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I’m very interested in your take on this.
Mahesh Mulumudi, MD, is Division Chief of Medicine for Providence Regional Medical Center. He probably has as much influence on hospital buying decisions as any clinician there.
Which made his comments during our free-ranging interview sting.
Hear what Dr. Mulumudi had to say. [07:40 minutes]
I transcribed the discussion for you on the 10x Conference site.
Paraphrasing, Mahesh said,
Often, he said, competitive product improvements are “splitting hairs.”
They are insufficient to interfere with hospital economics.
I pressed him on the hurdles for innovators. [02:50 minutes]
I’m afraid his answer made it sound even worse than I anticipated.
Greenlight Guru’s Jon Speer concurred. [01:55 minutes]
He asked, “It doesn’t sound as though the system is set up to make sure patients are getting the best care possible. Can you comment on that?
Overall, this is a really important conversation we need medtech entrepreneurs to hear – and internalize – before they spend millions on development only to face failure in the marketplace.
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What I hear is his speaking both ways. We look for less expensive and no we look for what works best. I was very upset by the statement about physicians having a conscience. I do know surgeons who put money first and patients last. Fortunately, most of the ones I have worked with are better people than that; not that they don’t make LOTS of money, but they care that their patients get good care. I consult and work with smaller companies, internationally, and have been since 2001, and the emphasis on bundling has been there for at least the past 10 years. Very frustrating to innovators and a headache for smaller companies, but I also remember that costs were getting so out of control that hospitals could not afford good technologies, so the market was ripe for the bundle bargain approach.
I would like to hear how this affects mid-sized companies, since they are not hoping to sell and I have no experience there.
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Jan Shields LVT, BSN, RNC-E
Dr. Mulumundi is very right on with this. One of my inventions is a hospital grade breast milk warmer. It is my professional opinion that the competition to my product destroys everything that is alive about breast milk. It will have frozen ice crystals in the middle of the breast milk, and ‘burn the baby’s mouth temperatures on the outside’. The competition uses air which must be warmed up to 175 degrees Fahrenheit in order to not take 40 minutes to warm an ounce. Breast milk is meant to be 97 degrees straight out of the breast. Proteins and other ingredients of breastmilk denature at 105 degrees to 110 degrees. The competition's technology is flawed, and the nurses hate it. Because of the distance between the purchasing department and the clinicians, no one really knows my competition is destroying the thousands of ingredients in the milk that infants need, except for those closely involved and those such as nurses who spread it through the "nursing discussion grapevine".
The company hides this fact, but there are those of us who know it. This company is huge and also sells breast pumps. So their deal is “We’ll give you a discount on the breast pumps if you use our breast milk warmer”. Then some pencil pusher who doesn’t care that this company could be causing necrotizing enterocolitis in preemies, (NEC) just signs on the dotted line. The pencil pusher is not going to do the research that is demanded and done by the inventors and clinicians. Meanwhile, you could have babies who die, babies who get necrotized gut which is a $50++K surgical gut. The babies immune systems then don’t do well and they get sick from viruses, bacteria, end up ill and have many, many thousands of dollars in septic workups, antibiotics, multiple drips and maybe so sick one nurse has only that patient (expensive) I could go on, but suffice it to say that the savings the pencil pusher saved are so long gone along with much suffering on the patient and their families’ part. Having someone who does not get to talk directly to the companies making these products that have done years of research and development is a huge mistake. A non-clinical decision maker doesn't understand the differences between one product vs. another, is a very risky way to purchase.
What to do? Quit minimizing success! If one product is better than another, someone has to care. I marched down to the hospital-wide product committee at a hospital I worked for in Detroit, and told them they were wasting a ton of money on electrodes. We were going through two or three sets of electrodes a day at maybe $3 per set when the perhaps $5 a set electrodes lasted over a week. (Not sure about the exact prices then and now.) I just spoke to them in a language they cared about, money. I left out the fact that the more expensive electrodes (a Neotech product) could stay 21 days on a 23 weeker and when finally removed, the skin under the electrodes was better than the skin exposed to air. That I saved that and the better tracings, etc. for the clinical types. In reality, the Neotech electrodes saved a lot of money and worked so much better. But how do the companies reach both the clinicians and the purchasing department? In this hospital, we formed a "product committee" consisting of two NICU nurses, one Neonatologist, one NICU RT, and a purchasing department employee. We met once a month, new products suggested to us were presented by a representative if available to us. If it was a product affecting someone's specialty within the NICU, they were also invited to come to the meeting.
