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Medical Device Makers: Stop Griping and Embrace Healthcare Reform

Lee Perlman, for HealthLeaders Media, June 15, 2010

Instead of vilifying a tax that is three years down the road, medical device companies should focus their collective talent, energy, and resources on the opportunities that healthcare reform will offer.

At a minimum, they will soon have a vastly expanded marketplace. Healthcare reform will bring insurance coverage to 32 million Americans who currently lack it. That's 32 million potential new customers for a dazzling array of indispensable, lifesaving products. That alone should inspire device companies to celebrate reform and develop even more products that consumers and hospitals will eagerly embrace.

Wall Street clearly agrees that the medical device industry's future is bright. In the wake of healthcare reform's passage most device company stock prices have remained strong.

But far more important than new customers is the unprecedented opportunity healthcare reform offers for hospitals and device companies to work together to improve patient care and facilitate meaningful price transparency for consumers. In a 2008 Health Affairs article, University of Pennsylvania Wharton School professors Mark Pauly and Lawton Burns wrote that hospitals are "disadvantaged in their bargaining with medical device manufacturers" and "the absence of disclosure of the range of prices…does not seem to make sense."

As healthcare reform is implemented, I believe it will be those device companies that recognize and embrace the need for complete price transparency that will benefit the most—especially smaller companies struggling to bring their products to market.

The time is now for hospitals and the device industry to embrace comparative effectiveness research that will help identify which treatment works best, for whom, and under what circumstances. We need more competition and evidence in the medical device market, and price transparency and comparative effectiveness can put both within our reach.

Rather than protest a modest future tax, we can collaborate now on what matters most: getting the right product at the right price to the right patient at the right time.

That is the true promise of healthcare reform, and the medical device industry—with its remarkable companies and immensely talented individuals deeply committed to improving patient care—is indispensable to getting us there. The time is now for device makers to step up and be healthcare reform champions.


Lee Perlman is president of GNYHA Ventures, Inc., the for-profit arm of Greater New York Hospital Association.
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