Navigate the transition to value-based care in life sciences

Understanding the shift to value-based care in MedTech

In the emerging landscape of value-based care technology, diagnostics face a unique challenge compared to other medical devices: The value of a diagnostic test or technology lies in enabling improved clinical decision-making and therapy selection, which is often distinct from the value of the underlying therapy or intervention itself. Additionally, recent years have witnessed growth in the availability and advancements of new digital diagnostic devices, e.g., incorporation of artificial or augmented intelligence (AI) and machine learning (ML) into diagnostic tests. This trend, along with a paradigm shift in industry toward environmental, social, and governance (ESG) considerations, requires stakeholders to assess the value of a diagnostic technology with these market changes in mind.

In this changing environment, it’s a business imperative for diagnostic manufacturers to understand, demonstrate, and clearly articulate how their offerings can not only lead to improved patient outcomes but also create value for a variety of key stakeholders. There are many ways that diagnostic technologies can impact the quality and cost of care. In our report, these are referred to as “value drivers.” Different stakeholders care about and prioritize different but overlapping sets of value drivers against which they judge the benefits of a diagnostic test.

Diagnostic device manufacturers must understand and speak effectively to each stakeholder’s unique set of value drivers. This may require new insights into how diagnostic testing can improve the effectiveness and efficiency of care delivery for providers or payers and how tests go beyond improving clinical outcomes for a patient population to deliver non-clinical patient benefits, such as the patient experience during testing and patient economic considerations.

AdvaMedDx launched a Strategic Value Initiative in 2017, in collaboration with Deloitte Consulting LLP, to develop principles and an approach for assessing the value of diagnostics that can be adopted by diagnostic device manufacturers, health systems, payers, and other stakeholders. The viewpoints of multiple stakeholders were incorporated into the process of developing the approach, with the overall goal of encouraging the adoption of the proposed principles and supporting practices into existing frameworks and assessment models as they evolve over time.

Since 2017, the diagnostics landscape has witnessed significant changes and advancements, especially with the advancements in digital diagnostic devices and a paradigm shift in industry toward ESG priorities. Due to these recent market changes, the diagnostics value framework has been refined and refreshed, incorporating important stakeholder viewpoints and feedback.

Embracing the eight core principles of MedTech valuation

Our recommended approach begins with a set of core principles that guide an effective process for comprehensively assessing the value of diagnostic tests. We believe that these principles warrant broad adoption by all stakeholders involved in value assessments—payers, providers, health technology assessment (HTA) bodies, patient advocates, laboratories, and diagnostic device manufacturers.

• The comprehensiveness principle: Value assessments should consider a broad array of patient-centric value drivers and their relevance and importance for different stakeholders.
• The evidentiary principle: Value assessments should utilize an appropriate range of available evidence, and the type of evidence and assessment methodology should be based on test type and the potential risks and benefits to patients.
• The cost principle: Value assessments should consider and report costs incurred and costs avoided over time frames appropriate for the test or technology (including, where available, costs incurred and avoided outside the health care system).
• The specificity principle: Value assessments should account for representative patient populations and applicable time frames for patient impact.
• The flexibility principle: Value assessments should be flexible to account for different types of tests or technologies and utilize an appropriate range of impact analyses.
• The engagement principle: Value assessment processes should involve the perspectives of multiple stakeholders and provide sufficient opportunities and time for all to engage in the process.
• The transparency principle: Value assessment processes and methodologies should be transparent to all stakeholders.
• The relevancy principle: Value assessments should be updated regularly to keep pace with innovation in standards of care or when there is significant new evidence.

Improve health and economic outcomes for patients

The recommendations outlined in the report can be used to reach a common understanding of what enables effective assessment of the value of a diagnostic test or technology. These overarching principles and the approach for assessing value can be adopted by diagnostic companies and diagnostic test developers as well as by other stakeholders involved in value assessments, including health systems and providers, payers, HTA bodies, and patient advocates.

As health care’s volume-to-value shift accelerates, Deloitte can help medical technology companies navigate the increased scrutiny and changing decision-making dynamics that they face. Connect with our team to learn how we can help MedTech companies use the value assessment framework to clearly articulate and credibly demonstrate how their offerings can improve patient outcomes and create value for other stakeholders across the health care ecosystem.