The times they are a changin’… yes they are.
Doctors, hospitals, payers, pharma, device manufacturers and the VC folks better be well versed in what’s will soon be showing at a theatre near you.
In no particular order of importance.
ACO: Accountable Care Organizations: Nobody actually knows what the final language shaping these potential monstrosities will be … so it may be a bit pre-mature for any mid or late stage planning.
ACOs, by definition have the potential to save money and encourage the quality practice of medicine. But the culture of change within the halls of healthcare which would be necessary to achieve those goals will likely not materialize.
ACEs: Acute Care Events. The ACE trials have produced promising results. They are getting docs to the table with institutions to propose rates for coverage of certain targeted DRGs such as total joint replacements. In the end, they get the newco to compete against the other local institution’s newco for the contract to provide care. If doctors and hospitals align and both have skin in the game… cost control will materialize. Interesting to note that gainsharing, typically forbidden by CMS, is legal under an ACE framework.
Co-management agreements. Far more common form of alignment between institutions and physicians. It’s a good place to start and to become comfortable with each other in preparation for the potential ACO train approaching. Key point is that all parties now have skin in the game to control costs.
Captive PCs and Hospital Employed Physicians… This is a huge current trend and will likely be the dominant trend for new physician hires for the foreseeable future. Those of us who have been in practice for a while and have been *successful* do not understand why this trend is so popular… but it pays to keep a close eye on this.
CONSOLIDATION !!!! Physicians groups are consolidating, Hospitals are consolidating and the Payers are also consolidating.
What does this mean for the Orthopedic Industry and anyone who conducts business with us? Currently, or in the very near future many physicians will be economically advantaged by saving the hospital money on the procedures they perform. They will be incented to meet nationally recognized discharge criteria and to diminish their length of stay. Again, if physicians has an economic incentive to save money, there are many ways for them to do so… and industry players would be wise to stay abreast of the latest trends and current practice patterns.
As I toured the American Academy of Orthopedic Surgeons (AAOS) meeting this past month I was astonished at the number of one or two product FUNDED start-ups which either offer more complicated me-too products or worse — they offer a product which is an add-on (from a cost perspective) to a traditional procedure.
Lets say I can perform procedure X with a 99% success rate and widget Z can increase that rate to 100%. But the implants and disposables for procedure X cost 10,000 and widget Z costs $1000. Does widget Z have any chance at gaining traction… nope. Not where healthcare is heading. They would be wise to find a suitor , now.
Pixie dust. There are a multitude of compounds and proteins that are made for us to sprinkle on fractures, etc at the end of the surgical case — and they may increase the healing rate. If the healing rate improves 3-5%, is it worth it to spend 7500-10000 dollars for the pixie dust??? Probably not.
The future of Orthopedic Surgery lies in our ability to manipulate the biological milieu which governs the healing response. Improved surgical outcomes will not be related to the plethora of companies producing stronger rope, stronger anchors, etc. Healing is a biological event, far more than it is a mechanical one. Vitamin D levels, calcium, and serum protein levels matter just as much as the number of screws we are using when it comes to fracture healing. At $1 for a vit D tablet and $1000 for certain screws…. I would take my vitamin D :-)
Now, of course I have over-simplified… but I am not too far off base. Physicians have the ability to dramatically decrease the cost of providing a certain service if they are incented to do so. Fairly soon, the majority of physicians will be incented to do so. The Orthopedic Industry is going to undergo a process of consolidation as never seen before… and me-too products and start ups with expensive disposables will not be at many AAOS conferences.
Of course, I may be wrong, this is just my opinion and not the opinion of my group or the hospitals I work at.
Jan Beery
Howard,
With a strong background in Ortho/manufacturing, I agree with Mark.
What we as manufacturers did was to start to empower patients with information. An informed/educated patient is becoming more the rule rather then the exception. That being said, it would behoove physicians to be a part of the chatter. Educate, and you’ll dominate. Social Media levels that playing field.
In regard to your statement about manufacturing and “me too” products. I completely agree. They will be left by the wayside as the existing me too products continue to strive for improved quality and quantity delivered in a cost effective manner. Manufacturers will continue to improve manufacturing efficiencies, cost containment, private label opportunities, distribution outlets, and ACO/GPO contracts. This will absolutely create a level of trust and positioning in the marketplace and ultimately increase market share.
Basically our health care environment will definitely be a changin!
1. All areas of health care will be streamlining cost containment.
2. ACO’s are real and watch for that growth.
3. Physician’s would be best served to be engaged.
4. Physicians, ACO’s and health care institutions are increasing their reach via social media, where patient’s and all other touch points of care are seeking information.
Much to discuss. This will provide years of Blog Topics!
Thanks for the insightful comments Jan.
Mark Browne
One force you don’t mention here, but have mentioned in the past, is that of patient choice. As we move toward a model that places greater accountability ( and financial burden) on patients, the choice of which implant to use, as an example, will no longer be only up to the physician/hospital/vendor triad. Patients will demand access to high quality at an affordable price as they have in almost any other industry. As baby boomers age, this force alone may have an enormous impact for orthopedics.
Good point Mark… thx
David Harlow
Howard — Global payments for episodes of care, rather than fee-for-service payments for individual encounters, are coming down the pike, whether through ACOs or through other instrumentalities. The new CMS Center for Innovation will drive some new payment demonstration projects as well, in search of the “special sauce” of financial incentives and quality measures that will help improve quality and reduce costs systemwide. (I’ve worked on getting past demonstration projects in the same vein approved by CMS, and they end up benefiting payor, provider and patient.) I agree with your assessment that business plans for innovations yielding marginal gains for high costs are ripe for re-examination. The challenge in this time of turbulent change is to take the long view, focus on process improvements that strike the elusive cost/quality balance, and are not subject to skewed incentives based on short-term financial or quality measures.
blaine
agree. eBay for orthopedic implants buy with a GPO