If there is a huge difference in medical equipment, maybe companies need to do what the drug companies are doing, skip the purchaser, the hospital, and go straight to the public like all of the drug commercials on prime time TV. In the case of the breast milk warmer, they could advertise in an area where new parents are going to deliver. “Does your hospital use this life-saving equipment?” or such. Or, “Our NICU has better equipment than their NICU has”, reaching the right market. Where should you deliver your baby? (Once you have the mom, you have the family most likely for life. Mom’s first experience with a hospital is usually childbirth. If she has a good experience, that becomes their family hospital.)
What the competition does, is that they hired a very good local NICU doctor to be on their “Board of Directors”. They also 'reward' nurses who push their products. Good idea if the product wasn’t garbage. Unethical in this case. Probably unethical in most cases due to the bias. We are not allowed to accept gifts more than a pastry.
Right now I know of products that the doctors and nurses can never even look at because someone is protecting their purchasing jobs or just plain ignorance on the part of the hospital organization.
One newer thing I have witnessed is advertising on the nurse or doctor journals online. We are too busy to read the entire journal at times, so the publishers are emailing the journals to us with the advertisements in them. If the ad catches our eye, we look at it. Also, the exhibition halls at the nurse and doctor conferences become increasingly important. Get the name of the "purchaser with the power" from the attendees.
In many inferior organizations, there will be a “Stella”. A "Stella" is the gatekeeper to the CEO or an important person who needs to know the information. The Stella loves her little bit of power and attention, so getting past the Stella is a nightmare. And the CEO doesn’t find out really important information. The “Stella” in my breast milk warmer, for example, was the competition's own R&D department. Wow, was the CEO furious when she saw my product and she found out I had contacted their company to offer it to them first. My offer never made it past the R&D department. Who needs an R&D department if they license product directly from clinicians or inventors? Job protection Stella's. CEO's and doctors both are missing out on what is really going on.
I feel the doctors pain, but they need to speak up for the equipment they want. Too many mild-mannered busy professionals I guess. I work with the doctors, I know they care. But their plates are full. They should establish product committees that meet monthly at lunch. I am going to keep inventing, I have some great patents ready for licensing now. They will miss out on the latest and greatest if they do not form product committees. It is a solution that works for everyone. Allow us to come in and explain. Then you want the product, or you don't, but you have the option. Also, this is where the purchasing department gets to know WHY and how important one product is over another that seems basically the same whether the cost is more or less.
Thanks for bringing up this subject!
Jan Shields L.V.T., B.S.N, RNC-E • Angele Innovations LLC • CEO, President
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Goes back to identifying the "unmet need" and filling it with an innovative solution. Incremental improvements and differentiators will not cut it if you're going against a company which can bundle products. Not really sure that care suffers in any way if differences between competitive products are marginal. The truly innovative solutions which deliver step-changes in performance/outcomes will still break through. The challenge is getting these to market and cornering before the bundlers come through with a comparable or marginally inferior product...and/or solid IP protection which prevents them from doing so.
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There are several aspects of this that are percolating right now but they are all overshadowed in my mind by the comment about the "0.34 versus 0.28 percent” over the 15,000 people.
Other folks here seem to have commented similarily but I suppose I'm feeling it a bit more viscerally right now.
Doing the math for the study means about 10 people die per 15,000 for a few dollars more.
Kinda biblical hmm? Sorry I’m feeling that way today; where do you draw the line? How much better does it have to be to "buy" it?
To bring politics into it, what’s being described on some level is a "death panel" making decisions. However it’s not an elected body that’s in some sense morally responsible to the public for it’s decision making in that regard is it? It's a board of directors and management responsible to shareholders.
