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Thoughts From a Surgeon: Orthobiologics, Payors and ASCs
Posted in Research to Reality | Dec 2016 | Comments (0)
We don’t need to list for you the rapid changes taking place in healthcare. What changes are to come, though?
During his keynote address at OMTEC 2014, Robert S. Bray Jr., M.D., CEO and Founding Director of DISC Sports & Spine Center and a neurological spine surgeon, outlined predictions on myriad topics, including orthobiologics, ASCs and the simplicity of instruments and implants. Two and a half years later, we checked in with Bray to see what progress has been made on his forward-looking thoughts and to ask what we can expect next.
Again, we don’t need to list the rapid changes taking place, but it was no surprise that he continued to circle back to cost, outcomes and greater collaboration amongst all stakeholders.
ORTHOPRENEUR: In 2014, you mentioned the search for the Holy Grail in orthobiologics. Can you elaborate?
What holds the most promise?
Bray: We’re still looking for the Holy Grail. The thing that has changed recently is that people are beginning to look at the biologic and the implant as a one-charge structure to the patient. Running our own center we care about what the cost is to the patient. If I put in an implant, plus BMP, plus Grafton, plus bone chips, the total implant cost—which we view as one entity—goes up dramatically. What we’re trying to get to is the simplicity within the implant and biologic so that we can limit the overall cost, but maximize the effectiveness.
There are a number of new things happening along that line. One is that the traditional PEEK implants are losing favor. The biggest problem is that PEEK doesn’t bind to the surface of bone. The implant took up a lot of space in a fusion, but by taking up a lot of space, it didn’t provide a big enough area for good fusion—and bone is the only thing that matters. There’s a new trend of looking at what implant or surface of the implant is the best, so that the implants bind better with bone. There isn’t an answer, at this minute. But there are at least eight companies looking at titanium-sprayed plasma, to etching the surfaces, to nano, to 3D-printing surfaces. We’re looking now to the implant to become an active part of the fusion. That’s the difference. And it’s a big difference.
That said, that’s going to determine the nature of the biologic used with that implant. What needs to happen (and is very separate right now) is that the implant makers need to start working with the biologics makers—they don’t tend to be the same company. They need to start looking at what biologics work best with this implant. The trend we’re going to see for the business is that as the implants participate in the fusion, the amount of biologic will be significantly less. The total cost of the implant is going to be important, and the fact that the implant integrates and is matched with the right biologics—that’s where we’re headed.
I have my predictions. Out of all of those different things I mentioned, I think 3D printing is going to play a huge role in the future of implant development, because you can get the whole architectural structure as you want it so the implant can grow right into the bone.
ORTHOPRENEUER: During your keynote, you mentioned the rapid growth in spine outpatient procedures, which would lead to growth of ASCs. Where are we now? How will the onset of bundled payments impact this?
Bray: We’re winning. Just after my keynote, we sold 51% of our business to Surgical Care Affiliates (SCA); I sit on their national development board now. Their concept was to continue to take high-acuity centers—total joint, spine—and drive them into new existing or de novo centers. They have a very big plan in place that is rapidly beginning to take form to do just this.
There has been a major shift from the insurers. I use to see a fight to get a contract to do a case at an ASC. Now, insurers want to incentivize the case to be done at an ASC. I can tell you that in a short period of time, you’re going to see some of the major providers lining up to incentivize cases directly to the surgeons and say, “If you do it at this site of service, you’ll be paid better.” This willingness to cost-share in the savings is going to come forward. The insurers will say, “If you can do it here, and this nets us a cost savings and increases quality of outcome, we’ll allow everyone to participate in that.” That is just now in the process of being implemented.
Your question about bundled care; that’s an approach. I don’t know that it’s wrong. It’s the one promoted most by Harvard Business School; they’re interested in this extensively. I would leave it more at a broader topic than bundles and say rick-sharing. The winning end of the scale is going to be a responsibility approach, in which the surgeons are responsible for their outcomes and have an incentive to get a good outcome with quality metrics. They’ve got to collect data; they have to keep the outcomes high. They have to meet the patient satisfaction scores and they have to meet price breakpoints.
An ASC is uniquely positioned to do this, if they’re big enough. It’s a matter of size and a matter of scope. That is one of the reasons that we decided to strategically partner with SCA. It took us from a mom-and-pop to a national scale, where we could get those insurers to the table. Now we’re working to get the manufacturers to the table. As a single, independent ASC or two, we were too small to have much clout. SCA brought business skills to deal with insurers and a bigger picture, moving forward. A single ASC is too small to participate in risk or a bundle in a meaningful way, because one or two bad outcomes and they’re under.
ORTHOPRENEUR: One the greatest takeaways from your presentation was the need for product simplicity and the way that impacts pre-procedure processes, as well as the procedure itself. What further advice can you give device companies?
Bray: This remains a big topic for me. I used the example of coflex, and all of the principles set out with that remain and are becoming ever more important. SPD (surgical instrument processing) and sterilization has to be kept to a minimum; the costs of doing that are outrageously high. The more that can be done to establish simplistic implementation and pre-packaged sterile implants, the better. That principle remains and the challenge remains. There are companies that have been trying to do that.
What advice can I offer to engineers and supply chain managers and executives? Stick with that principle as you’re looking at multiple types of vendors. And also the hospital or ASC, whomever needs to sit down with the surgeons and say, “Okay, here’s the variety of implants available.” The surgeons need to be willing to participate with the hospital or ASC in saying, “I can use any of these and these three are much more cost efficient than those four. Those are less fidgety, use less gadgets, are easier to sterilize and process; they look just as well or better, and I will limit my purchasing.”
The vendors and engineers and supply chain managers need to go back and sit down with the surgeons at the table and say, “Which one of these selections will answer your needs on a more across-the-board basis?” We’ve been able to do that effectively at DISC and keep our surgeons happy with different ideas of who wants to use which implant, while still keeping our vendor numbers limited. We don’t buy just anything out there.
Our effective control with that has been with a price point. We’ve said for a pedicle screw construct system we will pay X, and my CFO has little flexibility without coming back to the board and changing that. When she sits down with the surgeons and they say, “I would like to use this company or this company,” her next questions are: How complex is their stuff? How much hassle and strain will they put on our SPD? Will they sell at X?
We’ve cost-controlled at an agreeance point. We’ve found that to work well with implant companies. They respond, “Okay, we’ll play ball with you and we’ll sell for X, as long as you let us in as a vendor.” That communication between the departments is becoming more important.
The rep model is also disappearing. Our new models are going to be repless. As the instruments get simpler, the people onsite will be trained to handle them and the company will be responsible for stocking and one-time processing.
The whole rep future I think is limited.
ORTHOPRENEUR: And five years from now, where will we be?
Bray: There will be a dramatic move to specialized care. Spine will be done by spine centers and cardiovascular will be one entity—there will be specialty centers, whether they are within a hospital or within an ASC. The centers that specialize, do it well and do it in numbers have proven time and again that they get better outcomes.
One, you’ll see that the generalist who does a little bit of everything will now do less. There will be a consolidation to centers that can meet quality markers. Two, we will see a strong emphasis on quality and cost efficiency—Medicare is widely onto this topic with their new ways of looking at quality outcome markers.
You’re not going anywhere without data. The center that doesn’t keep their data and meet standards is gone in five years. You have to play ball.