Know How to Win Over Value Analysis Committees

Orthopedic companies are constantly innovating and developing cutting-edge devices aimed at improving patient care and outcomes. However, the journey from concept to market success often hinges on a crucial step: convincing hospital Value Analysis Committees (VACs) to purchase these products. VACs play a pivotal role in evaluating the clinical and economic value of medical devices before they are adopted into practice.

“VACs have become much more powerful and commercially aware of the decisions they make and how that impacts the healthcare facility they’re running,” said Maria Shepherd, Founder and President of Medi-Vantage, a consulting firm that specializes in analyzing the impact that device procurement has on gross margins and overall hospital costs. “If the VAC is making decisions for an entire health system, it can influence the buying power of several hospitals.”

When VACs came into prominence, they often included only one financial expert and a clinical staffer, according to Shepherd. “Now,” she said, “they can have more than 20 people with different functions and different opinions about what constitutes value in the delivery of care.”

VACs encompass a multidisciplinary approach, incorporating insights from financial experts, O.R. managers, surgeons, quality assurance specialists and infection control professionals, among others. This diverse composition ensures comprehensive oversight and evaluation of products that go beyond financial implications to include factors that impact the entire spectrum of healthcare delivery.

Neil Horton, R.N., Senior Consulting Director at Vizient, said VACs vary in composition and practice but typically involve stakeholders from clinical and non-clinical backgrounds. The committee members operate based on consensus, considering cost, quality and variation management when evaluating new products.

To navigate these committees effectively, orthopedic companies must understand the intricacies of VAC decision-making dynamics and tailor their approach to align with hospital priorities. According to Horton, understanding the structure and function of VACs provides valuable insights into their decision-making processes.

“When you’ve seen one value analysis program, you only know how that one works,” he said. “There’s a fair amount of variation among them, so you must understand how individual committees operate.”

Saving Money and Improving Outcomes

When working with VACs, demonstrating the clinical and economic value of orthopedic products is essential. High-quality clinical evidence, supported by published studies and professional references, carries significant weight. Shepherd said orthopedic companies must also provide robust financial analyses, including pricing strategies and budgetary impact models, to demonstrate the economic benefits of their products.

“Devices that help to reduce the cost of care are big value drivers,” she said. “Devices that improve clinical outcomes also provide value. A device that provides both is the holy grail.”

VACs prioritize cost considerations as a fundamental aspect of their evaluation process, seeking to maximize efficiency and resource utilization within healthcare facilities. Orthopedic company reps who engage with VACs must therefore be equipped to articulate the financial implications of their products with precision and clarity. This often involves presenting comprehensive budgetary impact models that illustrate the potential cost savings and return on investment associated with adopting the proposed device.

“Multiple clinical value propositions can be listed in proposals,” Shepherd said. “A device that reduces readmission rates, and has data to back up the claim, is a value-add to the hospital. Not only does it save the facility money, it also maintains its Medicare readmission ratings.”

VACs employ meticulous approaches to assess the cost implications of adopting new medical products by comparing prices to incumbent alternatives. Committee members scrutinize the cost differential between the proposed device and its incumbent counterpart, considering factors such as list price, volume discounts and potential savings. Annualizing costs based on projected usage, such as the number of physicians expected to utilize the product and the associated per-case cost, provides VACs with a comprehensive understanding of the new device’s financial impact.

VACs also utilize pricing indexes, assigning ratings based on a 0 to 100 scale, to assess the competitiveness of a product’s cost. A lower index score indicates favorable pricing relative to market standards, while a higher score signifies potential cost inefficiencies.

“A product that costs too much creates an opportunity for pushback,” Horton said. “Companies can try to get the price of a new device near or below the incumbent’s cost. If that’s not possible, they could provide proof that it’s clinically superior. An orthopedic implant might cost more than what the hospital is currently using, but if a company can show why it’s priced higher, it might get approved.”

In addition to direct pricing comparisons, VACs also scrutinize the impact of new product introductions on hospital margins. Surgeons might request new devices without fully understanding the potential implications for procedure profitability and overall margin sustainability, Horton noted.

VACs dig deep into these considerations to assess the true cost of adding new products. By meticulously evaluating direct costs and broader financial implications, VACs strive to make informed decisions that optimize value while safeguarding the fiscal health of their institutions. Orthopedic companies that understand this dynamic will be better positioned to make a strong financial case for adding their devices.

Proving Clinical Superiority

Presenting clinical data that backs the claims of a new device’s merits is also critical. VACs prioritize patient outcomes and safety above all else, making robust clinical evidence a cornerstone of their decision-making process.

