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Generic Device OEM Defines Value in Orthopaedic Care

Editor's Note: Device companies large and small are navigating shifts in the delivery of care. We asked Orthopaedic Implant Company (OIC), a generic device OEM, to share the path they chose, their definition of value and what it means for the future of the orthopaedic industry.

“Value” is one of the biggest buzzwords in the healthcare industry today. Commentators have pointed their fingers right and left at potential bastions of low-value care. Whether it’s due to inflexible industry structure, the expense of funding innovative devices and methods, opaque pricing options, over-diagnosis, the push for volume over value—the potential inhibitors of value-based care are everywhere.

But what is value in healthcare, really? Its simple definition is the cost and result of an episode of care. Value is a relative term. To understand whether you got great value for an episode of care treating a hip fracture, data on cost for the episode has to be gathered and benchmarked against other episodes. The crux of the problem has been that until recently, little mind has been paid to value. What we are witnessing is the transformation of healthcare. There’s a push to capture cost and outcomes data to support moving from fee-for-service to pay-for-performance medicine.

As a device manufacturer, we believe that medical devices need to be produced and provided at sustainable costs, as well as designed for ease of use, in order to supply true value to the physician and patient. We keep our sales and marketing expenses to a minimum. Our mission is to offer the highest quality implants at the lowest possible prices. Our pricing is flat and transparent.

In orthopaedics, providing value-based care means providing safe, affordable care for patients. Affordable procedures can be created through shorter hospital stays, elimination of rehabilitation facility stays, and fewer days requiring skilled nursing. Furthermore, an increasing number of indications can be treated in outpatient facilities, where value is much higher for patients than in traditional, in-patient facilities.

However, it is undeniable that saving on the cost of implants, whether in out- or in-patient settings, could have incredible impact for the value of our healthcare dollars. Independent studies have proven that value-based implant use provides cost savings while achieving outcomes on par with brand-name implants.

In a real world example, a level II trauma center using OIC’s line of devices has saved about $850,000 per year. Additionally, at the same facility, an orthopaedic practice and the facility have each seen over $1 million in additional reimbursement by participating in CMS’ Bundled Payment for Care Improvement (BPCI) initiative; implant savings contributed greatly to that success.

While programs like BPCI are encouraging, we’re seeing proposed legislation in California that the government will step in to enforce savings if physicians aren’t proactive in achieving cost containment. Mandating savings, at first blush, seems like the right path to go down; however, surgeons and facilities will find it more cost effective to exploit loopholes in the legislative language rather than make meaningful changes toward value-based care.

Physicians need to be able to identify sources of cost-inefficiencies themselves, so that they can continue to choose implants, medicines and treatment plans that will remain effective and achieve ideal patient outcomes. Physicians need to proactively seek solutions before control of how they practice is taken away from them.

In the next five years, value will have a tremendous impact on orthopaedic care. We can expect to see the following trends increasing in our field:

  1. Value-based payment models will become the norm. Medicare’s latest Quality Payment Program reimburses physicians based on quality of care to varying degrees, no matter which track they choose. This means that patient outcomes and their corresponding costs will increasingly correlate to insurance reimbursement. As many large orthopaedic groups have had successful experiences with BPCI programs over the last several years, there is no reason to think that this trend will prohibit physician profit or success.
     
  2. There will be more outpatient surgeries. The surge of new outpatient surgical centers will continue. This trend has incredible promise for healthcare. Better value has been clearly demonstrated at outpatient surgery centers for an increasing number of procedures. It’s more economical than going to a hospital, and patients simply prefer it.
     
  3. The price for care will gain greater transparency. The growth of cloud-based information database technology (as we are seeing in the widespread adoption of electronic health records) will soon expand to allow patients access to transparent cost analysis of their provider’s care. Easy access to cost-transparency will allow patients to choose the most affordable providers. Transparency alone is powerful enough to change healthcare. Markets in the U.S. have become the biggest in the world because of transparency and savvy consumerism. If we bring some of that transparency to healthcare and remind patients to keep their consumerist hats on, no country in the world would get better value for the best care.

Ultimately, the movement toward value-based care is putting more power in the hands of our patients. Every year we see patients gaining more control. This means understanding their options and the costs of each option clearly. The less insurance covers, the more control we get. In five years, I think we will see ASCs publishing their total joint fees online, and patients will act more like consumers and move from feeling awkward about asking for cost data to emboldened and demanding.

Healthcare isn’t a choice. It’s a necessity. But as we exercise more choice for our healthcare, providers are starting to respond with the value patients seek. As the above trends progress, the vastly inflated “affordability” of health will eventually balance out in our patients’ favor. 

This article was originally published in the June 2018 issue of ORTHOKNOW®



Steve Lichtenthal is Vice President of Business Development at the Orthopaedic Implant Company. Since joining OIC in 2012, Mr. Lichtenthal has been integral in helping OIC grow from startup to a formidable force in the industry. Prior to joining the team, he worked in various sales and management positions in both startup and Fortune 100 companies, including Standard and Poor’s, Bloomberg and Pivot, Inc. His experience is marked by a track record of success in launching new products, managing sales teams, and an affinity for increasing market share. He can be reached by This email address is being protected from spambots. You need JavaScript enabled to view it..

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