Hospitals are facing higher prices for spinal cord stimulators, used to treat patients with chronic pain, since two manufacturers launched more complex versions of the devices in 2013, according to the Modern Healthcare/ECRI Institute Technology Price Index.
The average cost of the stimulators is $16,957, up 8% from this time last year, said Amanda McShea, a manager for ECRI's PriceGuide service.
The newer models, which are manufactured by Boston Scientific Corp. and Medtronic, cost on average $19,000. Hospitals pay, on average, about $13,000 for the older models, which are still commonly used. More hospitals are choosing to buy the newer devices, ECRI data shows.
“The more expensive and more complex devices have contributed to the pricing increase,” McShea said.
This may be one reason why manufacturers are continuing to invest in neuromodulation products, which include spinal cord stimulators. The stimulators are implantable medical devices that send electrical signals to the brain, masking pain.
Three manufacturers produce spinal cord stimulators—Boston Scientific, Medtronic and St. Jude Medical. All three companies reported sales growth in their neuromodulation businesses during their most recent fiscal years, with Boston Scientific and St. Jude Medical each reporting revenue increases of at least 20% in those categories.
Increasing sales, as well as the anticipated wider acceptance of neuromodulation products, will likely fuel growth in the U.S. neurological device market, which is expected to grow by $5 billion over the next five years, according to a report published in December by iData Research, a Canadian medical-device research firm.
While manufacturers continue to invest in products that demand high prices from their hospital customers, many health systems have been working for several years to negotiate better prices on implantable medical devices, also known as physician preference items. These supplies usually make up a hospital's largest supply expense.
“This is a category that supply chain is working aggressively to drive costs down,” McShea said.
The supply chain staff at Beth Israel Deaconess Medical Center, an academic medical center in Boston, has found that prices of spinal cord stimulators are going up. But the facility has been able to find lower prices, based in part on leveraging its position as a teaching hospital.
But one challenge for the hospital is distinguishing the differences in the manufacturers' technology claims, said Pam Kennedy, a clinical contracts director for Beth Israel Deaconess.
Medtronic's new device, the SureScan System, is marketed as compatible with MRI systems. Many implantable devices are not compatible with MRI, which can affect care for patients with such devices. Medtronic in recent years has developed other products, such as a pacemaker, that are MRI-compatible.
Some MRI-compatible devices can only be used with certain MRI machines, Kennedy said. That means that the contracting and value analysis teams have to question the value of purchasing those devices based on that feature. “Are they truly compatible at any other facility?” she said.
The Modern Healthcare/ECRI Institute Technology Price Index looks at monthly and yearly price data for 30 supply and capital items purchased by hospitals and other healthcare providers, based on three-month rolling averages.
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