Peer-reviewed studies, randomized controlled trials and real-world clinical data are invaluable resources that substantiate the benefits of a new device and instill confidence in its potential impact on patient care. By demonstrating statistically significant improvements in clinical outcomes, such as reduced complications, shorter hospital stays and improved patient satisfaction, companies can effectively convey the value proposition of their products to VACs.

“Nothing speaks louder than high-quality clinical evidence — peer-reviewed studies with a statistically significant conclusion,” Horton said. “Ranking below that are independently published evidence, expert opinions and in-house evaluations.”

Finally, the uniqueness of a medical device and its ability to reduce SKUs or improve standardization play a pivotal role in a VAC’s decision-making processes.

Horton said VACs are increasingly focused on streamlining clinical formularies and reducing unnecessary variation in healthcare delivery, making products that offer distinct advantages in this regard highly desirable.

“A VAC might think, ‘Please no, not another spinal fusion implant, we already have 150,000 SKUs in that space, and we’re trying to standardize, not expand,’” he added. “Increasingly, addressing those concerns has becoming part of the value-add discussion.”

By emphasizing the unique features and standardization benefits of devices, orthopedic companies can effectively demonstrate their alignment with VACs’ objectives and secure favorable evaluations of their products for adoption into clinical practice.

How unique is the new product? Which current suppliers could deliver the product? Would we need to bring on another supplier or remove a current one to bring the product online? What impact will these factors have on the orthopedic service line?

“Companies must anticipate these types of questions from VACs and be prepared to provide comprehensive answers,” Shepherd said.

Clinical trial results, pricing strategies and budgetary impact models provide persuasive evidence of a product’s benefits.

Prepping for Approval

In addition to clinical data, providing comprehensive resources to VACs is essential for facilitating their informed decision-making. These resources should encompass a range of materials tailored to the specific needs and preferences of VAC members.

Detailed summaries of clinical studies, including methodologies, results and conclusions, enable VACs to evaluate the strength of the evidence that supports new devices. Health economics outcomes research and budgetary impact models offer insights into the potential cost-effectiveness of the device, highlighting its financial benefits for the healthcare organization.

Additionally, case studies and testimonials from providers who have successfully implemented the device in clinical practice provide real-world perspectives on its utility and efficacy.

By equipping VACs with these resources, orthopedic companies empower committee members to make well-informed decisions that optimize patient care and drive value.

Additionally, it’s always a good idea to partner with a surgeon champion. “These surgeons should be very engaged in the product,” Shepherd said. “VACs expect them to understand what differentiates it from others on the market, present its benefits with authority and answer questions about its clinical efficacy.”

She noted that orthopedic companies should prepare surgeon champions by providing them with summaries of clinical studies, FDA approvals, health economics outcomes research and budgetary impact models.

If a product gets greenlit for an in-house trial, companies must support the hospital throughout the trial and ensure surgical teams and surgeons know how to use the product effectively. Companies should provide resources for clinical evaluation, training and education to facilitate the product’s adoption.

Excellent customer service and responsiveness are crucial, ensuring that hospitals receive the support they need throughout the implementation process, according to Horton.

“Hospitals often lack resources for conducting trials, and ensuring these evaluations maintain clinical validity requires significant time and effort,” Horton said. “By offering templates, scorecards and other resources, companies can facilitate the trial process and enhance its effectiveness. Supporting in-house trials not only demonstrates a commitment to collaboration but also fosters trust and partnership between companies and hospitals.”

Constant Communication

Maintaining ongoing relationships with VAC stakeholders is key to long-term success and partnership. Investing in relationships with committee members and understanding their decision-making structures and processes can facilitate continued collaboration. By providing ongoing support, feedback and updates, orthopedic companies can nurture these relationships and ensure mutual success.

Engaging directly with VAC members and understanding the factors they consider when assessing new products can facilitate meaningful dialogue. Transparency and compliance with hospital policies are paramount in this engagement process to ensure credibility and trust.

“It’s crucial to invest in understanding the committee’s decision-making structure and key stakeholders,” Horton said. “Identifying the clinical decision-makers within the committee, and nurturing relationships with them, lays the foundation for productive working relationships. Scheduling regular visits to VAC meetings demonstrates the commitment companies have to introducing products that benefit the hospital. Respecting the VAC’s processes and protocols enhances credibility.”

The entire product evaluation process can last up to nine months, so it’s crucial to keep the lines of communication open and build relationships with committee members by providing good, quality information on the benefits of the proposed device.

“The best way for companies to be proactive throughout the evaluation process is to continue to report on how the device is doing in outside trials or evaluations,” Shepherd said. “Company reps can’t wine and dine committee members and think that’s enough. They need to develop reasons to contact them periodically with additional helpful information.

“If companies receive updates to the usefulness and cost-effectiveness of their products, presenting that information to VAC members is a great way to differentiate their device and continue to strengthen relationships with the committee members.” Save Supplier