By Lars Thording

The annual Heart Rhythm Society Scientific Sessions, held in San Francisco April 29 – May 1 this year, is the place to be to meet clinicians, technologists, service line management, suppliers, and scientists involved in electrophysiology, the diagnosis and treatment of arrhythmias in the heart. As a clinical area, electrophysiology has grown rapidly and substantially over the past 15 years and is expected to continue growing as demographics shift and more and more patients get diagnosed.

At hospitals with a favorable payer mix and top-notch electrophysiology facilities, the electrophysiology service line has also become one of the most profitable. It can enable hospitals to maintain less profitable service lines and still end up with positive operating profits, which is not something hospitals can take for granted in the post-pandemic era. Device costs associated with electrophysiology procedures are very, very high — often more than 50 percent of the CMS reimbursement rate for an atrial fibrillation procedure. Some single-use electrophysiology devices cost more than $3,000.

The combination of high device prices, growing demand, and importance to hospital profitability suggests that the medtech industry would be extraordinarily invested in this space, and HRS 2022 certainly demonstrated that: The global giants of the medtech industry showed up with extravagant, oversized displays — sometimes several stories tall — to present the newest technologies. Abbott, Biosense Webster, Boston Scientific, Medtronic, and Philips all offered up new and improved technologies, although many seemed to offer little in terms of demonstrated improvements in patient outcome.

This is a somewhat bizarre phenomenon in medical technology: For example, a new mapping catheter is launched with added dimensionality, improved electrode configuration and better image quality. But the clinician doesn’t obtain better results. Often, the last-generation device, in spite of its technological inferiority, did the job just as well. This is like buying a car that can go 150 mph instead of 110, but since you can only go 75 mph on the freeway, it still takes 30 minutes to get to work.

Given the importance to hospital economics of electrophysiology procedures, you would think that providers would reject the replacement of older technologies with newer ones. New technologies are always more expensive and add to the high cost of devices in electrophysiology procedures. And certainly, as a veteran HRS participant, I have noticed a change in how clinicians and hospitals respond to new technology launches. Traditionally, clinicians have wanted to get the newest technologies in their hands as soon as possible — after all, to use the newest technology means being on the top of your profession. However, this is not necessarily true anymore. At HRS 2022, we saw several examples of new technologies launched within the last few years that simply had never taken off.


Even more interesting is that increasingly, clinicians are on board with the need to contain device costs: They understand that there is a relationship between device costs, electrophysiology lab profitability, and their ability to have access to the technologies they need to provide the best care possible.

I believe this reflects a widening gap between the manufacturers’ interests and the hospitals’ interests, and this gap reflects a difference in the concept of value: Manufacturers are laser-focused on speeding up innovation and shortening product life cycles, so that the growth in volume combined with increased prices can maximize revenue in this lucrative space. To the manufacturer, value is a direct reflection of the speed of innovation and the technological sophistication of medical technologies (that’s the car that does 150 mph rather than 110). Ironically, procedure outcome is somewhat detached from this (it still takes 30 minutes to get to work). Clinicians used to be on board with this concept of technology value, and hospitals followed along.

Most large hospital systems in the U.S. are not doing well financially right now. Ascension posted an almost $900 million loss in Q1 of 2022, down from net income of $957.32 million in Q1 of 2021. Kaiser Permanente posted a loss closer to $1 billion, down from net income of $2 billion in the same quarter last year. Staffing costs are up, as hospitals are increasingly dependent on contract workers such as travelling nurses. Staffing shortages reduce procedure volume (and income), supplies are becoming more expensive, and service line management profitability is a challenge. At the same time, the pandemic cost hospital systems dearly, and they are still trying to dig themselves out of this financial hole. As a result, a May 8 Wall Street Journal article reported that large health systems like HCA and UHS are asking insurance companies and employers for higher payments for procedures, which will undoubtedly result in higher consumer premiums.

The manufacturer concept of value simply does not fit this situation. Hospitals simply cannot absorb higher device costs without evidence of substantial outcome improvement. In fact, they are looking for solutions that reduce their device costs. To hospitals, technology value means technology that allows them to provide better care to more patients at a lower cost (i.e., they need to get to work faster without paying more for the car).

Few exhibitors in San Francisco came with this solution, and certainly not the industry giants. Thankfully, there were valuable presentations about new methodologies and approaches, such as pulsed field ablation, and there are always lots of smaller companies who have no choice but to align themselves closely with hospital interests — and offer cost-effective solutions in areas such as patient monitoring.

About the author: Lars Thording is the VP of marketing and public affairs at Innovative Health LLC.