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“We could save a lot of money and improve care if we could choose standard cardiology supplies


“We could save a lot of money and improve care if we could choose standard cardiology supplies. We could reduce our inventories, negotiate better prices with suppliers, and improve the performance of our surgical teams. Everybody would win,” said Cameron. “Well, not everybody,” said Alex, vice president of medical affairs. “Most physicians are more comfortable using a particular type of stent, catheter, or drug. They are familiar with the product, they’ve used it successfully in the past, and manufacturers are paying some of them to use their products. The article in the New England Journal of Medicine by Campbell and colleagues (2007) that we discussed made it pretty clear that drug and device makers use an array of incentives to influence cardiologists. My guess is that it works, or manufacturers would not spend billions on gifts. At a minimum, you need to give a physician a good reason for switching from a familiar drug or device. You also may need to counteract inducements from the manufacturers.” “Our cardiologists are accepting gifts from drug companies and stent manufacturers? That’s outrageous,” exclaimed Cameron. “Probably,” Alex replied. “It’s pretty standard in the field, even though it’s a violation of the American Medical Association’s code of ethics. It really upsets me, and I’d be willing to work with you to do something about it. But don’t kid yourself, if you want to get physicians to adopt a default device or drug, you have to face that the switch will be disruptive for some physicians and will cost them time and money.” At this point, Emerson, the chief legal officer, jumped into the conversation. “Whatever you do, be aware of the concerns of the Health and Human Services Inspector General, who has repeatedly expressed concern about gain-sharing arrangements.” “That’s a valid point,” replied Alex. “But since 2005 the Inspector General has issued some opinions that permit gain-sharing programs in cardiology. The approved programs all have a clear structure, a plan for sharing gains, a focus on maintaining or improving quality, and a policy of disclosing the gain-sharing program to patients. Ketcham and Furukawa (2008) have studied these programs and concluded that the gain-sharing programs reduced costs and improved quality. My sense is that there’s an opportunity here, and we shouldn’t shy away from it.” Discussion questions:

• Why would standardization reduce costs? How could it improve quality?

• Could the hospital ban acceptance of samples, gifts, and payments from drug and device makers? Would this be a good strategy? What would the risks be?

• How could the hospital reward physicians for helping standardize cardiology supplies? How would this help align incentives?

• Are any strategies more likely to be effective than others?

• Are any strategies less likely to cause problems with the Inspector General?

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