Medtronic, Abbott awarded first SharedClarity contracts

About 135 hospitals in the U.S. will shift the large majority of their spending on bare-metal and drug-eluting stents to Abbott and Medtronic as part of the first contracts awarded by SharedClarity, a new joint venture that aims to reduce the costs of the most expensive medical devices used in hospitals.

Under the three-year contracts, SharedClarity hospital members will buy a majority of their bare-metal and drug-eluting stents from Abbott and Medtronic, two of the largest manufacturers of those devices in the U.S., in exchange for each hospital system receiving “significant double-digit savings,” said Mark West, president of Phoenix-based SharedClarity. He declined to provide an exact percentage of savings.

“The real benefit here is the ability to understand how these products perform and engaging the doctors and giving them the resources to understand how they perform,” West said.

McLaren Health Care Corp., a 10-hospital system based in Flint, Mich., which performs between 4,000 and 5,000 stent procedures each year and one of the owners of SharedClarity, will save 40% on stents this year as a result of the new contracts.

“If we're going to make healthcare much more affordable and make the costs of the services we provide much more attractive to the patients and purchasers of healthcare, this is going to help us achieve that goal,” said Dave Mazurkiewicz, senior vice president and CFO for McLaren Health Care.

Hospitals are under increased pressure to reduce costs, which has led more healthcare providers in recent years to evaluate what they spend on medical devices and supplies and has prompted changes to the traditional hospital purchasing model. Finding new ways to reduce the costs of the most expensive devices they buy has become a top priority for many healthcare providers. These types of devices, which can include stents, hip implants and pacemakers, are often referred to physician preference items, because surgeons usually align themselves with one or two manufacturers or products in the early days of their careers.

UnitedHealthcare in 2012 formed SharedClarity with Dignity Health. Since then, it has added three other health systems as owners, including McLaren, and has plans to bring in others to participate in independent clinical reviews of about 30 of the most expensive devices on the market. Those findings are paired with proposals from companies to achieve aggressive discounts on the prices of the devices.

Abbott is considered the market leader in both stent categories, according to Ian Swanson, a senior analyst for Decision Resources Group, a biopharmaceutical research firm. Boston Scientific is the only other manufacturer of bare-metal and drug-eluting stents in the U.S. following the 2011 departure of Cordis, a Johnson & Johnson subsidiary that made a drug-eluting stent.

It's generally understand that there is little clinical variation between these kinds of stents, which have been on the market for years. A study published last year in the Lancet found that third-generation drug-eluting stents manufactured by Boston Scientific and Medtronic performed similarly for every measure but one.

“A new stent coming on the market is not getting a premium price,” Swanson said. “All the hospital systems and purchasing systems are putting pressure to continue driving (prices) down.”

As part of the SharedClarity model, which is unique in that it aligns a health insurer with hospital systems, physicians at the member hospitals reviewed published device literature and completed clinical surveys of the devices. In some cases, they may also evaluate data from member hospitals and claims information from UnitedHealthcare. But that wasn't necessary for these contracts, West said. The clinicians reached consensus about what devices to select before that.

About four of five stents implanted in the U.S. are drug-eluting stents, which usually cost two and a half times more than a bare-metal stent. The combined domestic market for both devices was about $2.05 billion in 2011.

Another kind of stent is currently undergoing clinical trials. A bioabsorbable stent, which naturally resorbs into the body, may come to market in the U.S. by 2016 or 2017, depending on approval from the Food and Drug Administration, according to Swanson. If the device is approved, that will lead to another round of clinical reviews for stent contracts, West said.

SharedClarity plans to review between six and eight devices this year. The company's other member owners are Advocate Health Care in Illinois and Baylor Scott & White Health in Texas.

Follow Jaimy Lee on Twitter: @MHjlee



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