But it hasn’t been a remarkably great year, either.
Truthfully, it’s been one of those run-of-the-mill, hard-to-define eras, where the days seem to blend together almost in an indistinguishable blur. It’s been a year of routine, of familiarity, as the medical device industry further adapts to fundamental shifts in reimbursement, digital health, payer engagement, and value-based care.
In many respects, 2016 has seemed like a continuation of its predecessor. The lines between medtech, health IT, healthcare services and even therapeutics blurred more this year with Medtronic plc’s investments in consulting and hospital-managed services, and Johnson & Johnson’s participation in the setup of Verb Surgical, its robotic surgery joint venture with Verily, née Google Life Sciences.
The drive for scale and strength among OEMs continued with Abbott Laboratories’ $25 billion bid for St. Jude Medical Inc., Stryker Corp.’s $2.77 billion acquisition of Sage Products LLC and its $1.28 billion takeover of Physio-Control International Inc., Zimmer Biomet’s $1 billion purchase of LDR Holding Corporation, and NuVasive Inc.’s $380 million bid for Ellipse Technologies Inc. Likewise, companies also maintained their affinity in 2016 for bolt-on transactions to fill portfolio gaps and divestitures to exit non-core competency areas or shed poorly-performing business units.
Big data and cybersecurity issues lingered well into the year too, as the industry began digesting guidance from the U.S. Food and Drug Administration (FDA) on the use of real-world data, as well as recommendations on mitigating device cybersecurity threats following the 2015 discovery of defensive vulnerabilities in Hospira’s infusion pump systems.
The year, however, was not without its own defining moments, though. The most notable, obviously, was the suspension of the 2.3 percent medical device tax—a longstanding source of contention between industry leaders and Obamacare proponents. There was also the recurrence of Medtronic plc’s Infuse nightmare, the FDA’s second-ever device ban (on powdered surgical gloves), the battle for control of RTI Surgical Inc., the debut of the world’s first long-length digital radiography detector for scoliosis, and the official coronation of a new FDA commissioner.
For insight into these and other kairos of the past 10 months, take a stroll down memory lane, courtesy of Orthopedic Design & Technology.
The Tax Man Leaveth
The day went largely unnoticed.
There were no formal celebrations marking the moment, no proclamations immortalizing the date, and no special gatherings acknowledging the occasion. The day, in fact, was no different than any other that week.
Except that it was a Monday. The start of a new workweek. The beginning of a new month.
Monday, Feb. 1 was also the start of a new era for the medtech industry: It was the final medical device excise tax payment deadline.
For two years, anyway.
Or perhaps, ever.
Long a thorn in the industry’s side, the 2.3 percent medical device tax was suspended late last year through 2017 as part of a compromise $1.8 trillion spending package that prevented a government shutdown. The suspension capped a long, hard-fought repeal effort by MDMA, the Advanced Medical Technology Association, and other lobbying groups that opposed the levy for its chilling effect on innovation and R&D, as well as its drain on corporate finances. The fight triggered at least five showdowns in the U.S. House of Representatives, two of which featured stand-alone repeal measures, and two involved inclusions in a jobs package and a reconciliation vote.
Sired in 2010 to help fund expanded U.S. healthcare coverage under the Affordable Care Act (ACA), the device tax imposed a 2.3 percent levy on the medical supply sales. It applied broadly to a range of products, including pacemakers, artificial joints, surgical gloves, and dental instruments.
The levy raised $913 million in the first half of 2013, or roughly 75 percent of the expected amount. Regulators expected as many as 15,000 tax-associated filings, but only 5,107 medical device tax forms were actually filed, government statistics show.
One of the main impacts of the tax, according to industry leaders, was its decimation of the funding necessary to drive medtech innovation and fuel growth. For many manufacturers, the levy significantly hampered their ability to invest in new time- and cost-saving technologies like automation software, artificial intelligence, and robotics.
The tax also led to countless hiring freezes and in some cases, considerable layoffs. “As well as lacking effectiveness, the tax has many costly consequences for manufacturers, and was particularly crippling to smaller companies, which were forced to face challenges such as layoffs, cuts to research and development efforts, and delayed expansion plans,” Jennifer Ryan, a GlobalData analyst covering medical devices, said when President Obama suspended the levy.
“The tax also threatened to seize much of the money spent on product innovation and advancement in the U.S. medical device market, which was already struggling under stringent regulatory and reimbursement procedures.”
Without the added struggle of the device tax, medtech firms can now afford to replenish their staffs and funnel resources into research and new product development. Warsaw, Ind.-based Orthopediatrics Corp., for example, plans to invest in new projects, while noninvasive patient monitoring technology provider Masimo intends to boost both its R&D and infrastructure expenditures. Endourological treatment technology developer NxThera Inc., meanwhile, is boosting its staff of researchers and sales folk.
Such strategies are likely to become more widespread as medtech companies work the tax reprieve to their advantage. Indeed, more than two-thirds (69 percent) of corporate executives intend to use freed-up device tax funds to hire more U.S.-based employees, according to a Medical Imaging & Technology Alliance (MITA) survey conducted earlier this year. Seventy-seven percent of respondents plan to invest additional resources in R&D, 69 percent hope to finance new infrastructure, and 77 percent aim to complete one or more projects currently in development.
“These survey findings confirm that suspension of the medical device tax has already helped boost investment in R&D and ignite medical technology innovation in just a few months,” MITA Board Chairman Nelson Mendes, president/CEO of Ziehm Imaging Inc., said in a July news release. “Full repeal of this burdensome tax will turn yesterday’s economic headwinds into tomorrow’s tailwinds, spurring sustained growth and protecting patient care. We appreciate the bipartisan efforts of Congress to address this tax and urge them to vote for full repeal when the time comes.”
