Reimbursement a top concern for medtech startups

Reimbursement issues have become 1 of the top concerns for medtech startups, a panel at a Minneapolis conference said yesterday. In the past, FDA regulations, clinical trials, or finding investors might’ve been the top worry for those in the medical device field, but reimbursement and payment issues have climbed to the top of the list, according to speakers at LifeScience Alley’s "Leading the Conversation in Medtech" event.

Three medical device CEOs and a moderator who works with helping medtech firms solve reimbursement issues discussed the topic in an panel entitled, "Reimbursement for Investors and Entrepreneurs," and agreed that reimbursement has never been more important for the industry.

"Reimbursement comes up in just about every discussions I’ve ever had with investors," said David Rosa, president & CEO of Sunshine Heart, an Eden Prairie, Minn.-based medical device company that’s developing a therapy for heart failure. "Today, they’re all looking to de-risk their investment, and they all want to know, up front, the likelihood of reimbursement."

"It really is all about the money. The 1st real money we spent was on an outside analysis on reimbursement strategy. So it was fundamental to everything we’ve done," added Preceptis Medical president & CEO Steve Anderson.

Minneapolis-based Preceptis is developing a therapy to help children with hearing problems. Anderson said that his company chose their technology in part because of its relatively simple reimbursement path.

Moderator Bob Thompson, president of Gahanna, Ohio-based Comprehensive Reimbursement Solutions, began the panel with an overview of how reimbursement issues are affecting medtech. Payers have been moving toward more efficient systems, he noted, with standardized offerings, tightened networks, and lower costs. In addition, the provider and payer sectors are trying to tighten the supply chain. All of these trends have had an effect on medtech, but Thompson added that even in this new environment, medtech companies can do well.

"There’s a lot of opportunity out there," he said. "If you direct your products towards unmet medical needs, you’ll see the benefits – particularly if you deal with the quality and cost control issues that hospitals and payers are feeling."

One question the panelists did not come to a consensus on was whether the Affordable Care Act has had a big impact on their business. Anderson, whose product is mostly used for pediatric patients, did not see the ACA having a significant impact on his product. Rosa noted that the ACA has placed a high priority on reducing rehospitalization, and said since his product addressed heart failure, a major cause of rehospitalization, the health reform law had had a big impact on his company.

But Paula Skjefte, chairwoman & CEO of Cardialen, said that even though the ACA hasn’t affected her company directly,Obamacare is still having an impact.

"The ACA has really raised awareness in the industry, " Skjefte explained. "Investors ask us how the ACA will affect the business model."

Anderson noted that in the future, medtech companies who are developing new technologies will have to convince investors that their innovations are worth the investment. And he says the reimbursement question will be 1 of the top priorities for investors.

"The hardest questions you’re going to get are on the reimbursement side," he said. "It goes to the heart of everything we’ve been doing. Five years ago, we would’ve said, ‘Oh, reimbursement, I don’t need to worry about that.’ But this is the big issue today. It’s a big issue, and a big opportunity."