Data can help identify true innovation

Premier puts new technology through the paces


Journal of Healthcare Contracting: Can you name two or three ways in which the process of evaluating new medical technology differs today from, say, 10 or 15 years ago? What accounts for those differences?

Mike Alkire

Mike Alkire

Michael J. Alkire, COO, Premier Inc.: An assessment team of Premier members, Premier clinical staff members and Premier Sourcing committees evaluate the documentation, clinical evidence and all supporting information submitted by the supplier – including information from clinical studies, government sources and expert opinions – to conduct a thorough, 360-degree review of product efficacy, safety and cost-effectiveness.

Products that offer a significant advantage in terms of safety, improved clinical outcomes, or operational efficiencies will be recommended to a Premier sourcing committee, which is 100 percent comprised of member health systems. These members evaluate the evidence and then determine which products to offer a contract award.

One of the main ways that the evaluation has evolved is through improved access to clinical outcomes data. Premier has access to clinical, financial and operations data on approximately 40 percent of all U.S. discharges, giving us a more holistic look at total costs. Using this information, we can do more than just negotiate a lower price per unit; we can evaluate which products perform the best in terms of patient outcomes, and help our members use the product correctly, thereby eliminating inefficiencies. As we like to say at Premier, the best price is to pay no price – to not use any supply or conduct any procedure that isn’t proven to improve outcomes and reduce total costs.

We do this in a few key ways:

  • Comparative effectiveness: Comparing the new technology with the current generation to determine the benefit specific to patient outcomes. One example of this is the Partnership for Advancement of Comparative Effectiveness Review (PACER), a comparative effectiveness initiative led by Premier. This group has brought together diverse health systems to collaborate on clinical evidence, price and usage data, as well as best practices when it comes to reducing physician preference items, with a focus not only on reducing costs within supply chain, but also improving care.
  • Value analysis: A method to evaluate emerging technology to ensure that the addition of the product and associated costs will result in enhanced patient outcomes.
  • Resource utilization: Use of outcomes data to find ways to reduce waste across an enterprise by streamlining processes and providing tools to reduce unjustified variation throughout a healthcare system.


JHC: When your sourcing team hears a vendor (or end user, such as a physician or surgeon) call a new device or technology “innovative,” what should their expectations be of that device or technology?

Michael Alkire: Innovation can be broken down into two types: incremental innovation and radical innovation. I think both play an important role in medical advancements.

Incremental innovations are small improvements on technologies or devices that already exist. These innovations typically help to make the product more efficient, more user-friendly or safer. An example is the MRI-compatible pacemaker. Pacemakers were first invented in the 1960s, but have seen a number of incremental innovations to improve their effectiveness. You can see how far the device has come today: Since many patients with cardiac rhythm management (CRM) devices have comorbidities, an evolved function allows patients with these implanted devices to easily conduct an MRI test without having to turn off the CRM device for the procedure.

Radical innovations, on the other hand, are completely new solutions to a problem that totally transform the playing field and disrupt existing technology. The artificial pancreas is one example of a radical innovation that has yet to hit the market, but could radically change the way providers treat diabetes. Since it automatically regulates blood glucose, it would also fundamentally change the way patients manage their condition and improve their quality of life.

When our sourcing team hears “innovative,” we’re not taking it at face value. We need a product to demonstrate that it improves efficiency, increases safety, reduces harm, or improves patient experience to consider it an innovation. The biggest difference between faux innovation and true innovation is that the advancements of true innovation – whether it’s an incremental improvement or a radical change – are measurable, and when evaluated by clinicians or end-users on our committees, are deemed to add real value.


JHC: Can a GPO do anything more than introduce its members to new technologies from early-stage or startup medical device firms? In other words, can a national GPO sign agreements with companies such as these, which tend to be small?

Michael Alkire: A GPO can definitely do more than just introduce its members to startup firms. Often, though, what a startup needs is product testing. Because startups often are stretched in terms of resources and staffing, they may have an innovative technology, but lack access to test it in the real world, or face challenges in scaling the product. Because of our work with more than 3,750 diverse hospitals and health systems, and our integrated data platforms which track nearly 40 percent of the nation’s discharges, Premier has the ability to convene and facilitate pilot programs with interested members, while tracking patient outcomes.

We also act as an incubator and foster innovation. If a startup product already has undergone initial testing and demonstrated substantial proof of concept, then Premier may invest in the company to help cross the threshold to the next stage, where the entrepreneur can scale their work with more of our member health systems.

One recent example of this is our investment in BloodBuy. Its blood management technology demonstrated success in reducing waste of blood purchasing units within several facilities. So, along with St. Joseph Health, we invested in the company and offered the technology as a solution to our members in an effort to foster growth.

