The idea that the cost of medical devices is unsustainable given the emergence of value-based care is gathering steam with hospital administrators. Among other initiatives to drive down supply costs, the so-called “rep-less model” for key (costly) devices has generated a lot of attention lately. The concept of “going rep-less” is very attractive and straight–forward: eliminating the sales rep in the operating room (OR) should mean that devices are made available at a significantly lower price. After all, for most medical technology companies, the sales and administrative portion of their total bill is usually above 40 percent; cutting away the sales costs promises to at least drive down the price SOMEWHAT.
The problem is that “going rep-less” is little more than an attractive concept and the “talk of the town” in healthcare today. A few hospitals have implemented versions of the rep-less model, and a few manufacturers have adopted second-tier pricing for products that come “without the service element.” Precisely how a hospital successfully implements such a model while retaining quality and surgeon satisfaction, however, is still unclear.
One of the areas targeted for the “rep-less” trend is knee and hip replacement. Knee and hip implants are very expensive and constitute a significant part of the overall cost of surgery. As hospitals experience increased financial pressures in a high-activity area like knee and hip replacements, they start to look closer at these devices and their costs (which seem to increase every year, although improvements are merely incremental and come with no difference in outcome). A focus on price negotiations alone can result in (marginally) reduced costs. However, the use of implants, consumables, instruments, etc. during knee and hip surgery is so complex that hospital administrators rarely have full transparency into the total cost picture. This strategy of putting pressure on the rep and the manufacturer rarely has significant impact.
The promise of “going rep-less” is that implant prices could decline substantially–in one clean sweep–if the sales rep is completely removed from the process.
“Some hospitals and health systems have begun to examine the premises for “going rep-less”, and are increasingly realizing that, while the promises are great, the premises require some serious thought”
But under what premise is this likely to be an effective strategy? Most hospitals recognize that eliminating the sales rep is difficult and challenging in terms of clinical outcomes, surgeon satisfaction, patient safety, etc. There are at least five questions that need to be answered:
How do you replace the knowledge that the rep brings with him/her into the OR?
How can surgeons support a solution with essentially “less service”? (Surgeon retention is a real challenge today.)
What is the actual leverage in negotiating a lower price from the manufacturer?
Who manages inventory and logistics, areas that have successfully been handled by the rep?
How does the hospital ensure that processes are optimized and transparency gained under this new regime?
None of these are simple questions. The premises under which a “rep-less model” would work can be found in the following four areas:
1) Clinical capabilities in the OR must be replaced. Although the rep is not necessary knowledge of how to support the surgeon is important. Using surgeon extenders that can partner with the surgeon clinically is a viable option. The use of Surgical First Assistants (SFAs) is on the rise. Appropriately trained, these highly qualified clinicians can close the knowledge gap and in many cases, increase efficiency and throughput. And, this change doesn’t mean that what we save on devices, we’ll spend on payroll.
2) A rep-less model must integrate clinical and operational initiatives. Simply replacing clinical knowledge does not do the job. Operational challenges like inventory flow, wait times, etc. need to be addressed simultaneously to ensure that expected savings and efficiencies are actually achieved.
3) Going rep-less is a transformational process and needs to be managed as such. The necessary process change in “going rep-less” cannot be “top-down.” Surgeons and other staff whose job is impacted need to be brought on board from the beginning, and their concerns and opposition addressed. Most surgeons have a strong, long-lasting and very personal relationship with “their rep” and regardless of the impact they typically perceive the presence of the rep to be very important. SFAs increase the level of service; they do not represent a reduction in service level. And, many surgeons are quick to understand that a surgical partnership is likely to increase their productivity.
4) The device purchasing process needs an overhaul. One cannot simply call the manufacturer and request a product they don’t have on their shelves. The purchasing process needs to be overhauled for the hospital to realize the savings promised in the model.
Some hospitals and health systems have begun to examine these premises for “going rep-less”, and are increasingly realizing that, while the promises are great, the premises require some serious thought.