John P. Wareham, chairman and CEO of Beckman Coulter, Inc., became president and chief executive officer in September 1998 and was named chairman in February 1999. Prior to those positions, he was president and chief operating officer, a position he assumed in 1993.
As president and COO, Wareham managed a corporate restructuring plan that resulted in significantly improved margins. He also led an aggressive acquisition strategy that resulted in the Beckman and Coulter union.
Wareham joined Beckman in 1984 as vice president of the Diagnostics Systems Group, a position he held through October 1993. There, he propelled the diagnostic business to a leadership position in the clinical laboratory market, making it one of the most profitable entities in the industry.
His move to Beckman was preceded by a 15-year career with SmithKline. Wareham holds a bachelor of science degree in pharmacy from Creighton University in Omaha, Neb., and a master’s degree in business administration from Washington University in St. Louis.
Wareham just finished serving a one-year term as chairman of the Board of Directors of AdvaMed (Advanced Medical Technology Association), the organization formerly known as HIMA (Health Industry Manufacturers Association) from March to November 2000. Our conversation focused on AdvaMed’s changing role from industry representative to advocate for patient access to improved medical technology.
CLP: Why the name change to AdvaMed?
JW: It doesn’t roll off the tongue the way HIMA did, but the organization wanted to take on more of an advocacy role for patient access to medical technology. The name stands for Advanced Medical Technology Association, so it goes with the new advocacy position. Quite frankly the motivation behind it is that the biggest deterrent to access to medical technology today is not regulatory approval; it’s money and coverage and processes to obtain those. It’s the biggest deterrent to better patient care. So the name change was a means to an end in helping us re-position the organization.
CLP: How were you elected AdvaMed chairman?
JW: You are voted into the position by your peers on the board. Historically the chair position is rotated annually, and on occasion, IVD (a leader from the in vitro diagnostics industry) gets a rotation. It goes in cycles because the association encompasses a large scope of medical technology. In addition, we’re also taking more of a global approach with our advocacy.
CLP: Are there any efforts to align the regulatory and reimbursement aspects?
JW: Alignment of the patient access process, looking at it from a patient point of view, rather than a functional, departmental point of view, such as FDA for safety and effectiveness and Medicare for coverage, would be a useful thing for the government to do. In the meantime, we’re advocating incremental changes to improve the processes. The fact is, it can take an average of four-and-a-half years to get national coverage approved (through the Health Care Finance Administration). The variation can be six months to never, but most new technologies ultimately get approved.
In industry we use “continuous process improvement,” and you would think that new technology would improve the outcome of patient care. Since that’s the goal of healthcare, you would think it would be smarter to accelerate approvals and not put things in its way. So right now, our major focus is to support passage of the Ramstad Bill (HR 4395), called the Medicare Patient Access to Technology Act. (See News Digest for an update on the Ramstad Bill.) It sets clear coding, payment and coverage criteria, because today there’s no particular criteria set for coverage. Unlike FDA, where there are set schedules, expectations and turnaround times, HCFA has no such criteria and targets.
CLP: What does HR 4395 do?
JW: It sets clear and open procedures for coding and payment decisions. It allows for public participation in the process, and there’s a requirement to update lists more frequently so that new technologies are considered on an ongoing basis. It also adds some appeals mechanisms. For example, right now if you’re a patient who is denied coverage, you can appeal it. But even if you win, the next patient who is denied the same coverage has to go through the same appeals process.
CLP: What is the current coverage procedure?
JW: There are a couple of procedures used in coverage decisions. The common procedure is to compare new tests with existing tests, cross-walk them over and give them the same reimbursement as the old technology. Of course, that’s not much incentive for improvement. One notable example is the ThinPrep-type pap smear. For many years, it was reimbursed at the same rate as the old pap smear, even though it had remarkably improved outcomes. Only recently were they able to get into a premium reimbursement position. That’s a prime example of a new technology that really deserves a higher reimbursement rate. I also believe that the third-generation TSH assay and the free PSA test are other examples of technology with better outcomes. So the processes used are not sensitive to the methodologies and the outcomes.
CLP: Is there any way to track whether a lab or doctor’s office is using the latest and best technology or an older version?
JW: The outpatient coding procedure is one of the processes that needs to be re-affirmed for all medical devices, not just IVDs. It’s very complex. Getting coding for new technologies is one of the challenges, so that’s one of the processes we’re trying to change in the Ramstad bill. If you look at just Medicare, there are 130,000 pages of regulation that drive that process. It’s no wonder there are delays. These aren’t bad people. Not even the smartest among us could manage 130,000 pages of regulation. That’s why it takes as long as five years to get national reimbursement.
CLP: Is H.R. 4395 being covered by the laboratory professional organizations?
JW: I don’t think it’s on their screen, and it does affect IVDs. We, as an industry, could do more to get aligned on a routine basis, so we are clearly advocating patient access to technology. I think we could make some improvements in getting the professional organizations such as CLMA and AACC on board.
CLP: What’s in the future for the IVD industry?
JW: The industry has gone through a major consolidation and much of that has been driven by reimbursement. When markets stop growing, there tends to be consolidation. We participated in that consolidation, and we’ve done very well.
Looking to the future, I’m not sure how much more consolidation will continue. I think we may be entering a new era when bringing new technologies and new methods to improve patient outcomes will be the driver of the next ten years. That doesn’t mean that improving what you do today from a cost-structure point of view isn’t important; it is. But being able to move in and actually affect patient outcomes is really what we’re all about as an industry, and we’ve really kind of lost that in the last ten years.
We’ve spent so much time focusing on improving cost structure. I think we’re going to have a new era in in vitro diagnostics in the next 10 years. And it is going to start with the recognition that we in IVDs do add a heck of a lot of value. In fact, we’re probably undervalued in terms of our importance to the healthcare system. Our biggest advocates are the doctors practicing medicine. That’s our biggest value. One thing we can do as an industry is to highlight that visibility. There are certain industry initiatives we’re working on to make that more visible. And then of course, you have all the technological changes driven by new technologies and the mapping of the human genome. There are going to be whole new areas for testing driven by technological advancement and the movement of new technologies into the IVD market place. I think those are going to be the main drivers in the next 10 years rather than this constant reduction in reimbursement.
