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Three Trends in the Implantable Device Industry Print E-mail
Written by Stephanie Wasek   
Monday, 28 April 2008
1. Movement to outpatient settings. There is a global trend across specialties, including orthopedics, neurology and cardiology, that increasingly complex procedures are moving toward outpatient settings.

“From a trending perspective, all the growth in surgery is moving to the hospital outpatient and ASC market,” says Jay Ethridge, MBA, the CEO of Implantable Provider Group, which works with providers to manage the cost risks inherent with high-cost implantable devices. “Especially because a lot of ASCs are smaller operations, and many are newer ventures, there can be a lot of pain involved in contracting with various payors. It’s important for an ASC to have personnel who understand payor reimbursement methodologies. For example, grouper rate methodologies typically allow for $2,000 to $4,000 for reimbursement on implants, but when you get into some of the higher-cost implants required by more complex cardiac, ortho and neuro procedures that are moving to the ASC setting, you can easily reach upward of $25,000 to $30,000 in some cases.”

If providers can’t effectively negotiate to cover those up-front costs on top of those of the procedure, profits and cash flow may be seriously eroded to the point a facility cannot continue offering these services. Mr. Ethridge recalls situations in which ASCs have had serious accounts payable situations with manufacturers; their credit was cut off, and they had to stop performing procedures with implants, or they were required to pay for the devices at time of delivery.

“If you don’t have someone who’s very sophisticated from a contracting perspective, the payors tend to have a little more leverage,” he says. “If you want to get in the network of some of the bigger payors like BlueCross BlueShield and United, it can be helpful to look for expertise and someone to manage the risk before you do.”

2. Continued high implant costs. As mentioned, implant costs can reach, in some cases, tens of thousands of dollars for a single procedure.

“The regulatory requirements, clinical studies and other activities necessary for device approval are really driving the costs of the technology,” observes Mr. Ethridge. “Implant technology is constantly improving; there is a lot of risk for manufacturers in getting these devices to market and a lot is spent on quality controls to meet regulations after that. These factors keep prices high.”

Which can put commercial insurers off paying ASCs for their costs. And it can be especially difficult to cover implants when prices rise and you’re between contract renegotiation periods.

“If a provider is not at a point in time where it can renegotiate, part of what we offer is opening negotiations,” says Mr. Ethridge. “We try to show payors that their strategies may be a little short-sighted: If they don’t pay enough, physicians will find another place to have the procedures done — likely the hospital — and it will cost them more at the end of the day. We work to help set the stage for appropriate reimbursement for the appropriate place of service.”

3. Interesting growth areas. The most popular implants for ASCs are those for orthopedic sports medicine procedures, says Mr. Ethridge.

“We’re seeing a lot of orders for implants for intermediary procedures such as ACL repair and rotator cuff repair,” he says. “These are generally for younger patients, to repair joints, improve mobility and reduce pain, versus more intensive procedures like hip or knee replacement.”

This may be to be expected, as ASCs do tend to serve commercially insured patients, who tend to be working rather than retirement age, more often. However, the areas where there are strong trends toward growth may be a bit more unexpected. Here’s what Mr. Ethridge has observed in the market:

Spinal cord stimulation products “continue to be a sizable growth market, up 15 percent to 20 percent each year.”

There’s “some movement afoot in physician’s offices to perform trials on neuro implants, and GYN procedures are picking up in that space as well.”

Finally, while diagnostic interventional cardiology procedures have been popular in outpatient settings in recent years, CMS’s go-ahead for pacemaker implant procedures in the ASC will lead to “a lot more cardiac procedures in the ASC settings — the less-serious procedures like battery changes, for example. There are a couple cardiology-focused ASCs in Florida that we’ve seen, and a lot of hospitals have joint-ventured with cardiology practices over the past five
years or so. [Cardiologists] are pretty
entrepreneurial, so they’ll probably start to look at some of their own JVs with ASC companies before long.”

Contact Stephanie Wasek at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it
 
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