Some high-priced areas of advanced technology-orthopedic implants and angioplasty catheters-are getting a dose of price competition.
The average price of a balloon catheter, for example, likely will fall to $550 in 1997 from $700 in 1993, according to Boston-based Cowen & Co. Meanwhile, physicians will use fewer balloons to clear plaque from arteries, cutting the average cost of balloons per procedure to $770 in 1997 from $1,169 last year.
The price of hip implants, which typically has climbed 5% to 7% each year, will rise only slightly to $3,100 in 1997 from $3,060 in 1993, Cowen & Co. predicts.
These price estimates provide some of the most striking evidence of the healthcare system's hardening attitude toward medical technology and physicians' growing willingness to consider cost when selecting products, industry observers said.
Prices also are falling for intraocular lenses and nonionic contrast media, they said. Other types of medical technology, such as vein grafts and heart valves, are ripe for pricing battles.
In recent weeks, drug companies have introduced a new chemotherapy agent and a new cholesterol-lowering drug at prices that are less than competing products-rare actions in an industry that traditionally has charged premium prices for new products.
One force behind price competition is hospitals' efforts to adopt product protocols, said Edward Gravell, a vice president at Purchase Connection, a large Los Angeles-based buying group. For example, orthopedic clinics are creating formulas to rank patients' needs for more expensive and sophisticated orthopedic implants. They also are standardizing implants to one manufacturer to obtain better prices.
Purchase Connection now is surveying its members to see how it can help them in their efforts.
Implants and cardiac catheterization supplies often are hospitals' first targets for such cost-control measures because they represent a high proportion of total procedure costs, Mr. Gravell said.
Hospitals have had more success in controlling supply costs in the past year because physicians' attitudes have changed, said Patrick Carroll, a materials management consultant based in Cypress, Calif. Many physicians are demanding evidence that "improved" devices actually improves patient outcomes.
They're more likely to minimize the use of high-end orthopedic implants or other costly supplies when administrators provide documentation that shows how the supplies' higher prices boost total hospital costs, Mr. Carroll said.
In the markets for balloon catheters and orthopedic implants, several factors set the stage for price competition, said Ann Pluemer, a Cowen & Co. analyst. Several companies offer similar technology, and technology is changing more slowly, Ms. Pluemer said. Meanwhile, the number of procedures performed each year isn't growing as rapidly.
A price war is developing among makers of balloon catheters, which dominate the angioplasty supply market, a recent Cowen & Co. report said. The annual growth of the $730 million U.S. market will slow to 6% to 9% through 1997, it said. For the past five years, the market has grown at a 20% annual rate.
Implants won't see as much price competition because products differ more significantly and manufacturers must spend more money providing physicians with support services. Growth in the $1.5 billion U.S. market for orthopedic implants will slow to 8% to 10% from a 17% annual rate, Cowen & Co. said.