical-device companies, which count on the government to approve their  products and, in  many cases, reimburse them for their use.

“It’s clear there is an enormous new energy in Washington, particularly related to health care,” said Edward Dougherty, senior vice president with Washington-based B & D Consulting, which specializes in medical technology.

Dougherty spoke Tuesday to several dozen employees from Twin Cities medical device and life science companies at a St. Louis Park event put on by LifeScience Alley, a nonprofit industry group.

The momentum following this year’s election is different from past transitions, Dougherty said. The early, reform-minded appointments by President-Elect Barack Obama signal a “thematic shift” for health care, and the strong Democratic majority, along with the global financial crisis, creates “a perfect storm” for reform, he believes.

Medical-device companies should be planning now for how they can play a proactive role in shaping and responding to new health-care policies coming out of Washington, Dougherty said.

The big ideas, themes and directions are already emerging, even if details remain sparse, Dougherty said.

Although some in the industry worry reform will mean costly and onerous new regulations, Dougherty said the changes are likely to bring both challenges and opportunities.

Among the incoming leadership’s top health-care priorities will be expanding access to care and treatment, Dougherty said. And those officials will be less shy about using direct government involvement to achieve that goal.

A couple of possibilities for increasing access to health care include expanding eligibility or allowing individual buy-ins for Medicare and SCHIP, the federal government’s program for insuring low-income children.

The industry can expect an increased emphasis on preventive care and solutions that deliver long-term value, Dougherty said. This includes wellness programs and chronic-disease management.

And look for more regulatory scrutiny to ensure products are safe, effective — and cost-effective, Dougherty said. Device makers should assume their existing evidence procedures will be insufficient.

One of the surest bets under the new administration is the creation of a “comparative effectiveness institute,” which would objectively evaluate new devices and treatments and compare them with other alternatives.

Dougherty said device makers are generally OK with the idea of an office that would compare clinical data, but what keeps executives up at night is the possibility that the institute would include price comparisons.

The institute’s evaluations could be used to shape reimbursement rates and policies for such government programs as Medicare, and those decisions are sometimes echoed by private insurers.

“In this kind of thing, the devil is in the details,” Dougherty said, and those details don’t exist yet.

All of these goals only will be possible to achieve if government can successfully rein in costs, he said. There’ll be attention to cutting waste and fraud, as well as making sure that new innovations add value.

There’s potential opportunity for medical devices that help reduce hospital stays, for example, as well as for innovations that help patients manage chronic diseases.

Makers of high-cost, high-volume devices can expect some pushback, along with those that can’t sufficiently differentiate themselves from other products, Dougherty said.

Minnesota has no elected officials who are deeply involved in the key committees related to health care, he said. Medical device companies should strategize about where its strengths are as constituents.

His advice includes networking with other stakeholders, staying aware of key committee agendas and proposed rules, submitting public comments and participating in industry groups like LifeScience Alley.

Dr. Larry Kuusisto, vice president of education for LifeScience Alley, said the event’s timing turned out to be “exceptional.” When it was scheduled for a week after Thanksgiving, few would have guessed that by then the president-elect already would have made key appointments.

The transition is moving much faster than usual, he said, giving device companies lots to ponder already.

Said Kuusisto: “The urgency of change and the thoughtful approach to the transition is hopeful.”