New product opportunities with DRGs

Medicare's new payment scheme for hospitals and other cost-containment pressures have changed the way that hospitals do business. The number and duration of hospital patient admissions have declined. Hospitals are more carefully considering the cost of their supplies. As a result, demand for many types of hospital supplies has declined; however, new market conditions have also created opportunities for innovation in the device and pharmaceutical industry. This paper describes the new economic incentives for hospitals and how these translate into new product opportunities in the areas of outpatient care, less-invasive surgical procedures, decreasing length of stay in hospitals or substituting for high labor costs during hospital stays, and generally, products that provide the same quality of care as before but at much lower cost. Specific examples of such products from Rorer Group Inc. are chosen to illustrate the company's attempts to meet the new needs of the hospital marketplace.