Traditional medical device companies — including Medtronic, Boston Scientific, Zimmer Biomet and Stryker — are trying to prove their worth to hospital systems looking for more than just widgets to implant to treat a variety of maladies.
No where is this more apparent than in the world of orthopedics, where scrutiny has fallen on implant prices, even as the industry has responded by pointing out that a big part of the costs of a joint replacement happen when the patient has been released from the hospital. From April this year, the bundled payment regime was instituted in 800 U.S. hospitals by which Medicare would pay them a lump sum per joint replacement for a defined period. That period of time stretches from 3 days before the surgery to 90 days after it. If hospitals’ costs are lower than the Medicare lump sum, they win. Otherwise… well you get the picture.
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Acutely aware of the cost-conscious, value-driven environment, ortho companies are looking for ways to help their customers navigate value-based care. Zimmer Biomet made an interesting play last week in buying a virtual or telerehab startup RespondWell for an unknown sum.
RespondWell has developed its Therapy@Home program by which an avatar coach — Maya — guides a patient through clinician-prescribed physical therapy routines before and after a procedure such as joint replacement. The telerehab program developed using sensors and Microsoft Kinect also collects data on patient-reported outcomes. Patients can also communicate with care teams using two-way messaging and video in between patient visits.
RespondWell will become part of Zimmer Biomet’s Signature Solutions business, the services unit of the Warsaw, Indiana company.
“The new value-based reimbursement environment compels hospitals and providers to assume responsibility for patient outcomes well after discharge and through the critical rehabilitation period,” said David Nolan, Group President for the company’s biologics, extremities, sports medicine, surgical, trauma, foot and ankle and office-based technologies, in a news release on Oct. 27. “Integrating an innovative and comprehensive telerehabilitation program into our Zimmer Biomet Signature Solutions offering addresses the emerging need for healthcare providers to oversee and optimize post-surgical recovery outcomes in order to maximize value across the entire episode of care.”
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The move makes complete sense assuming, of course, the technology works and patients find it easy to use.
A similar concept is at play at San Diego-based Reflexion Health, which has its own avatar coach – Vera — and the Microsoft Kinect platform to provide telerehab to joint replacement patients. The product is cleared by the FDA.
Earlier this year, when I was still senior editor at Medical Device + Diagnostic Industry, I had the opportunity to interview Stryker’s CEO, Kevin Lobo, at the annual meeting of the American Academy of Orthopaedic Surgeons in Orlando.
During the interview – I don’t have access to the recording anymore — I described Reflexion Health to Stryker asking if Lobo felt as I did: that such a company would allow Stryker to play both during the implant part of the bundled care environment as well as the rehab and recovery period. So, why not acquire such a firm?
Lobo’s passion for healthcare and technology is very evident to anyone who has a conversation with him, but he had a surprising answer. Rehab is not something that Stryker is good at. That is very much the job of the hospital and so while the tech seemed interesting to Lobo, telerehab is not something that he would consider bringing within its wheelhouse.
Rather, Lobo’s full focus was on having the right launch for its Triathlon total knee on the Mako surgical robotic system scheduled to be next year. When asked whether hospitals would adopt such an expensive device — Mako is rumored to cost more than $1 million — given how cost-conscious hospitals are, Lobo was emphatic about Mako’s prospects.
“I absolutely think Mako can win in a bundled payment environment,” he told me in early March. “We are going to show much less soft tissue disruption. Every surgeon is going to be able to do it the same way. We’re going to have much more consistent, predictable outcomes and that’s going to be enabled by a robot.”
In other words, robotic technology would bring better clinical outcomes for the patient as well as repeatability and predictability of procedures for the surgeon.
Time will tell whether Zimmer Biomet’s telemed software approach or Stryker’s robotic tactic will find traction among hospitals contending with bundled payments in orthopedics.
Meanwhile, one executive is skeptical at best about hospital customers adopting new technology and the value of such acquisitions.
“It’s a bit of the Wild Wild West as I look at it even with some of the competitors doing acquisitions. It’s hard to say if any of them are getting traction to be honest. We did some primary research with customers, at least in the U.S. [who are] decision makers in hospitals and right now there’s not a lot out there that’s moving the needle,” said Gary Pruden, executive vice president and worldwide chairman of Johnson & Johnson’s medical devices, in a phone interview last week in response to a question about the Zimmer Biomet deal.
Photo: sdominick, Getty Images
