al·ter·native / pay·er
Many health innovators choose to bypass the long and expensive implementation process to publicly reimburse their health product. Instead, health innovators may navigate other pathways to commercialize their product using an alternative payer. Alternative payer options can be lucrative and act as a first entry point into the Ontario market. Some of these alternative payers may provide a “start-up” option to get the product into the health care system but it may not provide a long-term source of funding to sustain the use of a product.
Depending on the innovation type and target market, a health innovator may seek funding for a product through the following alternative payer options:
Private Health Care Organizations: Private health care organizations (e.g., private clinics) may be interested in purchasing an innovative health care product if the priorities of the private health care organization and user aligns with the benefit and value of the product.
Allied Health Care Professionals: Many services and products used by allied health care professionals are not publicly reimbursed and require private funds to care for patients. In this case, there may be high demand for an innovative health product if the priorities of both allied care professionals and their clients align with the need and value of the product.
Private Insurance companies: Private insurance companies often cover products or services that are not publicly funded by the MOHLTC. Insurance coverage for an innovative health product may be a lucrative option to fund a product without going through the government reimbursement process.
Direct to Consumer: Many Ontarians and health care providers are willing to pay for an innovative health product if it solves or addresses an unmet health need important to them. Before a product can be marketed directly to a consumer, it must be classified as either a medical grade versus consumer grade technology. This classification will inform the pathway to adoption and whether the product can be sold directly to the consumer. Health innovators should consult Health Canada to determine if a product is permitted to market direct-to-consumer.
International markets: Many products are marketed directly to international markets like the United States and Europe before entry in the Ontario market. International markets are a viable option to health innovators as they are easier to penetrate, more densely populated and have the private capital to support the commercialization and adoption of a new product. Selling in international markets first, like the United States, can help generate the revenue and evidence required to enter the Ontario market.
Hospital/Charitable foundations: If an innovative health product solves an unmet need for specialized conditions, diseases, or diagnosis and treatment of health care problems relevant to hospital or charitable foundations, it may be worthwhile to lobby these organizations. Funds from these organizations may help to purchase new innovative products as well as provide infrastructure to house new innovations.
Private Donor: Securing a private donor to fund an innovative health product will increase chances of implementing within a hospital where both the priorities of the donor and hospital align.
Venture Capital (VC) Investment: Attracting VC investments will help to support commercialization of innovative health products that demonstrate an ability to dramatically increase health care productivity by reducing health care costs and improving patient health.
Determine the evidence requirements for this payer.
Determine the funding mechanism of this payer.
Understand the pricing and purchasing procedures for this payer.
Identify possible strategic business relationships for the commercialization of the product.
Identify competitors to build a strategic business case.
Consider government reimbursement and hospital procurement to alternate payers.
Last update: 2018-Nov-26
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