Medicare is no longer offering reimbursement for preventable nosocomial infection. This step has been taken to encourage prevention over cure. Medicare does not reimburse hospitals for the treatment of preventable conditions and this includes certain infections acquired at healthcare facilities.
This step has been taken to reduce nosocomial infection rates and it will now discourage pharmaceutical companies from developing premium antibiotics. The withdrawal of Medicare reimbursement for nosocomial infection will end up having two commercial impacts. One is that there will be reduced incentive for pharmaceutical companies and there will be an increased incentive for diagnostic companies.
The change in the Medicare policy gives more emphasis to prevention than cure of nosocomial infections. The aim is to give impetus to infection control practices. However, this will also lead to an increase in antibiotic prophylaxis. Given the cost of branded hospital antibiotics, generic products will now become the preferred choice.
The fact that withdrawal of Medicare reimbursement for nosocomial infection is about prevention, it will have further impacts. The fall in infections will first reduce the use of antibiotics. This means that there will be a reduction in resistance to antibiotics. When this happens, incentive to develop new and better antibiotics will reduce. In addition, if there are infections, physicians will be compelled to treat the patients faster and better with products most likely to minimize the costs that come with preventable non-reimbursed hospital stay. Also, with increased costs of treatment failure, there will be an increased demand for precise and fast diagnostics.
Hospitals will also have to start screening people for infections at the time of admission and this will give an important commercial opportunity to diagnostic companies.
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