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More than 1,400 orthopedic professionals — from surgeons to device companies to suppliers — recently gathered in Chicago for OMTEC® 2023 to address the global manufacturing industry’s biggest challenges and largest opportunities.
Mike Evers, Senior Analyst at ORTHOWORLD, kicked off the conference’s action-packed second day by moderating a powerful keynote panel discussion about the macroeconomic factors that are impacting the industry and shaping the future of patient care. He was joined by forward-thinking orthopedic executives who explored the strategies and technologies that will drive innovation and growth in an evolving healthcare landscape.
The panel included:
- Rob Ball, CEO of Shoulder Innovations and Managing Director of Genesis Innovation Group
- Wael Barsoum, M.D., President and Chief Transformation Officer at HOPCo
- Nitin Goyal, M.D., Chief Innovation Officer at Zimmer Biomet
- Kevin McGann, President and CEO of Accelus
Here’s what they had to say about rebounding from the pandemic, outpatient surgery’s impact on new product development and the value proposition of investing in cost-effective care.
Firm Financial Footing
The companies that excelled during the pandemic managed financial challenges caused by macroeconomic pressures and high inflation, according to Dr. Barsoum. His background as the CEO and President of Cleveland Clinic Florida fueled his interest in aggressive growth strategies, but he now recognizes the importance of long-term investments and maintaining cash reserves.
“We’ve seen a tremendous advancement in our understanding of financial markets and how to manage cash and debt,” he said.
Significant supply chain challenges, market forces and geopolitical uncertainty have forced Zimmer Biomet to diversify its supply partners and work with multiple vendors instead of single-source manufacturing. The halt in elective surgeries also drove the company to expand its product mix.
“The past few years have opened our eyes to the importance of diversifying revenue streams,” Dr. Goyal said. “We’ve been forced to think about M&A and growth opportunities in sports medicine, regenerative medicine and in spaces that people wouldn’t typically associate with Zimmer Biomet. That will strengthen the company moving forward.”
The entire orthopedic market continues to struggle with supply chain and labor issues, Ball pointed out. “Understanding how to work through those issues together has been the number one solve for us,” he explained.
Responding to the ASC Market Growth
The shift of cases from hospitals to ASCs that increased during the pandemic — Dr. Goyal said COVID added “rocket fuel” to the outpatient migration — will grow significantly over the next five years. The panelists discussed ways that suppliers and OEMs must meet the needs of this increasingly important customer base.
For example, surgeons who operate in multiple ASCs create massive logistical issues in managing the supply and delivery of several instrument trays needed to perform complex procedures such as joint replacement surgery.
“That increases the cost of doing business in the outpatient setting,” Dr. Goyal said. “It also creates an opportunity to streamline processes to meet the instrument and implant needs of ASC customers. Companies can capitalize by innovating in that space.”
McGann said that companies must minimize the number of instrument sets and orthopedic implants used during procedures performed in ASCs to limit costs and reprocessing burdens. “Sterile packaging is one way to streamline the manufacturing process and ease the challenge of inventory management from the ASC perspective,” he added.
Ball agreed with the overall concept of paring down instrument sets to accommodate the needs of ASCs. He also highlighted the difficulty of doing so while still giving surgeons the tools they need to perform successful procedures.
“Shrinking the footprint of instrument trays is nearly impossible because of the implants on the market and current surgical techniques,” he explained. “We must first reconceive how implants are placed and how surgeries are performed to develop streamlined platforms that support the ASC environment.”
Orthopedic companies must focus on simplicity, scalability and reproducibility when developing new products and technology as more cases move to the ASC setting, according to Dr. Barsoum.
He implored OEMs and suppliers to consider how they can maintain margins — or even grow them — while recognizing that ASCs are reimbursed 30% to 40% less than hospitals for the same surgeries. “Orthopedic companies that sell devices to ASCs must find ways to produce, sterilize, package and deliver them for less,” he said.
Focusing on Transformational Change
The panelists agreed that surgical innovation needs to create a completely different solution than what’s currently accepted as the standard of care. “We’re living in an era of ‘good enough,’ ” Dr. Barsoum said. “Today’s technology achieves quality outcomes, so does it make sense to spend hundreds of millions of dollars to advance it incrementally? Technologies that are worth investing in must be transformational.
“The advancement needs to be so dramatic that surgeons and the facilities where they operate believe the extra cost is worth it. That might be hard for industry to accept, but it’s the reality.”
Dr. Barsoum said the U.S. spends $4 trillion a year on healthcare — almost 20% of the nation’s gross domestic product. “That’s simply too high of a percentage,” he said. “We must think about developing technologies that result in less spending because outcomes are better and rates of hospital readmissions, surgical infections and postoperative complications have gone down. Transformational technologies that drive down the overall cost of care over the long term are worth paying a premium for.”
HOPCo is a leading value-based health outcomes and management firm that helps orthopedic practices and service lines streamline their offerings. The company’s pivot to focus on digital technology has been a major factor in the company’s recent growth. “How do you make your product less reliant on labor and more contingent on a digital approach to expanding your footprint?” Dr. Barsoum said. “That’s been a successful strategy for us.”
Objectifying the episode of care with real-world data is one transformation that will drive progress in surgical care over the next five years, according to Dr. Goyal. “Today, the number of predominant decisions made by providers are completely subjective,” he said. “There’s a huge opportunity for industry to inform objective decision-making before, during and after surgery.”
Ball took a different tack when reflecting on how orthopedic care needs to evolve. He pointed to the importance of innovating healthcare delivery instead of focusing on advancing surgical technologies and techniques.
“Hospital executives don’t see the need to change delivery-of-care models because they’ve been successful,” he said. “However, they’re too expensive. We need to make change more palatable to truly innovate patient care.”
Finding Value in High-tech Care
Dr. Barsoum referenced Michael Porter’s widely known definition of value-based care: delivering quality outcomes at a lower cost. “Orthopedic devices and technology don’t necessarily have to be less expensive,” he said. “But they must be so much better than current solutions that the additional cost is worthwhile. That’s the key point.”
The panelists touched on the massive power shift in the decision-making dynamic among orthopedic customers. “More of the decisions are being made at the administration level and much less at the clinical level,” Ball said. “That forces us to create more value in the devices and technology we develop.”
Value can be found in solving real clinical problems, added Dr. Goyal. “Proving that technology produces better outcomes requires clinical data,” he said. “How much better are the results of surgery? Is the improvement enough to justify the additional cost?
“At its core, value-based care improves patient outcomes while reducing costs. Outside-the-box solutions that improve quality and maintain cost efficiency are becoming more important. There’s a real opportunity there.”
McGann said efforts to provide value-based care must focus on meeting the needs of surgeons and patients throughout the continuum of care. He believes technological advances and data collection are the keys to demonstrating predictive outcomes, cost-effective methodologies and increased patient satisfaction.
“AI-based algorithms will capture clinical data and provide the most efficacious solutions for specific diagnosis or pathology, which will lead to a form of proactive care,” McGann said. “We’re exploring how to become a leader in that space and accelerate that type of progress.”
The panelists said orthopedic companies that understand the importance of aggressive innovation, invest in data-driven solutions and meet the needs of ASC customers will shape the future of orthopedics, position themselves for exponential growth and outpace the competition. It’s actionable advice worth heeding.