In that vein, how far can hospitals push their profit based purchasing decision making? (How about on offer is a device 5% less cost per unit versus the same .28 to .34% mortality rate as in the example above, how many dollars would the breakeven point be?) Woudn't more lives be saved having Doctors and other professionals who are working directly on patients and not in a corporate office making those types of decisions as in the pre-2010 era described? (Can it be proven maybe?)
It’s a tough question to answer resources versus results. But I'd rather there be some transparency around it.
Here’s the Biblical piece that came to mind. Similar statistical sample probably. Ultimately one of the points of the piece is to show the importance and lengths one should go to saving lives despite the costs personal or otherwise.
22 The men turned away and went toward Sodom, but Abraham remained standing before the Lord.[d] 23 Then Abraham approached him and said: “Will you sweep away the righteous with the wicked? 24 What if there are fifty righteous people in the city? Will you really sweep it away and not spare[e] the place for the sake of the fifty righteous people in it? 25 Far be it from you to do such a thing—to kill the righteous with the wicked, treating the righteous and the wicked alike. Far be it from you! Will not the Judge of all the earth do right?”
26 The Lord said, “If I find fifty righteous people in the city of Sodom, I will spare the whole place for their sake.”
27 Then Abraham spoke up again: “Now that I have been so bold as to speak to the Lord, though I am nothing but dust and ashes, 28 what if the number of the righteous is five less than fifty? Will you destroy the whole city for lack of five people?”
“If I find forty-five there,” he said, “I will not destroy it.”
29 Once again he spoke to him, “What if only forty are found there?”
He said, “For the sake of forty, I will not do it.”
30 Then he said, “May the Lord not be angry, but let me speak. What if only thirty can be found there?”
He answered, “I will not do it if I find thirty there.”
31 Abraham said, “Now that I have been so bold as to speak to the Lord, what if only twenty can be found there?”
He said, “For the sake of twenty, I will not destroy it.”
32 Then he said, “May the Lord not be angry, but let me speak just once more.What if only ten can be found there?”
He answered, “For the sake of ten, I will not destroy it.”
33 When the Lord had finished speaking with Abraham, he left, and Abraham returned home.
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Richard J. Clark
Thank you so very much for sending this along. Mahesh raises some critical points and ultimately shines a spotlight on another facet of our healthcare system that is broken and not considering what might be in the best interest of the patient. The unfortunate situation we find ourselves in can be resolved but it needs to have a multifaceted approach. The health insurance industry is truly what caused this domino effect to begin, as a healthcare professional I often found myself at the mercy of the insurance company. Their ability to dictate to hospitals & healthcare professionals their reimbursement rate drove the hospitals to form these partnerships which their first intention was to get the medical device companies under their thumb so to speak, not to provide patient’s access to best care possible. The insurance companies forced clinicians to run their clinics like a “deli counter, now serving #.....” just to break even with overhead costs, reducing the time they could spend with a patient. You are lucky today if you get 10 minutes of face time with your clinician. This scenario has had a direct effect on the burn-out rate, an increased suicide rate among clinicians, and a decreased enrollment in medical schools.
That all being said, there is a real fear among clinicians regarding “improvements, or modifications” to medical devices that were granted FDA approval under 510(k) clause without adequate data demonstrating the changes safe and effective. Like Mahesh mentioned if the new version of the device does not have a glaring benefit there is great hesitation by hospitals & clinicians to bring in a product.
Mahesh mentions the new trend of SaaS which will provide patients with a health monitoring device to better assist clinicians with a individualized health promotion plan. This is ultimately where we are headed, with the incorporation of machine learning/AI into healthcare we now can use the data collected to improve the quality of care overall. Patient education is the first step but this has to be done carefully to ensure that they are receiving factual unbiased information. Involving them with plan will be crucial. Providing clinicians opportunities for continuing ed & training is paramount, without it WE ARE DOOMED. This is truly the only industry I believe that does not put it’s “customers” first. Any other industry that followed this model would be out of business “tout de suite (immediately)”.
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Dennis Gershowitz - Customer Success and Loyalty
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from David Niewolny
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from Janet Andrews, M.A.
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