Weighing the Issue

Committees consider costs, benefits of new technology

Getting a handle on new medical technology is a challenge for most hospital and integrated delivery network (IDN) administrators. They know innovative technology leads to better patient care. But they also know it can lead to higher costs. That’s why administrators are gathering clinicians and administrators together to jointly address the issue.

University of Utah Hospitals and Clinics in Salt Lake City, for example, has successfully gained control of technology costs through a technology assessment committee, which investigates, approves and performs follow-up reviews on new technology. Because of its efforts, the university no longer spends money on equipment that’s used a few times and then put away, says David McGrath, a value analyst and coordinator of the committee. “We don’t have all this wasted equipment or supplies sitting on a shelf that the physicians don’t ever want to use again,” he says. “The process forces physicians to be really serious about what they want before they ask for it.”

Challenged to implement new technology
Utah’s Technology Assessment Committee was featured in the University HealthSystem Consortium’s “Use and Assessment of Technology 2004 Benchmarking Project.” The project, organized by Oak Brook, Ill.-based UHC, set out to identify the necessary elements of an effective technology assessment process. “Members told us they were challenged by the need to implement new technology,” says Kathy Vermoch, UHC project manager of operation improvement. “As university hospitals, they’re expected to be at the cutting edge of new technology in healthcare, and also to balance this with costs.”

The process
For purposes of the Benchmark Project, new technology was defined as that which has been cleared by the Food and Drug Administration for the treatment of patients. Computers and information technology, or capital equipment intended for the management or maintenance of buildings, were not included in the assessments. For most institutions, the cost threshold is $5,000 per year.

Utah’s technology assessment committee comprises 26 members: 12 physicians (including the two co-chairs), each with voting privileges, and 14 non-voting representatives from various hospital departments. Ohio State’s committee, meanwhile, is 60 percent clinicians and 40 percent hospital administrators. It is chaired by a physician and has 14 voting members. Membership includes COOs and CFOs from each of Ohio State’s five health business units; attending physicians from key clinical areas, such as orthopedics and cardiology; and hospital administrators. The committee assesses technology for all of Ohio State’s five hospitals, says Tina Latimer, administrative director of quality and operations improvement.

New technology is brought to the committees through a variety of ways. Most commonly, a physician or department head submits a request form for the committee to review. Upon receipt of the request, Utah’s support staff compiles a packet of information on the technology for review by the committee members. The packet contains a clinical and financial review. The clinical review includes product information, evidence-based literature, an FDA approval letter, and research from professional journals. The financial review shows the contribution margin for the procedure based upon the direct cost of performing a procedure with the new technology compared to current procedure.

“Costs are not the driving factor,” says McGrath. “Clinical and financial reviews are taken into account. There is not one thing that drives the committee’s decision. It’s a weight and balancing measure on both of those pieces of information.” Similarly, Ohio State compiles background analysis for the committee. “We look at evidence-based literature, clinical efficacy and outcomes, cost information and procedure and billing codes to project reimbursements per case,” says Latimer.

Requesting physicians are invited to make a short presentation in front of the committee. After considering the information packets and the presentation, committee members vote behind closed doors. For the most part, the entire process takes about eight weeks.

“Sometimes on the surface, something would look like a really expensive technology that a hospital would never want to implement,” says Vermoch. But upon further analysis and testing, the committee might conclude that that technology can turn an inpatient procedure into an outpatient procedure, shorten length of stay, reduce complications or improve services.

Benefits of the process
The biggest benefit of implementing a standardized technology assessment process is the elimination of trivial requests, says Vermoch. “It’s an educational experience for the physicians. They actually get to see the impact of their decisions. It helps them become part of the team and make good decisions. Physicians won’t go through the process unless they feel it is really important.”

McGrath says technology assessment also helps drive standardization. In the past, Utah would buy similar equipment from multiple vendors. Now, physicians are asked to agree on which technology they will use for similar procedures. Physicians partner with administrators to make decisions based on what’s best for the patient and institution. “Informed decision making is very hard to quantify,” he says. Utah has replaced guesswork, instinct and good intentions with a standardized, data-driven process. “It helps [physicians] make good decisions on the best available information, which is a major advantage.”

Technology assessment can also lead to better hospital-vendor relationships. Vendors are given a clear and concise process, says McGrath. Latimer adds that Ohio State has found its relationship with vendors to be much more collaborative than ever before.

Finally, not all benefits can be quantified. “Tech-nology assessment helps hospitals avoid mistakes,” says Vermoch. It ensures that the technology being considered for purchase aligns with the organization’s strategic goals.

Taking a look back
Another key component of the technology assessment process is the follow-up. Utah’s technology assessment committee schedules a retrospective review on each approved decision. Some reviews are based on the number of procedures while others are reviewed on the basis of elapsed time. Ohio State’s committee sets reviews on a case-by-case basis as well. Latimer says each piece is reviewed in the first year. Utilization projections, costs, reimbursement and clinical outcomes are all reviewed.

The next step
The next step is for more hospitals and health systems to standardize technology in order to help control costs.

The UHC “Use and Assessment of Technology 2004 Benchmarking Project” can be used a guideline for any health system or hospital in forming a technology assessment committee. Ohio State and Utah found that physicians are willing to participate in the process, and even to take a leadership role.

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