The Clinical and Financial Costs of Medical Devices

Recently, a rep from a medical device company came to the office to demonstrate their product -a retinal camera.  This kind of product is used to screen for retinopathy (eye disease) in patients who have diabetes.

Over the years, we have looked at and sometimes purchased or leased other devices.  Often, we find these devices can improve patient care and workflow and, to a lesser degree, increase revenue. 

We brought in an ultrasound machine, which we use to monitor thyroid nodules and to perform thyroid biopsies. This has been very helpful in treating our patients and has been responsible for fairly decent reimbursement.  Having said that, there are certain plans that do not pay for in-office ultrasound studies.  The good thing is, if it's denied, we may not get paid but we're not really losing money.

We have also invested in an Hba1c machine.  If patients don't have their labs done prior to their visit, we can do the test in the office and let the patient know how well controlled their diabetes is.  There is no expense for the machine anymore, but we do have consumables.  It uses disposable cartridges and we need to use a new lancet for each test.  We don't make any money from doing these tests.  When we get paid for the service, it generates an extra dollar or two.  Every now and then, we don't get paid.  There are some plans that don't cover in-house labs.  Medicare will only pay for one test every 75 days.  So if the patient forgot that he had labs done 70 days ago and we perform the test, we don't get paid.  Fortunately, the cartridges and lancets don't cost much, so when we don't get paid, it's not a huge burden.

On the other hand, for a while we were doing nerve conduction studies to test patients for diabetic neuropathy.  It saved the patient a trip to a neurologist for the test.  Unfortunately, we learned the hard way that many payers don't cover it.  And the supplies were expensive.  So we were in the hole for a decent chunk of money every time a claim was denied.

So, when considering a new purchase, I have to take into consideration several things.  In addition to the clinical utility of an item, I need to know how much the initial outlay and the cost of ongoing expenses.  Will there be consumables?  Will there be a monthly fee?  Is there a fee per test (as there will be for the retina camera)?  Is it covered by most payers?  Does each test need pre-certification?  Do we need to get certified in some way in order for payers to cover an in house test (as with the ultrasound)?  In the long run, will performing a test result in higher revenue even if we lose money per test (e.g. higher reimbursement due to better compliance with required annual diabetic eye exam)?

Sometimes it makes both clinical and financial sense to have a device and perform tests in house.  Sometimes, it is better for the practice to continue to have patients have their tests done at another facility.