Becker's Hospital Review

27 CFO / FINANCE Hospitals Often Exceed Budget for Equipment Costs in Q2 By Mackenzie Bean W hen buying new equipment, hospitals seek to bal- ance improved care quality with the financial impli- cations of the purchase, according to a new report from Chicago-based OpenMarkets. To highlight the main trends in hospital capital equipment pur- chasing for the second quarter, OpenMarkets evaluated data on the purchasing habits of more than 250 hospitals from April to June 2016. Here are seven report findings. 1. Hospitals budgeted 18.6 percent of their annual dollar spend in the second quarter and made 23.9 percent of their annual item purchases in the same time period. 2. Equipment purchases in May comprised 10.2 percent of an- nual dollar spend, yet hospitals allocated the smallest amount of their budgets (2.2 percent) to this month. 3. Hospitals budgeted 10 percent of their budgets for June and used 9.2 percent of their annual item purchases in this month. 4. April saw a high volume of quote activity between providers and suppliers, but had the lowest amount of purchases in 2016. 5. Making purchases in May, instead of June — a more high-traf- fic month — can save hospitals 4 percent on equipment. 6. Endoscopes were the second most frequently purchased equipment category among hospitals for the second quarter. Hospitals paid half the annual average cost for endoscopes during the month of April. 7. Hospitals willing to buy demo or refurbished equipment saved up to 52 percent of the list price. n Setting Lower List prices — A First for Pharma? By Mackenzie Bean S everal major drugmakers have thrown a wrench into the typical drug pricing system this week by setting lower than normal prices for two newly approved drugs, reports Bloomberg. Here are four takeaways. 1. Sanofi and Regeneron Pharmacetucials on March 28 earned Food and Drug Admin- istration approval for its new eczema drug, which will cost $37,000 a year, compared to the $50,000-a-year price tags for similar, yet older, treatments, according to Bloomberg. To limit public scrutiny of the drug's price, Sanofi and Regeneron communicated directly with insurers about pricing and other details prior to winning FDA approval. "We believe that Sanofi and Regeneron and the payers are heading perhaps towards set- ting a new paradigm," Regeneron CEO Leon- ard Schleifer said during a March 28 investor call. "But it ain't over yet." 2. e same day, Roche earned FDA approval for its new multiple sclerosis treatment and said it would cost $65,000 — a 25 percent de- crease from the price of Merck's competing treatment approved 15 years ago, according to the report. 3. Drugmakers are waking up to a new reali- ty, Roger Longman, CEO of Real Endpoints, a data analytics firm that assesses the value of drugs, told Bloomberg. "In the old days, if you could convince the physician that one drug was slightly better than another, then he or she would prescribe it, it didn't matter what the cost was," said Mr. Longman. "Now, the decision makers are the payers: the insurance companies, the employers." 4. Since the newly approved drugs have no direct competitors and fill a previously un- met need for specific patient populations, the drugmakers will not have to offer as large of discounts as drugs with more competition, notes Bloomberg. So despite these price de- creases, the companies will still rake in the same net prices for the new drugs as their competitors. n 3 RD ANNUAL HEALTH IT + REVENUE CYCLE CONFERENCE September 21-23, 2017 | Hyatt Regency | Chicago, Illinois 150 SPEAKERS FROM HOSPITALS AND HEALTH SYSTEMS 255 SPEAKERS TOTAL THE BRIGHTEST CIOS, HEALTH IT AND REVENUE CYCLE EXPERTS IN HEALTHCARE REGISTER HERE www.beckershospitalreview.com/health-it-revenue-cycle-conference/ Registration@BeckersHealthcare.com OR 800.417.2035. KEYNOTES BY George W. Bush, 43rd President of the United States of America Sugar Ray Leonard, Boxing Legend, Successful Entrepreneur and Author, The Big Fight: My Life In and Out of the Ring

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