Spinal Care and its future ROBIN YOUNG ORTHOPEDICS THIS WEEK

Transcription

1 1 Spinal Care and its future ROBIN YOUNG ORTHOPEDICS THIS WEEK

2 Today s Presentation Robin Young Introduction The Last Five Years Solid and Rising Demand for Spinal Care Deflationary Pricing Next Five Years Changing Practice Management Technology Trends The Urge to Merge Conclusion: Dawn of the Age of Data and Autonomous Treatments 2

3 Robin Young 3

4 Treating Musculoskeletal Diseases The last 5 Years Between 2011 and 2015 Orthopedic Procedure Volumes rose 21% and surgeon incomes rose 18% and prices fell 11%. Highlights and lowlights: Affordable Care Act became law and 11 million more patients received insurance The big Insurance companies began to merge into an oligopoly Centers for Medicare and Medicaid Services launched programs for controlling costs, rewarding or punishing hospitals Commoditization of implants and instruments became a reality and there was a notable decline in implant and instrument innovation Surgeon product champions became an endangered species and the surgeon-employee became the norm. 4

5 Y/Y Changes in spine implant or instrument sales % 5 3.6% 3.1% 3.0% 2.6% 1.9% 2.0% 1.0% 0.7% 0.7% 0.9% 2.1% 2.7% 2.6% 2.5% 2.0% 2.0% 1.8% 0.9% 0.7% 0.0% 0.0% -1.0% Q1 Q2-0.2% Q3 Q % Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q % -2.1% -3.0% Worldwide Spinal Sales Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3-0.1% Q4 Q

6 Deflationary for 21 consecutive quarters 6 0.0% Q1 11 Q2 11 Q3 11 Q4 11 Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q % -1.0% -1.5% -1.3% -1.4% -1.5% -1.6% -1.8% -1.7% -2.0% -2.0% -2.1% -2.5% -2.4% -2.5%-2.5% -2.7%-2.8% -3.0% -3.5% -2.4% -2.5% -2.4% -2.5% -2.7% -2.7% -2.8% -3.4%

7 Spinal Implant Sales averaged 1-2% annual rates of growth last 5 years Diversified Spinal Implant suppliers Pure Play Suppliers (MDT, SYK, ZBH, JNJ) (NUVA, LDR, Globus, K2M) (2.0)-(4.0)% % Average Annual Growth Rates Average Annual Growth Rates 7

8 Biologics, bone allograft, bone graft substitutes, amniotic tissues Viable Cell Allografts Living cell bone graft substitutes Amniotic Tissue Allografts Wound care Osteocel, Trinity, Vivigen, etc. Clearly superior Where s the data? Too expensive, one company dominates PRP Too much variability Where s the data? Payers coming around Stem Cells Inconsistent results Good safety record Injectables Amniotic Fluid ViscoSupplementation Powdered amnion FDA issues 8

9 Orthopedic Surgical volumes, pricing and sales Surgical volumes +21.9% Pricing (11.5%) Manufacturer sales +10.6% 9

10 10 Spinal Care Changing Practice Management Technology Trends The Urge to Merge

11 Three Powerful Trends Changing practice management Shifting Technological Emphasis Fragmenting Points of Care 11

12 Cost Pressure Points The pressure points for costs; Length of the hospital stay Implant cost Skilled nursing facility rehab costs There is NO doubt that the current deflationary medical environment will continue to put pressure on implant pricing, incentivize (pressure?) physicians to discharge patients earlier and put the spotlight on post op care. 12

13 Collecting, mining and employing data in new ways 13 Juan--José Gonzalez, President of DePuy Synthes Companies U.S. Beyond the Implant Sick patient vs Injured patient Artificial intelligence Predictive Analytics Figuring out the rehab black hole What IBM Watson brings is very advanced data analytics capabilities. They actually have a significant level of expertise at capturing data, looking at patterns and trying to identify correlations which allow you to segment that patient When you combine the consumer expertise of Johnson & Johnson with DePuy Synthes orthopedics expertise and IBM Watson s predictive analytics then the hospital has a tool which is very powerful and can help improve outcomes and patient satisfaction along with reducing costs. So, we understand and, of course, are excited about the potential with predictive analytics and IBM Watson.

14 Shifting Technological Emphasis Robotics Stryker Medtronic Smith & Nephew Zimmer Biomet Globus Medical Reduce errors Increase throughput Reduce the labor intensive nature of surgery End of trays and sterilization Disposable instruments and implants Supports move to ASC s and Outpatient ORs Easier cost tracking and expense management Better Pain Management Time release Bupivicaine Time Release steroids The rise of Amniotic Fluid injectables Longer lasting Step change better pain relief 14

15 Robotics 25% of U.S. orthopedic surgeons will be using robotic assistance 12 months from now 33% will be using a robot 24 months from now Why? Marketing Patient demand Increased accuracy More consistent results Increased OR efficiency Why Not? Cost Increased OR time No clear evidence showing superior outcomes Bottom Line: Autonomous, intelligent devices are the future in multiple sectors of the economy including surgery. 15

