‘Re­peal­ing the med­i­cal de­vice tax is im­por­tant for the in­dus­try’

Modern Healthcare - - Q & A -

“We think it is the right bill; it has the right el­e­ments and has the right fi­nan­cial struc­ture.”

From user fees and the med­i­cal de­vice tax to in­creased wor­ries about cy­ber­at­tacks, 2017 is shaping up to be a busy year for the med­i­cal de­vice in­dus­try. Hav­ing just com­pleted his two-year term as Advanced Med­i­cal Tech­nol­ogy As­so­ci­a­tion board chair­man, Vin­cent For­lenza is bullish on the in­dus­try's abil­ity to tackle these pri­or­ity is­sues. As CEO of Bec­ton, Dick­in­son and Co., For­lenza sup­ports the cur­rent it­er­a­tion of med­i­cal de­vice user-fee amend­ments in front of Congress. He also said the in­dus­try will con­tinue to push for re­peal­ing the Af­ford­able Care Act’s med­i­cal de­vice tax, ei­ther as part of full re­place­ment bill or a stand­alone mea­sure. For­lenza re­cently sat down with Mod­ern Healthcare’s Adam Ruben­fire to talk about his ten­ure as Ad­vaMed chair and how the in­dus­try can sup­port cus­tomers in a chang­ing healthcare en­vi­ron­ment. The fol­low­ing is an edited tran­script.

Mod­ern Healthcare: What were your big­gest ac­com­plish­ments as Ad­vaMed chair­man?

Vin­cent For­lenza: We were able to ac­com­plish a lot. First off, there was sus­pen­sion of the med­i­cal de­vice tax. I saw that in the con­text of an in­no­va­tion sys­tem that was re­ally stressed for a num­ber of rea­sons. Sec­ond, I would point to the 21st Cen­tury Cures Act and work­ing with Congress to get that passed. Third is ex­pand­ing the mem­ber­ship, es­pe­cially into the dig­i­tal tech­nol­ogy space. We all know that as the in­ter­net of things evolves, it is go­ing to be an im­por­tant el­e­ment for the in­dus­try go­ing for­ward. Those are a few, but let me add one more: ne­go­ti­at­ing the med­i­cal de­vice user­fee amend­ments and build­ing on what we had done with the Food and Drug Administration in the pre­vi­ous deal. We’re anx­ious to get that passed through Congress.

MH: Speak­ing of the user­fee amend­ments, the Trump administration has said it plans to raise the fees. What does that mean for your abil­ity to in­no­vate and the abil­ity of star­tups to in­no­vate?

For­lenza: The process to get to a new user-fee agree­ment, which is go­ing be­fore Congress, was a long one and was jointly put to­gether with the FDA. We think that is the right bill; it has the right el­e­ments and the right fi­nan­cial struc­ture. I was en­cour­aged to hear that the Se­nate Health, Ed­u­ca­tion, La­bor and Pen­sions Com­mit­tee wants to move for­ward. It’s good for the in­dus­try and it’s good for BD. There are a num­ber of el­e­ments in there in terms of im­prove­ments of the process, some im­prove­ments in get­ting ap­provals. It is a pretty com­plete ap­proach and, as I said, it builds upon a lot of things that we had done with the FDA and adds some new el­e­ments in terms of real-world ev­i­dence.

MH: Per­ma­nent re­peal of the med­i­cal de­vice tax has been a ma­jor pri­or­ity for Ad­vaMed and de­vice­mak­ers in gen­eral. If Congress is un­able to re­place the ACA, do you be­lieve the in­dus­try will ad­vo­cate for a sep­a­rate bill re­peal­ing the tax?

For­lenza: Re­peal­ing the med­i­cal de­vice tax is im­por­tant for the in­dus­try. It’s im­por­tant for pa­tients and im­prov­ing in­no­va­tion. Ad­vaMed will stay fo­cused on that and Ad­vaMed will

look for the ap­pro­pri­ate ve­hi­cle with Congress to ac­com­plish that goal. I can’t say ex­actly how that will play out, but as leg­is­la­tion moves through Congress there may be an ap­pro­pri­ate ve­hi­cle, and I think we will be re­spon­sive to those op­por­tu­ni­ties. But we will re­main fo­cused on this. It’s very, very im­por­tant.

MH: Cy­ber­se­cu­rity is a ma­jor is­sue. The FDA in 2016 came out with some guid­ance on de­vice se­cu­rity. How se­ri­ous of a threat is de­vice se­cu­rity, and what are you do­ing to ad­dress it?

For­lenza: It is a se­ri­ous threat for our cus­tomers and for the in­dus­try. I’ve been chair­man of the board of a hos­pi­tal in north­ern New Jersey, and I have seen the evo­lu­tion of the threat, and I’ve seen the cus­tomer base re­spond­ing in in­creas­ing its ef­forts on se­cu­rity. I was very pleased to put this is­sue on the ta­ble to the Ad­vaMed board, and there was a lot of en­thu­si­asm to cre­ate prin­ci­ples to make sure that we were aligning with what needs to be done and also to work with the FDA.

