THOUGHTS

Top 3 Medical Reimbursement Challenges for Medical Device Manufacturers and Their Impact

Aug 2, 2018

With respect to medical devices, reimbursement can be defined as the payment paid by a third-party public or private insurer to a health care provider in return for the payments or costs incurred by the provider for using a medical device or for performing the required procedure. If the coverage under reimbursement has no certainties, it becomes difficult to analyze return on investment. This creates obstacles in securing venture funding and also limits innovation. This, in turn, pulls back the patients from getting the advantage of new technologies. Thus, reimbursement and coverage of payers have a crucial role to play in making or breaking a device. There are many challenges associated with medical reimbursement for medical device manufacturers, which varies greatly from country to country. But there are a few common challenges that are shared by many countries. Here are the top three.

Medical Reimbursement Challenges

The gap between the value of a technology and reimbursement levels

In many countries, rates of medical reimbursement are not based on value, rather it is cost-based. The rates of reimbursement are fixed by the government body in most of the countries. This body mainly comprises of government officials or clinicians and they decide on what the rates of reimbursement should be for specific medical devices and procedures. Such decisions are not based on the technology of the manufacturer or the feature of the device but are driven by standing formulas. This means that such a medical reimbursement is a reflection of the cost to use a certain device or procedure and does not reflect the technology used in it. But here is the challenge to match reimbursement levels with the kind of technology used in the medical device because this balance is very essential to get a positive outcome and ensuring the availability of advanced medical technologies to the patients in the future.

Cuts in government medical reimbursement spending

The government in countries like E.U, U.S, China, and Japan are looking for various ways to cut down on their expenditure to prevent the costs of healthcare crossing their limits. This also includes cutting down on medical reimbursement amounts. Several governments have already initiated the process to reduce their spending on the reimbursement of medical devices and this has reduced the total healthcare spending.

Opacity and complexity of reimbursement process

Medical reimbursement process is considered to be the most opaque and complex process that stops medical devices from getting exposed to advanced technologies. In many countries, there are even many stakeholders involved in the reimbursement process who interact with the companies. Many times, medical reimbursement decisions can be lengthy, uncertain, opaque and even unpredictable. Therefore, for companies to invest in new technology without knowing the amount of reimbursement becomes very difficult.

Impact of Medical Reimbursement Challenges  

#1. Difficult to get good ROI

The gap between reimbursement rates and technology makes the investment risky for the manufacturer. The risk of ROI makes them apprehensive towards experimenting and working on innovations in medical devices.

#2 Providing quality

The opaque and lengthy system of the medical reimbursement process makes it quite difficult for the manufacturer to produce quality medical devices and provide valuable services.

#3 Difficult early diagnosis and preventive care

The government’s decision to cut down on healthcare expenditure, especially when it comes to medical reimbursement for devices and procedures, leads to difficulty in diagnosis at the early stage of disease like breast cancer, which needs a screening.

Therefore, to avoid such instances manufacturers need to take steps for their participation in the formulation of medical reimbursement rules. This will further help in advancing the innovation process in medical devices and attaining financial goals.


To know about the medical reimbursement challenges and its impact

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