16 An Explosion of Mergers Suppliers 6 orthopedic suppliers have made 37 acquisitions in the last 5 years The major purchases were: Insurance Carriers Anthem to buy Cigna Aetna to buy Humana DePuy acquires Synthes United Health Bought Catamaran Zimmer acquires Biomet Centene Bought Health Net Stryker acquires MAKO Smith & Nephew acquires ArthroCare Zimmer acquires LDR Smith & Nephew buys Blue Belt One purchase that did NOT happen: Stryker did not buy Smith & Nephew 16

17 Orthopedic Supplier Mergers and Acquisitions TODAY 1 Alphatec's International Business Alphatec's International Business Alphatec's International Business Alphatec's International Business Alphatec's International Business Alphatec's International Business 2 Arthrocare Arthrocare Arthrocare Arthrocare 3 Berchtold Berchtold Berchtold Berchtold 4 Biomedical Enterprises Biomedical Enterprises Biomedical Enterprises Biomedical Enterprises Biomedical Enterprises Biomedical Enterprises 5 Biomet Biomet Biomet Biomet 6 Biotronic Neuronetwork Biotronic Neuronetwork Biotronic Neuronetwork Biotronic Neuronetwork Biotronic Neuronetwork 7 Blue Belt Technologies Blue Belt Technologies Blue Belt Technologies Blue Belt Technologies Blue Belt Technologies 8 Branch Medical Branch Medical Branch Medical 9 BST-Cargel BST-Cargel BST-Cargel BST-Cargel BST-Cargel BST-Cargel 10 DeOST LLC DeOST LLC DeOST LLC DeOST LLC DeOST LLC 11 DePuy DePuy DePuy DePuy DePuy DePuy DePuy 12 Ellipse Ellipse Ellipse Ellipse Ellipse 13 ETEX ETEX ETEX ETEX 14 Excelsius Surgical Excelsius Surgical Excelsius Surgical Excelsius Surgical Excelsius Surgical 15 Facet Solutions Facet Solutions Facet Solutions Facet Solutions 16 Globus Medical Globus Medical Globus Medical Globus Medical Globus Medical Globus Medical Globus Medical 17 Knee Creations Knee Creations Knee Creations 18 LDR LDR LDR LDR LDR LDR 19 Life Modular Life Modular 20 MAKO Robotics MAKO Robotics MAKO Robotics 21 Medizin-Technik Medizin-Technik Medizin-Technik 22 Medtech Medtech Medtech Medtech Medtech Medtech 23 Nuvasive Nuvasive Nuvasive Nuvasive Nuvasive Nuvasive Nuvasive 24 Olive Medical Olive Medical Olive Medical Olive Medical Olive Medical 25 Patient Safety Patient Safety Patient Safety 26 Physio Control Physio Control Physio Control Physio Control Physio Control Physio Control 27 Pivot Pivot Pivot Pivot 28 S2 Interactive S2 Interactive S2 Interactive S2 Interactive S2 Interactive 29 Safewire Safewire Safewire Safewire Safewire Safewire 30 Sage Products Sage Products Sage Products Sage Products Sage Products Sage Products 31 Small Bone Innovations Small Bone Innovations Small Bone Innovations Small Bone Innovations 32 Smith & Nephew Smith & Nephew Smith & Nephew Smith & Nephew Smith & Nephew Smith & Nephew Smith & Nephew 33 Stanmore Stanmore Stanmore Stanmore Stanmore Stanmore 34 Stryker Corporation Stryker Corporation Stryker Corporation Stryker Corporation Stryker Corporation Stryker Corporation Stryker Corporation 35 Synthes 36 Transplant Technologies Transplant Technologies Transplant Technologies Transplant Technologies Transplant Technologies 37 Zimmer Zimmer Zimmer Zimmer Zimmer Zimmer Zimmer 17

18 Impact of Mergers and Acquisitions Suppliers More standardization of implants and instruments Course adjustments which reduce emphasis on implant innovation and increase focus on logistical innovation Follow the market segmentation with products tailored to ASCs, Urgent Care centers, Outpatient care Insurers Continued cost containment strategies (manage for the healthy policy holder, not the patient) Less competition, more standardization of offerings Increased interest in alternative insurance strategies. Wal-Mart, Home Depot, Self Insuring hip and knee replacements 18

19 Impact on Group Purchasing Organizations Beyond mere pricing? 98% of 5,000 U.S. hospitals use GPOs (U.S. Gov t study) 27% of hospital purchases are outside of GPOs purchased directly from the manufacturer, in other words. Fewer, but larger suppliers of orthopedic implants and instruments combined with ever larger and more integrated hospital systems, could the percentage of direct purchases (non-gpo) increase? Could GPOs become the intermediary of choice for smaller, more innovative orthopedic implant and instrument suppliers? Pacira Pharmaceuticals, for example, have only 3 customers. Cardinal and two GPOs. 19

