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What Does it Take to Innovate?

Ken-Gall web Lee Hunter_web Jeff-Marx web Matityahu-Head-shot-web

Ken Gall, Ph.D.

Lee Hunter, M.D.

Jeffrey Marx, Ph.D.

Amir Matityahu, M.D.

Founder & CTO

Hunter Medical 

President & CEO

Founder & CEO
Epix Orthopaedics 

Orthopaedic device manufacturers are often called upon by surgeons to develop new devices that transform care—to improve surgeon techniques, hospital efficiencies and patients’ lives. In the face of widespread industry challenges, such as price pressures and regulatory roadblocks, product innovation lags.

BONEZONE spoke to four executives and surgeons about the need, cost and obstacles for innovation.

“Innovation does not always lead to short-term sales impact, so most companies are afraid to invest in it,” says Ken Gall, Ph.D., Founder & CTO of MedShape. “But even without premium pricing strategies, product innovation is necessary to stay competitive long-term. Companies that do not innovate will eventually lose market share to innovative companies, especially since emerging new technologies do not always force premium pricing, but can sometimes bring new product function without additional per-unit costs. Resourcing for product innovation in startups or large companies comes from risk capital, money that is invested for longer term gain vs. short-term earnings.”

Innovation can be seen as a double-edged sword. Lack of innovation, especially in mid- and-small-tier players, can hinder companies’ negotiating power with hospitals. True innovation saddles companies with upfront costs in the hopes of greater adoption and return. All products are undergoing cost scrutiny by hospitals and payors.

However some in the industry, including surgeons, have questioned whether the need for more innovative products exists due to the cost to hospitals and time required by surgeons to learn how to use new devices. This applies to the more mature market segments, such as hip, knee and trauma.

In developing products, all companies need to determine the payoff to innovate. What will and won’t hospitals pay for today? What are surgeons looking for?

“Physicians and hospitals are getting frustrated by the cost of implants and devices,” says Lee Hunter, M.D., an orthopaedic hand, elbow and shoulder surgeon and Founder of Hunter Medical. “So much of what we use regularly is off-patent. Often times, companies will roll out a device that is similar to what is on the market now. They’ll put out a new ad campaign and charge a premium of 20 percent more than their generation implant just two years ago. People have started to look at that and demand more. The price of an implant has never correlated with functional outcome of a patient, for any device. The $300 suture anchor has never been shown and will never be shown to provide any better functional outcome than the standard $100 suture anchor. You’re going to see a lot of hospitals, as their budgets get squeezed tighter, push that more and resist some of these pricing increases for standard technology devices.”

Hunter founded his company in 2013 with the goal of providing solutions for unanswered problems in orthopaedic surgery. His product, the ElbowLOC® Arm Positioning System, simplifies elbow surgery for the surgeon, OR staff and patient by enabling improved supine or lateral patient positioning.

He continually calls on industry to be more innovative.

“There’s a tremendous amount of clever device marketing campaigns out there, but not much true innovation,” he says. “We can do better.”

Hunter considers distal radius plates, all-inside arthroscopic meniscal repairs and the favorable pricing for off-patent or generic devices to be innovative.