These types of strategic investments help small, groundbreaking companies grow to support our national membership and is a unique differentiator, as Premier is going above and beyond to facilitate innovation in the marketplace. And for technologies – like BloodBuy – that completely disrupt an existing market and offer a novel solution to a challenge healthcare leaders face in supply and cost management, that’s something we can’t pass up for our members.


JHC: What are the challenges in evaluating clinical evidence about a newly introduced product/device, which probably lacks a track record in the field? How should the provider (GPO, IDN, hospital, etc) deal with those difficulties?

Michael Alkire: I think that’s where the collaboration and expertise of a GPO or company like Premier comes in. We have sourcing committees made up of experts from our member health systems for each service line. When new products come for evaluation, those experts have vast knowledge of what is already on the market in that category or if the product offers something truly new. That’s also where Premier can help facilitate pilots for manufacturers with products that need more testing or expert feedback. We can connect them with the appropriate people at our member health systems to either help them with further testing, or delve a little deeper in the evaluation process to determine if it’s really a value-add to the greater Premier community.


JHC: To what extent can the healthcare provider hold the vendor accountable for the performance of a newly introduced device after it is in use in the healthcare facility?

Michael Alkire: This is where risk-based contracting plays a role. In Premier’s view, supply chain performance doesn’t – and shouldn’t – stop at best pricing. We believe in a total cost-of-care approach that takes into account product efficacy and its ability to improve patient outcomes – twin goals that are now essential to providers as they face both reimbursement cuts and payment penalties for less than ideal quality outcomes.

Health systems want to align with the vendors they work with to improve quality and costs – showing there’s a net economic return in terms of creating healthier patients to justify the price point.

Similar to the value-based shift taking place across other segments of healthcare, many providers are asking their suppliers to share the risk and demonstrate their product’s ability to improve patient outcomes. Even after a product is in use at a facility, if it fails to demonstrate the outcomes that were touted, then the supplier is at-risk.

Providers have been at the center of this conversation with manufacturers because they manage the care delivery and optimize risk, and they have implemented the infrastructure to get key data on outcomes. Premier has been facilitating conversations between providers and suppliers in this next chapter of value-based care.

This is where healthcare is going; all parties need to recognize this and jump on the wagon. In the new healthcare economy, value is the currency. Many of Premier’s members crave these partnerships, because they’re already participating in a payment environment, like bundles and alternative payment models, that is conducive for them to succeed within these arrangements of shared risk. In a recent Premier survey, 86 percent of C-suite respondents are exploring value-based contracting partnerships (Premier’s spring 2016 Economic Outlook survey).

In the modern world, we need evidence for the value of each and every feature included in any device, and justifiable pricing by showing a demonstrable return on investment in the form of better quality and lower costs.


JHC: In June, Premier hosted its Innovation Celebration, which featured more than a dozen next-generation medical innovations, including advancements in lung and breast cancer screening, neonatal and scoliosis imaging, tissue management and perinatal heart rate monitoring. How have your criteria for inclusion in the Innovation Celebration changed over the years?

Michael Alkire: This year marked Premier’s 8th annual Innovation Celebration held at our Breakthroughs Conference. To attract a wide array of ideas and inventions, we have always kept inclusion criteria broad to ensure diversity in the technologies we evaluate. The essential criteria is that the product must meet an unmet need in the market.

However, because of the proliferation of technology advancements, wearables and big data applications, we’re naturally seeing different types of products through the application process, and we expect that to continue. This year we launched our Innovation Engine, which arms inventors with the tools, resources and support they need to discover the next big breakthrough, scale it across the industry and transform the world.

We’re not your traditional GPO, and we pride ourselves on evolving to meet the needs of providers as the healthcare landscape shifts. With these new demands on hospitals and health systems, Premier embraces new technology to help our members raise the bar on quality of care and reducing costs. We want to ensure startups understand how Premier can be a great partner in the testing and scaling process of their medical technologies.

For instance, the next wearable that can trigger treatment reminders to a patient has an application for our health systems and providers in managing medication or treatment adherence – a well-known issue which significantly affects patient outcomes and healthcare spending. We’ve found our health systems are being challenged in new ways to perform in this value-based environment, and they are ready and willing to embrace new ways of meeting those challenges.


JHC: Any final thoughts on the challenges and/or opportunities associated with evaluating new medical technologies?

Michael Alkire: One big opportunity is the possibility to integrate healthcare components in technologies created for non-healthcare applications. There are hundreds of new technologies that are intended for different industries, but could have utility for patients or members. Amazon Echo or Google Home could be used to push patient health reminders. A challenge is getting access to those products or technologies when the team marketing them is not focused on healthcare. But the opportunity is huge.

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