AAOS 2013: New Technology Plus Old Time Religion

Over 31, 000 surgeons and health care providers, device reps, manufacturers, analysts, engineers and reporters blew into Chicago the week of March 19 to participate in the world’s premier orthopedic bazaar and scientific meeting, the 81st gathering of the American Academy of Orthopaedic Surgeons (AAOS).

Three of the biggest device makers and supporting businesses from the “Orthopedic Capital of the World” (Warsaw, Indiana) are just 100 miles up the road and an optimistic hometown surgeon took his place as the 81st president of the Academy. This year’s gathering was generally more upbeat than past meetings.

Famed device engineer and Biomet, Inc. founder Dane Miller told us that he has attended over 40 annual AAOS meetings and this one had good energy. Indeed, with over 600 exhibitors, of which 213 were first-timers, the meeting blew the roof off last year’s 517 exhibitors.

After surviving the Age of (Christopher) Christie and deferred prosecution agreements, years of incremental technology advancements, Obamacare, metal-on-metal hip failures and a pinched public purse, incoming Prez Josh Jacobs, M.D., welcomed the profession and industry with a new emphasis on the value orthopedic therapies brings to society.

A Tale of Two Meetings

There were two meetings really. One in the Exhibition Hall, which was actually chock full of new stuff and ever solicitous sales reps. The other one could be found in the meeting rooms where surgeons faced up to the new realities of American healthcare system—and how their practices, work and patients may well change as a result.

In packed ballrooms, surgeons heard what to do about metal-on-metal hips, re-hashed debates over the safety of BMP’s (bone morphogenetic protein) and had to think about shifting economic sands as payers and other economic imperatives appear to be herding them to the large hospital system corral.

Fight Over Knees

The Exhibition Hall was buzzing over the biggest or at least most expensive new product launch, perhaps ever. AAOS in 2013 was the coming out party for Zimmer’s Persona fixed-bearing total knee system. The production quality of Persona’s party was enough to make Hollywood/Disney envious. Persona gives surgeons about twice as many implant sizes and, for the hospital purchasing manager, a lot fewer instrument trays.

But wait…across the hall…DePuySynthes was simultaneously launching the Attune and Smith & Nephew was also presenting its new baby—Journey II. But, truth be told, Persona took the prize in terms of glitz and pomp and circumstance.

It didn’t take too long for competitors to take a shot at the new knees.

“Variance in sizes is not patient-specific—it’s inventory, ” wrote ConforMIS CEO Philipp Lang in a reader comment in OTW.

“Off-the-shelf implant shapes that do not match the patient’s anatomy result in residual pain, functional limitations and a knee that does not feel natural. While Zimmer and DePuySynthes may claim to have introduced personalized implants, patients will only receive more generic size options versus a knee that is personalized to their anatomies, ” added Lang.

During a tour of the Persona exhibit, device developer Bob Booth, M.D., said in response to Lang’s critique that he considers knee replacement a soft tissue operation and wants as many options as possible during surgery instead of a single implant created pre-operatively.

Robotics Collide

Humans are clearly intrigued with robots—especially the orthopedic surgeon variety—who we suspect may well be frustrated engineers. MAKO Surgical Corp. and upstart competitor Blue Belt Technologies, Inc. had very popular booths. Competition between the two firms recently heated up as MAKO and Stryker Corp. filed lawsuits against Blue Belt and former employees who had the temerity to join the upstart. Their claims? Stolen secrets and tortious interference. All we know for sure is that the court filings will make for interesting reading.

In what must surely be a first, a federal judge sided with Stryker in barring a new Blue Belt hire, ex-Stryker marketing director James Bruty, from attending the meeting. Stryker said Bruty lied about where he was going to work after leaving Stryker.

A Young Surgeon’s Anxiety

Something about AAOS is refreshing. It’s that splash of new technology combined with old school religion—you know, how orthopedic surgeries and implants return literally hundreds of thousands of long suffering arthritic patients to normalcy. But then seeping in around the edges of the good news were the fingers of reimbursement and healthcare economics anxiety.

“I’m 40 years old. My fellow surgeons and I are still young enough to switch careers, ” said a young surgeon to Richard Rothman, M.D., founder of the Rothman Institute, during a session on the future of surgeon practices after hearing about loss of control, the rise of the administrator and payer and surgeon shortages.

A retired surgeon in the audience stood up and spoke to the young man and calmly reminded him that when he was young, he too thought his elders had just gone through the golden age of orthopedics and change was daunted. But he added that the higher demand for his services and fewer surgeons coming into the field, only made him more valuable.

Dr. Jacobs told us that he would have told the young surgeon that there’s no better area in medicine where you improve patients so quickly and dramatically. “Don’t lose sight that you really help people. It’s a great job.”

