{"id":826,"date":"2019-10-23T09:00:30","date_gmt":"2019-10-23T13:00:30","guid":{"rendered":"https:\/\/blogs.sw.siemens.com\/siemens-opcenter\/?p=826"},"modified":"2026-03-26T04:58:38","modified_gmt":"2026-03-26T08:58:38","slug":"overcoming-medtech-challenge-6-value-based-care-and-healthcare-cost-pressure","status":"publish","type":"post","link":"https:\/\/blogs.sw.siemens.com\/opcenter\/overcoming-medtech-challenge-6-value-based-care-and-healthcare-cost-pressure\/","title":{"rendered":"Overcoming MedTech Challenge #6: Value-Based Care and Healthcare Cost Pressure"},"content":{"rendered":"\n<p><em>Sixth in a series of seven blogs focused\non the top challenges that medtech manufacturers face today, and the\ntechnologies and implementation strategies that are critical to meeting these\nchallenges.<\/em><\/p>\n\n\n\n<p>The movement toward value-based care will\nhave far-reaching implications. Value-based care is a payment model for providers\n(health systems and physicians) that is based on patient outcomes rather than\nthe amount of services provided. In a fee-based approach, a physician gets paid\nregardless of whether the patient\u2019s health improved because of those services. In\na value-based model, payment is reduced for poor patient outcomes or complications\nresulting from service.<\/p>\n\n\n\n<p>Value-based care along with regulatory and\nother governmental financial pressure are intensifying the need for cost efficiency\nin medical devices. Examples include the government excise tax on medical\ndevices, the FDA UDI initiative, and hospitals reducing spending on equipment\ndue to perceived reduction in reimbursement under a value-based care model.<\/p>\n\n\n\n<p>To support outcome-based models, manufacturers\nof imaging and diagnostic equipment, such as X-ray, computed tomography (CT),\nmagnetic resonance imaging (MRI), molecular imaging and ultrasound, are\nbeginning to shift from selling capital equipment like diagnostic and imaging\nmachines to selling images, studies and tests to improve outcomes.<\/p>\n\n\n\n<p>Here are a few key insights related to\nthese trends:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>According to <em>Healthcare\nInnovation<\/em>, nearly two-thirds of healthcare payments are now based on value<\/li><li>Healthcare IT strategist Fred\nPennic notes that value-based care strategies are having a great impact in\nterms of care quality (77 percent), patient engagement (73 percent) and provider\nrelationships improvement (64 percent)<\/li><\/ul>\n\n\n\n<p>Acute competitive and financial pressures\nare emerging as a result of these trends. How will MD&amp;D companies achieve\nthe efficiencies needed to remain competitive and profitable in this financial\nenvironment? Four strategies to gain or keep a competitive advantage in this\nenvironment are:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>A shift from right-first-time to best-first-time<\/strong><\/li><\/ul>\n\n\n\n<p>Value-based care and government regulations\nare increasing the strain on capital investment and operating budgets for healthcare\nproviders and caregivers. As a result, both providers and medical device manufacturers\nare implementing outcome-based models, shifting from asset acquisition to\nfee-for-outcome. Quality requirements will have a stricter standard \u2013 the\ndevice must not simply perform as intended, but must improve the patient\u2019s\nhealth.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Remaining flexible to\nmeet diverse price\/margin sensitivities<\/strong><\/li><\/ul>\n\n\n\n<p>There is an increasing recognition of the need\nfor off-grid devices for developing countries. With the challenge of managing chronic\ndisease globally, the medical device industry must find the right balance\nbetween addressing global opportunities and removing the health differences\nbetween mature and emerging economies.<\/p>\n\n\n\n<p>Using a platform approach like the automotive\nindustry, medical device manufacturers will look to make simple product\nconfigurations to serve these regions.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>A response to pricing\npressure: differentiation and efficiency<\/strong><\/li><\/ul>\n\n\n\n<p>Given intense pricing pressure,\nmanufacturers will look to achieve price premium via consistent product\nperformance. They will need to develop new, differentiated product and service offerings\nfaster. Their products will need to generate more value and higher outcome per\ncare than the competition. Manufacturers will look for new opportunities to\ndrive cost efficiency in production.<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li><strong>Controlling cost and\nquality in various production environments with MES<\/strong><\/li><\/ul>\n\n\n\n<p>Although MES will continue to underpin cost efficiency and product quality, it will also supply the data from the as-built production environment as a source of information to understand the next level of quality; that the product not only operated as intended in the field, but also led to a positive patient outcome. Using MES will also enable the flexibility that manufacturers will need to orchestrate a global manufacturing enterprise while supporting local needs, price points and preferences. That\u2019s the beauty of the MES system \u2013 it knows what resources are on local production lines and can optimize production based on manufacturing orders.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/www.plm.automation.siemens.com\/global\/en\/topic\/medical-device-challenges-and-mes\/64263\" target=\"_blank\" rel=\"noopener\">Read the eBook<\/a><\/strong> to learn about more trends facing the Medical Device industry, and how integrated MES is addressing new challenges.<\/p>\n\n\n\n<p><strong><a href=\"https:\/\/www.plm.automation.siemens.com\/global\/en\/challenges\/mes-for-medical-devices.html\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"Learn more (opens in a new tab)\">Learn more<\/a>&nbsp;<\/strong>about MES for Medical Device. <\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Sixth in a series of seven blogs focused on the top challenges that medtech manufacturers face today, and the technologies and implementation strategies that are critical to meeting these challenges.<\/p>\n","protected":false},"author":29942,"featured_media":827,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"spanish_translation":"","french_translation":"","german_translation":"","italian_translation":"","polish_translation":"","japanese_translation":"","chinese_translation":"","footnotes":""},"categories":[1],"tags":[173,288],"industry":[196,201,225],"product":[],"coauthors":[],"class_list":["post-826","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-news","tag-diagnostics","tag-manufacturing-execution-system-mes","industry-consumer-products-retail","industry-food-beverage","industry-medical-devices-pharmaceuticals"],"featured_image_url":"https:\/\/blogs.sw.siemens.com\/wp-content\/uploads\/sites\/3\/2019\/10\/Blog6.jpg","_links":{"self":[{"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/posts\/826","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/users\/29942"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/comments?post=826"}],"version-history":[{"count":2,"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/posts\/826\/revisions"}],"predecessor-version":[{"id":831,"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/posts\/826\/revisions\/831"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/media\/827"}],"wp:attachment":[{"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/media?parent=826"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/categories?post=826"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/tags?post=826"},{"taxonomy":"industry","embeddable":true,"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/industry?post=826"},{"taxonomy":"product","embeddable":true,"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/product?post=826"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.sw.siemens.com\/opcenter\/wp-json\/wp\/v2\/coauthors?post=826"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}