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How the Medical Device Industry is Evolving

4 min read


Mike Sotak, CEO of PEL

This post is sponsored by PEL, LLC.

Mike Sotak is the president and chief executive officer of PEL, LLC.  He has more than 22 years of experience in the medical products industry. Prior to joining PEL he spent six years as an executive with Invacare, headquartered in Elyria, Ohio. In this interview, Sotak discusses some of the challenges of the device manufacturing industry and how technology is shaping the future.

Question: What is the biggest challenge the O&P industry faces in getting fair Medicare reimbursement for their products? What can be learned from others in health care about making the reimbursement process easier?

Mike Sotak: One of the biggest challenges O&P professionals face is getting reimbursed for the total cost of delivering a device to a patient. The current reimbursement model does not separate the patient care service provided and the cost of the device. O&P caregivers are challenged to demonstrate the value they provide in bringing about desired patient outcomes and the service costs associated with properly delivering a device to a patient.

Across the medical spectrum, change is being driven by the focus on patient outcomes. To meet the level of scrutiny today, it is critical for O&P practices to document not only the medical necessity of the device, but the patient benefits derived from their services. Reimbursement models are evolving and O&P professionals must align themselves with other healthcare providers to ensure they are part of the continuum of patient care.

Q: Information technology is revolutionizing many aspects of healthcare, including data analysis to find better treatments for a variety of diseases and conditions. How do you think innovative uses of health IT will advance treatment for O&P patients and how devices for their conditions are made?

MS: We believe many patients may benefit from O&P services, but they simply don’t seek medical care or they settle for alternative solutions such as wheelchairs, scooters etc. Information technology can help connect data and information regarding patients and the potential solutions offered to achieve optimal clinical outcomes. For example, clinical research shows that mobility is important to everyone’s health and wellbeing. The value of the prosthetic therefore can yield far greater health benefits beyond restoring the ability to walk. Information technology today can measure the relative increase in mobility delivered and connect the dots to better overall health.

Q: What other ways can information technology streamline O&P businesses to improve economic and clinical outcomes? What innovations can be borrowed from others in health care and applied to O&P?

MS: Information technology can be used to make administrative processes more efficient so that O&P practitioners can spend more quality time with patients. In other healthcare sectors, processes have been carefully evaluated to improve efficiency at each step in the patient experience. Sometimes specialists in regulation compliance or billing have been necessary to achieve the desired efficiency and accountability.

Q: How has your business changed since the passage of the Affordable Care Act? Has the effect been positive or negative?

MS: The Affordable Care Act has resulted in increased enforcement of regulations with hope of eliminating wasteful spending. It is too early to tell how the impact on cost control will influence our customer base or the quality of patient care, but we are optimistic. In the long-term, we hope the Act would yield positive outcomes for O&P practices and patients, and in turn positive results for our business

Q: What do you see happening in the O&P Industry over the next three years?

MS: We anticipate there will be significant consolidation at the O&P manufacturer and caregiver levels. Over the long-term, patient care should be better as the industry evolves to represent the best players at all levels and by focusing on clinical outcomes. In general, consolidation at the manufacturer level will result in better quality products at the best value. At the caregiver level, practices will continue to improve their business and clinical processes to achieve the best economic and clinical outcomes.

Many independents will be forced to aggressively expand their practices or partner with others to reach a viable scale required to support the increasing administrative requirements and the ongoing reductions in reimbursement. O&P practices will likely find themselves partnering with other provider groups and payers such as ACO’s and other payment bundling models as they continue to evolve. The most successful practices will be managed by business professionals with skills to address the complex needs of a patient care business.