The following content is sponsored by Implant Partners.
About three years ago, executives at Wright Medical Group looked at the orthopedic industry's sharply-increasing device costs coupled with decreasing procedure reimbursements and saw an opportunity to incite change.
They developed a novel business model where surgical control could be put back in the hospitals' hands while saving 40 to 70 percent on primary hip and knee replacement surgeries, all by eliminating inefficiency and the often unnecessary costs accrued by device company representatives.
Wright's original LLC, called Wright Direct, sold to MicroPort Orthopedics on Jan. 9 and has been renamed Implant Partners. Company executives know the model is unorthodox but also believe the time for such a model is right.
"Implant Partners was created to help maintain the clinical success that is commonplace among U.S. manufactured hip and knee implants, but to eliminate the excess that is also prevalent," says Steve Lamb, company vice president and lead partner. "We noticed that there were some key indicators developing that suggested the market was ready for a disruptive model like ours — more institutional focus on improved procurement procedures, a steady increase in employed surgeons, growth in hospital membership in [integrated delivery networks] and all of the other changes spurred by our new healthcare economy."
Since its inception, Implant Partners' process has been relatively simple, yet with shocking results.
Implant Partners' experts come into hospitals and train the physicians and operating room staff to perform tasks normally fulfilled by device company reps. During the transition process, a trainer will be in the operating room to guide the initial procedures. Once the physician and staff are comfortable, the Implant Partners' consultant will sign off on the training, but remain available, even through remote video chat, to help with any complications or questions that arise.
Training typically takes a couple of days and the entire transition can be deployed in four to six weeks, Mr. Lamb says. Once full implementation has properly taken place, the cost savings are hard to deny.
Challenges to change
With all its potential for big savings, though, not all hospitals are jumping on board. The biggest challenge is getting hospitals and physicians to be economically aligned, Mr. Lamb says. Orthopedic surgeons are often very attached to their current implant providers and company reps, and hospitals must consider this motivation before trying to change the system.
"When surgeons are economically aligned with the hospitals, potential obstacles seem to disappear, and the surgeon is completely vested in saving the hospital money," he says. "However, when they get the same fee regardless of if there is a rep in the room or not, why not have the rep in the room? As soon as they are able to participate in cost containment, there is a different level of ownership."
Part of the transition to the new model involves establishing true hospital-physician alignment with both parties coming to an agreement about lawfully and equitably distributing the cost savings. Implant Partners strives to help hospitals and physicians achieve optimal clinical, operational and economic alignment arrangements.
Surgeon responses
Even surgeons skeptical to a different device business model embraced the rep-replacement approach once the transition took place, Mr. Lamb says. Hospitals that have truly partnered to share savings found themselves with satisfied surgeons who were able to use the Implant Partners devices for the vast majority of their cases.
The devices used by Implant Partners are the same Wright Medical Group hip and knee implants many physicians currently use; the savings comes from the distribution model, not a differently-manufactured device. Because of such, Mr. Lamb says, "many surgeons that haven't used our products before have been overly surprised at our product and instrument design and quality."
One physician asked by the company for feedback reported he could use the Implant Partners model 70 to 80 percent of the time, and that it works well for "bread and butter" patients – those primary patients without severe deformity. Most physicians require additional operating room assistance for more sophisticated cases. In these cases, they can either get help from Implant Partners or from their traditional implant provider.
Why change is imminent
Implant Partners' mantra is "clinical success without the excess," and industry insiders, hospitals, and surgeons believe the healthcare industry climate is such where extreme measures — such as partnerships between hospitals and implant companies — will be needed to survive and thrive.
CMS' new rates for 2014 hip and knee reimbursements have dropped from $1,600 to $1,350. Such pricing is one of many incentives for hospitals and surgeons to change the way they acquire implant devices.
Mr. Lamb says it's not far off on the horizon when payers will cut one check for a hip or knee replacement, similar to the BPCI initiatives that started Jan. 1. Health systems must act now to preserve their savings and retain their ability to sustainably perform joint replacement surgeries.
"We believe our model will fundamentally change the industry — certainly in the preference items area," Mr. Lamb says. "Put simply, the current way of doing things is just unsustainable over the long-term, especially with bundled payment arrangements increasing rapidly. Our model of providing clinical, operational and economic alignment helps guide our partners through this essential change management process and allows all healthcare stakeholders to win — surgeons, hospitals, payers and patients included."