The Rise of the Payer

Roger Strode, an attorney with Foley & Lardner told surgeons that various experts suggest the successful hospital enterprise must reach at least $2 billion in annual revenues to absorb the administrative, compliance, technology, and risk-taking characteristics of long term sustainability. Those economics are driving surgeon practices under the hospital’s umbrella.

He said limits on health insurer premium profits under the new health care law are shifting their focus to provider business and reconfiguring the insurer’s landscape to control risk dollars. He cited examples of insurers now buying hospitals.

Jacobs the Optimist

Dr. Jacobs addressed this new environment in his Presidential remarks to the Academy and in an interview with OTW on March 27.

“PPACA [Obamacare] is the law of the land; it is time to move forward, ” Jacobs said. The Academy needs to now clearly demonstrate how orthopedic surgeons are part of the solution to the nation’s health care crisis clearly spelled out by a keynote presentation by former Wyoming Senator Alan Simpson and former Clinton White House Chief of Staff, Erskine Bowles

New Era of Surgeon/Industry Relations

“Orthopedic surgery has been a particular target of the government, in part due to the cost of implants and the creative history of orthopedic surgeons as innovators and inventors as they established relationships with manufacturers. These relationships attracted the attention of the Department of Justice. The reverberations from the subsequent investigation and settlements are still being felt, ” said Jacobs.

Jacobs told us interactions with industry in the post-DPA (deferred-prosecution agreements) world are scrutinized much closer and planned and implemented in a more formal fashion. “Companies are committed to following the new rules.” His own experience in research is that the interaction with industry is far more complex now. He added that surgeons need to interact with manufacturers to design patient-and surgeon-friendly implants and track the outcomes of the procedures that are performed with these implants.

Zimmer President and CEO Dave Dvorak told us the same thing at the meeting. Dvorak pointed to the development of the Persona knee in a new era of surgeon/industry relationships. “Almost all innovative ideas originate from surgeons, ” said Dvorak. Those ideas are brought to fruition by industry engineers.

As an example he noted Zimmer’s program of separating sales and marketing activities from consulting, medical education and other appropriate financial arrangements with healthcare professionals.

Dvorak said the DPA process certainly changed the manner of the engagement, but did not change the need for collaboration. “The Persona is the biggest product development project the company has undertaken, and it provides a strong example of how appropriate, transparent collaboration can facilitate major breakthroughs in the standard of orthopedic care.”

Orthopedic Value to Society

Hip and knee replacement procedure together comprise the highest expenditure of Medicare dollars, Jacobs said, and as a result procedure utilization rates have come under increased government scrutiny. Recovery auditors (RACs) have tried to claim that many surgeries were unnecessary and some payers have classified certain elective orthopedic services as so-called “additional cost tier procedures.” This has resulted, for example, in patients having to pay a $500 surcharge in one state-run system. “That’s a significant disincentive to obtaining a needed and effective healthcare intervention.”

Well, yeah.

“We are collecting the data to make the case that we’re helping keep citizens productive, ” Jacobs told us. He noted the focus has been on costs, not the downstream value to society, which leads to mistaken conclusions. “We restore workers to gainful employment and keep people mobile and healthy so they stay out of the health care system…we shouldn’t reduce access to procedures that are overall cost savers to society.”

He credited his predecessor, John Tongue, M.D., with leading an exhaustive Academy-sponsored economic analysis called, “Modeling the Indirect Economic Implications of Musculoskeletal Disorders and Treatment” which demonstrates the societal value of orthopedic procedures.

The research suggests that physical impairments associated with musculoskeletal (MSK)-related disorders reduce household income and the likelihood of employment, and increase missed work days and disability pay for those who are employed. Appropriate treatment of MSK disorders has the potential to significantly reduce indirect costs and is associated with net economic benefits to society.

“Regulatory Advocacy”

To make this case to public payers, Jacobs said the Academy is augmenting its legislative advocacy efforts to repeal the independent payment advisory board (IPAB) and replacing the sustainable growth rate formula by engaging in “regulatory advocacy.” In effect, educating those in the executive branch of government who are writing the rules to implement the goals of the new health care law.

“The advocacy message is presented in terms of our quality programs (e.g., clinical practice guidelines and appropriate use criteria) which represent a potential solution to the current healthcare crisis, not just demand for fair reimbursement. We have a golden opportunity to demonstrate the value we provide to society and to each and every citizen of our country.”

We don’t know what happened to that 40-year-old surgeon. If he wants to make a lot of money, he’s probably preparing his MBA or law school application. If he follows the advice of his new optimistic Academy president he’s probably figuring out how to fit into a new health care landscape.