20 20 Top Ten Spine Technologies for 2016 ROBOTS AND 3D PRINTING

21 Judges for Neel Anand, M.D.: Dr. Neel Anand is Clinical Professor of Surgery and Director of Spine Trauma at Cedars-Sinai Spine Center in Los Angeles, CA. He is also certified by the Royal College of Surgeons in England and American Board of Orthopaedic Surgery. Bradford L. Currier, M.D.: Bradford L. Currier, MD, is an orthopedic surgeon at the Mayo Clinic in Rochester, MN. He completed his medical degree at Georgetown University and then did a residency in orthopedics at Mayo Graduate School of Medicine. Dr. Currier's spine fellowship was at the University of Miami in Miami, Florida. Richard Guyer, M.D.: Richard Guyer, M.D. is the Co-founder of the Texas Back Institute and Director of their Spine Fellowship Program. Dr. Guyer is also co-director for the Center for Disc Replacement at Texas Back Institute. Gil Tepper, M.D., F.A.C.S.: Dr. Gil Tepper M.D., F.A.C.S. of the Valley Spine Center in Santa Monica, CA is one of the top practicing surgeons in the United States. He is the director of the Valley Spine Center in Los Angeles and oversees both the surgical practice at Valley Spine and an array of non-surgical services. Philip S. Yuan, M.D.: Dr. Yuan is the Chairman of the Department of Orthopedic Surgery at Long Beach Memorial. Currently he is the only physician at Long Beach Memorial that has focused his practice solely on spinal surgery; allowing him to keep up to date on all less invasive surgical options.

22 Surgical Assist Devices (Robots): Mazor and Medtech Mazor X Rosa Mazor X seamlessly integrates preoperative analytics, intraoperative guidance, real-time verification, and other standalone technologies. As a result it offers the spine surgeon a suite of solutions for minimally invasive spine procedures, complex deformities, revisions, and singleposition lateral decubitus procedures. The robot allows physicians to precisely execute minimally invasive surgeries according to highly accurate planning based on intraoperative images. Robotic arm can easily reach the targeted areas. Rosa s dynamic guidance system tracks the patient s movement in real time. Intraoperatively and maintain planned trajectories. Corporate Partner: MEDTRONIC Corporate Partner: ZIMMER 22

23 Robotics on the cheap 3D printed surgical guides. Mighty Oak What happens when you marry 3D printing with pre-op planning using a CT scan? Answer: a mechanical guidance system specific to each cortical screw. Surgeon can pre-surgically plan midline trajectories in thoracolumbar spinal fusion surgery. No complex and expensive computer navigation or robots required. 23

24 3D Printing: K2M, Vertera K2M 3D-printed titanium interbody implant that provides surgeons with a full range of anatomically designed interbodies for oblique placement through a transforaminal approach. Designed to match sagittal lordosis in an oblique orientation while accounting for the anatomic structure of the endplates. 35 angled posterior wall to accommodate the vertebral anatomy. For treatment of patients with degenerative disc disease (DDD) and degenerative scoliosis. Step up in interconnectivity and bone growth support Vertera Three-dimensional interconnected porous PEEK implant with 60% porosity, 250 um average pore size, and over 99% interconnectivity. It also mimics the structural transition of cortical to trabecular bone. Will osseointegrate, will not shield or subside, and will not produce any imaging artifacts. 24

25 Alternative to Infuse (Cerapedics) and Idiot Proof Pedicle Screws (Spine Guard) i-factor Peptide Enhanced Bone Graft is based on the biological activity of the synthetically derived 15-amino acid peptide found naturally in type I human collagen. This 15amino acid peptide (P-15) is responsible for the attachment and proliferation of osteogenic cells. FDA approved for cervical use DSG Screw Pedicle screw system with a breach anticipation sensor located at the tip of the screw. Real-time screw guidance and the ability to insert directly into the pedicle without drilling a pilot hole. Merges Dynamic Surgical Guidance bipolar sensor with a pedicle screw. 25

26 Dawn of the Age of Data and Autonomous Treatments 26 Treating Musculoskeletal Disease, which cost $20 billion in 2016, will rise inexorably over the next 4 decades It is and will remain the largest sector in healthcare. But change is toward autonomous, data driven treatments: Treatment will be managed by predictive analytics, treatment algorithms and artificial intelligence driven devices Physician entrepreneurs will buck the scale-up trend and develop innovative business models ASC s and Urgent Care Centers will gain increasing share of the back pain market Obamacare may be replaced with Donaldcare. Who the hell knows what that is. GPOs will chase scale, size and stature Practice Management will be a significant source of innovation

27 27 Thank you ROBIN YOUNG

28 Appendix A: CMS Reimbursement Notes 28 CMS IPPS orthopedic reimbursement rules for 2017: % y/y increase for non-fusion spine procedures with MCC, 5.8% with CC or spinal neurostimulators, and 5.9% without CC/MCC; % y/y decrease to 6.0% y/y increase for spine fusion reimbursement % increase for hip or knee revision procedures with MCC, with CC increase 1.1%, and without CC/MCC to increase 2.6%; % y/y increase for lower Extremity joint replacement (including hip and knee) with MCC and without MCC to increase 0.2%; % y/y increase for upper Extremity joint replacement (e.g., shoulders) with CC/MCC