The future of total hip replacement will likely be very different than today. “Push” factors such as aging populations in the developed world that are increasing demand, shrinking health care budgets, longer life expectancies, and higher patient expectations, when combined with “pull” factors such as the advent of new exponential technologies, promise to change the experience for patients, physicians, providers and medical device manufacturers. As with any major disruption to the status quo, we believe the winners will be the ones who are faster to adopt to the new normal. The first step in successfully navigating change is recognizing the major drivers.
The convergence of exponential technologies – 3D printing, embedded sensors, “smart” materials, and others – combined with a redesigned care delivery model for total hip arthroplasty (THA) – have the potential to improve patient outcomes and drive measurable economic benefits. Potential advantages include earlier and more effective diagnosis, decreased pre-operative and procedure times, lowered post-operative infection rates and treatment costs, and reduced recidivism. When evaluating future care delivery and commercial models, physicians and executives should consider the opportunities and risks associated with such changes.
Two recent US government initiatives may have implications for the future direction of THA reimbursement: Bundle Payment for Care Improvement (BPCI) and Comprehensive Care for Joint Replacement (CCJR). In 2015, the Centers for Medicare and Medicaid Services (CMS) launched CCJR, mandating bundled payments for knee and hip replacements in 75 metropolitan areas starting in 2016.1 The CCJR program makes hospitals financially accountable for the cost of surgery and subsequent hospital stay, as well as payments to the physician(s) performing the surgery and any and all subsequent medical costs in the 90 days after patient discharge. With an estimated USD $7 Billion in Medicare reimbursement2 for joint replacements, these initiatives promise to significantly impact the economic future for providers, payers, and medical device suppliers.
What’s at stake
Every year, physicians in the United States perform more than 311,000 total hip replacements in patients aged 45 years and older (Figure 1),3 with an expected future growth rate of 3.1 percent annually.4 With a 95 percent success rate,6 THA surgery has improved the quality of life for millions of people and provided a growing base of business for providers, payors, and MedTech companies. Still, THAs can be costly. From 1998 to 2011, total hip implant prices increased nearly 300 percent.3 Surgery may cost $40,000-$65,000 with a device list price of $13,000, compared with a manufacturer cost of goods of roughly $350 for the device and hospital list price of $4,500-$7,500.7 Rationale for this pricing is largely due to the traditional fee-for service reimbursement model where surgeon preference was a major factor in device choice and hospitals were able to increase prices charged for procedures.8 Surgical complications can be costly, as well; periprosthetic joint infection, for example, is estimated to become a $1.6 billion burden by 2020.9 An uptake in health care’s use of exponential technologies such as advanced digital imaging, robotic surgery, embedded sensors, and other innovations (see sidebar) may boost THA growth beyond its anticipated 3.1 percent CAGR. When used in concert with a redesigned THA delivery model, exponential technologies can increase efficiency, decrease costs, shorten post-operative recovery, and improve the patient’s pre-, peri- and post-operative journey. In addition, the increased uptake of exponential technologies in THA creates growth opportunities for medtech companies; however, it is important that commercial, R&D, innovation, and finance executives consider how these technologies may impact current and future-state operations and plan accordingly
Exponential technologies can provide clinical and financial advantages
The application of exponential technologies in hip replacement surgery has the potential to provide substantial clinical and financial advantages. Defined as technologies in which every year the power and/or speed are doubling and/or the cost is halved,10 the following are examples of exponential technologies and selected medical applications:
• Advanced digital imaging creates visual representations of internal human anatomy, usually in the form
of three-dimensional images. Compared to existing imaging techniques, pre-, peri-, and post-operative
digital images can be used to obtain a more accurate picture of internal patient anatomy, thus often enabling improved patient outcomes throughout the continuum of care. Advanced imaging also includes remote viewing/reading of images and artificial intelligence (AI)-assisted analysis.
• Additive manufacturing (3D printing) adds layer-upon-layer of material to produce a three-dimensional
object. Polymers and metals are among the current materials used in 3D printing, and the process is
expanding to bioprinting, the printing of human tissue.11
• Robotic surgery uses robots to help surgeons perform procedures with improved accuracy and often with less invasiveness than manual procedures.
• Embedded sensors/smart materials use sensors placed peri- or post-operatively to monitor patient
outcomes. Smart materials have the ability to change in a controlled and predetermined way based upon
external stimuli such as pH, temperature, electric fields, and bacteria.
Telemedicine uses remote methods to connect patients with caregivers throughout the patient journey.
While exponential technologies may provide clinical advantages in patient care and outcomes, stakeholders likely will need to overcome hurdles in several key areas:
• Care providers/physicians: Adapting physician practices and conducting clinical end-user training to spur the adoption
• Manufacturing: Funding incremental R&D costs for enabling compatibility between existing products,
virtual imaging, additive manufacturing, and robotics.
• Regulatory: Overcoming regulatory restrictions for additional indications for use (IFU), if needed, to apply
the technologies as intended during patient journey.
As evidenced by previous innovations in orthopedics, these hurdles are not insurmountable and
should not preclude an organization’s efforts to pursue a reimagined THA.