We recently queried our Orthopaedic Surgeon Editorial Board to learn their personal views on industry challenges. The first response came from Charles R. Gordon, M.D.
Charles Gordon, M.D. is a clinician, scientist and entrepreneur. His experiences as a neurosurgeon and in the care of patients have led him to co-invent multiple devices for the spine. He and his staff continue to participate in research on novel treatments of spinal disorders. Additionally, he co-founded Texas Spine and Joint Hospital, a unique inpatient facility treating patients in East Texas.
Question #1: In your opinion, what factors have most affected the slowdown in procedure volume growth that we’ve seen over the last 18 months? Do you see any likelihood that things will turn around?
Charles Gordon, M.D.: In my opinion, the slowdown in procedure volume growth that we have seen over the last 18 months is due to a couple of factors. First and foremost, I see third party reimbursement issues becoming more and more of a challenge. This is certainly the case in my practice. We find that we are asked to justify more and more of the procedures that we are recommending to patients. Evidence-based medicine is here to stay, and I believe has only just begun.
The second factor that I am seeing at work is that as companies reach to conserve costs, they are increasingly unloading some of their insurance expenses onto patients, oftentimes indirectly by purchasing healthcare plans that require a much higher deductible. As employers shift healthcare costs more squarely into the patients’ column, they (the patients) have become much pickier in electing to undergo major elective procedures.
My forecast is that this situation will likely stabilize. I believe ultimately that evidence-based medicine will support the providers who are working to keep patients more active, thereby living longer and healthier lives. And even though patients will continue to bear an increased cost of their medical care, the demographics are in favor of the overall growth in procedure volume. Whereas I do not see a major rebound, I do believe that things will stabilize in the next year or two.
Question #2: Companies continue to face severe price pressure. Do you think this will continue, and if so, why?
Charles Gordon, M.D.: Companies will continue to face significant pricing pressure. Again, at some point we will find a bottom where commodity-based companies will be able to price products and turn a meager profit, but I do not believe we are there yet. It is my opinion that we will see continued downward pricing in the range of 5 to 10% per annum for the next several years.
Question #3: What do you expect the future will hold for orthopaedic sales reps?
Charles Gordon, M.D.: In terms of the orthopaedic sales reps, I strongly do believe that they have a valuable role in the operating room, but I see that role changing. In the past, sales reps have been able to command fairly lucrative reimbursement for a defined set of services. It is my opinion that over the next few years, the responsibilities of those services will grow and at the same time the reimbursement will decline. For instance, I see the resurgence of stocking distributors, reps who actually own the material that they are selling. I see sales reps distinguishing themselves in terms of value added, both for the surgery and particularly for the hospital. I see reps becoming more and more responsible for maintenance, not only of their implant inventory, but also warehousing of the delivery system.
Question #4: What do you see as the biggest challenge facing orthopaedic/spine surgeons in the next 3 years? What assistance, service or resources can industry provide to you, your patients or the hospital to help address this challenge? (Are there specific technology improvements you feel would be most helpful to you and your patients moving ahead?)
Charles Gordon, M.D.: In terms of the biggest challenges facing orthopaedic and spine surgeons over the next three years, it is clear that surgeons will be asked to do more with less. All of the pricing pressures that are being felt in the orthopaedic industry are also being felt by hospitals, and orthopaedic and spine surgeons, as well. Looming Medicare cuts, bundled payment programs with CME and other insurance carriers are, I believe, going to come to fruition. My guess is that we will see some type of permanent Medicare cuts, though probably not as draconian as those that are currently scheduled.
I think the primary technical advance that companies could provide is in offering more expedient ways for surgeons to deliver care. In an era where outcomes are measured and costs are diminishing, the efficiency of surgery will become increasingly important. I believe finding technical delivery methods that offer our patients satisfactory outcomes with shorter operative times will be very valuable to surgeons, patients and payers. Clearly, technologies that help drive costs out of the system will be more favorably advanced than those procedures that are a net increase of cost.
Whereas this is certainly a challenging time, I think it is also an incredibly exciting time to be in this industry.
This and other surgeon responses are also featured in ORTHOKNOW®, www.orthoworld.com.