At BD, we build this is­sue into our prod­uct devel­op­ment process. We have to make sure that in every step of that process we’re tak­ing this into ac­count, and that is very rig­or­ous. We are not just us­ing our in­ter­nal re­sources, but we will also use out­side peo­ple to test our ap­proaches. Once the prod­uct is on the mar­ket, we have to make sure that the man­u­fac­tur­ing is se­cure, and that we sup­port the cus­tomer with up­dates and mak­ing sure that there’s a very open and hon­est di­a­logue go­ing back and forth. It has to be a timely di­a­logue, too, so that our cus­tomers are safe and our de­vices are safe. That’s for­ward-look­ing, and, of course then, we’re al­ways look­ing backwards in terms of older prod­ucts and what we can do to up­date them as well and make sure that they are safe.

MH: Ul­ti­mately, isn’t it up to your cus­tomers to se­cure their net­works? You build in se­cu­rity, but it’s up to them. How do you deal with that and how do you en­sure that ev­ery­thing’s safe?

For­lenza: If you went back maybe two years ago, there was less of a fo­cus from our cus­tomers on this is­sue. But the events that tran­spired with ran­somware in­ci­dents, cus­tomers are much more fo­cused on net­work se­cu­rity. We have to make sure that as we in­ter­act with the cus­tomer, we un­der­stand where they’re go­ing with their se­cu­rity plans, how our soft­ware can fit in with their plans, and make sure that these ac­tiv­i­ties are seam­less. The chal­lenge is to con­tinue to sim­plify what we do so that it’s eas­ier for them to con­tin­u­ously upgrade and meet the chal­lenge.

You build a 10-foot wall, and the other side builds an 11-foot lad­der. So se­cu­rity is go­ing to be a con­stant bat­tle. And from the BD side, we’ve cre­ated a new gov­er­nance sys­tem for prod­ucts across the com­pany so that we leverage that knowl­edge, and we drive those as­pects of our pro­gram to as high level that we can.

MH: We’re see­ing a lot of ac­qui­si­tions in the lab­o­ra­tory space in hospi­tals, or hospi­tals are choos­ing to boost their in-house lab op­er­a­tions and bring ev­ery­thing in-house. Is that af­fect­ing your lab­o­ra­tory au­to­ma­tion busi­ness and some of your other di­ag­nos­ti­cre lated busi­nesses?

For­lenza: Yes, it does, be­cause what you’re re­ally do­ing is a ma­jor re­vamp for the hos­pi­tal as op­posed to go­ing and sell­ing in­di­vid­ual sys­tems.

We have a tremen­dous lab au­to­ma­tion sys­tem for in­fec­tious dis­ease and the mi­cro­bi­ol­ogy area. As our cus­tomers con­sol­i­date, that au­to­ma­tion be­comes more im­por­tant for them.

Who you talk to be­comes dif­fer­ent be­cause the C-suite gets in­volved in those de­ci­sions whereas they don’t on an in­di­vid­ual instrument. Of course, all of that is tied to­gether with soft­ware, go­ing back to what we were just talking about, so the CIO is in­volved in that de­ci­sion; of course, the head of the lab­o­ra­tory is as well. So, it’s a more com­plex sell, but it’s one that has a ma­jor fi­nan­cial re­turn for the hos­pi­tal.

MH: We’ve seen more in­ter­est in bun­dled-pay­ments and cap­i­tated episodes of care. How do you feel BD fits into that value-based care sit­u­a­tion and the con­ver­sa­tion on how to bring down costs?

For­lenza: The strat­egy that we have as a com­pany is to sell so­lu­tions. That means we can be­come a strate­gic part­ner for our cus­tomer base as they move to­ward value-based care and pop­u­la­tion-based health. To do that, they have to re­struc­ture their pro­cesses and we have to fo­cus on en­abling them to make those process changes. For in­stance, we’re help­ing them re­vamp and au­to­mate med­i­ca­tion man­age­ment across their en­tire de­liv­ery net­work. This goes from the phar­macy to com­pound­ing to get­ting the drugs up on the floor to the pumps to mak­ing sure that all of those sys­tems are talking to one an­other and they in­ter­face with the EHR. We are try­ing to elim­i­nate both mis­takes from the med­i­ca­tion man­age­ment process, but also driv­ing down cost and mak­ing it all ef­fi­cient by avoid­ing such things as drug stock-outs. When we sell, it’s that whole value propo­si­tion.

“You build a 10-foot wall, and the other side builds an 11-foot lad­der. So se­cu­rity is go­ing to be a con­stant bat­tle go­ing for­ward.”

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