If the time comes, that is.
The tax’s future is unclear at the moment, since a new presidential administration and potentially new U.S. Congress will ultimately determine its fate. Still, industry leaders are hopeful the suspension will eventually become permanent.
“We are optimistic,” said Clayton Hall, vice president of government affairs for the Washington, D.C.-based Medical Device Manufacturers Association (MDMA). “It’s easier to keep a tax suspended than to get it turned off.”
“I think it will be very difficult to turn it back on,” agreed Perry De Fazio, a vice president at Boston, Mass.-based investment banking firm Covington Associates. “If there is an attempt to turn [the tax] back on, there will be the question of what are you turning it back on for?”
To reconcile the shortfall in ACA funding, perhaps.
“While some camps will be legitimately relieved at the repeal of these levies, the simple reality is that the funds from both the Cadillac tax and the medical device tax are important to funding the Affordable Care Act,” William Bithoney, M.D., managing director and chief physician executive at the BDO Center for Healthcare Excellence & Innovation, noted in a statement. “How will the projected billions of dollars raised by these taxes be replaced?”
Read more: http://bit.ly/odtyir1601
The Battle Over Bundled Payments
Gregory J. Golladay, M.D., had a feeling the bundled payment initiative at his hospital would be a hard sell with colleagues. “Historically, many doctors, especially surgeons, have been independent practitioners who have made the majority of their decisions without significant oversight or regulation,” he said in an Association of American Medical Colleges interview late last year. “In general, it seems that physicians who have demonstrated prior resistance to change tend to pose challenges when presented with health system design changes.
These physicians are not accustomed to restricted implant selection or the requirement to follow a standard care protocol. They are used to a care model that they believe worked well for them and their patients...There’s a necessary paradigm shift from the way many doctors were trained and have always delivered care in an individualized way to adopting standardized protocols and practices.”
Such a leap can be difficult, as physicians have never really been tethered to standardized pricing or product selection criteria. Historically, they’ve been in control, choosing the medical devices and treatments they believe is best for patients (determined mostly by past clinical outcomes). But the shift toward value-based healthcare is threatening those long-held freedoms by introducing alternative payment models that encourage teamwork, set a pre-determined budget for services, or reward top clinical outcomes.
Doctors, not surprisingly, have been hesitant to embrace these new payment models due to concerns about transparency and shared risks/incentives. Many perceive value-based initiatives as a threat to their autonomy and reimbursement, believing they’ll unfairly be held accountable for factors beyond their control.
Golladay, however, regards new payment models as an “opportunity to coordinate care across the continuum.” Since the spring of 2015, his medical facility—part of the Virginia Commonwealth University (VCU) Health System—has used a bundled system to reward its physicians.
The VCU program is based on the Bundled Payments for Care Improvement (BPCI) initiative created last year by the Center for Medicare & Medicaid Innovation. The program combines Medicare payments for all services related to one of 48 clinical episodes of care; providers participate in one of four models. The most practical track for academic medical centers is one in which Medicare sets a condition- or procedure-specific target price for a patient’s complete care during a hospital admission and 30, 60, or 90 days post-discharge.
The provider’s actual Medicare fee-for-service payments are reconciled against the target amount. The provider receives a Medicare payment for keeping fees below the set target but pays the agency if it exceeds the agreed-upon amount.
This patient-centered model is designed to improve the coordination of care and ultimately improve health outcomes. It gives providers an incentive to focus on quality of care over procedure volume, and it prepares hospitals for the eventual reality of Medicare reimbursements aligning with quality metrics.
Since implementing the bundled approach, VCU has significantly reduced the risk of postoperative complications. All patients scheduled for elective joint replacement surgery are directed to the health system’s Preoperative Assessment Communication and Education Clinic to ensure they are as healthy as possible before their procedure. As a result, VCU has noticed a sharp dropoff in the severity of kidney injuries among joint replacement patients and a 75 percent reduction in post-surgical blood transfusions.
“Just knowing where you stand in terms of the data and then being able to have the courage to admit where you have room for improvement has made a huge difference for us,” said Golladay, Adult Reconstruction Fellowship director and associate professor of orthopedic surgery at VCU. “It’s just like a 12-step program—first, you have to admit you have a problem.”
A fairly easy first step, most certainly. Few in the medtech industry can refute the skyrocketing costs of U.S. healthcare.
But fewer can agree on a way to fix it.
The Centers for Medicare & Medicaid Services suggested a way in April, revamping its reimbursement model for hip and knee replacements by tying payments (or penalties) to patients’ overall recoveries. The agency’s Comprehensive Care for Joint Replacement (CJR) model puts hospitals in 67 metropolitan statistical areas in charge of ensuring cost-effective surgery and patient recovery for 90 days after hospital discharge. The five-year pilot program is being phased in gradually, with no financial penalties for first-year underperformers. In the second year, however, hospitals will be either financially rewarded or penalized for their ability to meet a fixed rate and corresponding quality metrics. Eventually, the program aims to link nearly one-third of all total hip and knee replacements in the United States to quality, patient satisfaction, and cost measures.
Despite some early grumblings, orthopedic device manufacturers have responded favorably to the CMS initiative by rolling out programs designed to reap the rewards of a bundled payment system. Stryker Corp., for instance, launched an Internet-based platform this past spring for hip and knee replacement patients that enables them to communicate by computer or smartphone with their hospital care team throughout their treatment. DePuy Sythes, meanwhile, teamed up with bundled payment program provider Value Stream Partners to help hospitals improve clinical outcomes, increase patient satisfaction, and lower overall costs. Zimmer Biomet followed suit in July with the release of Signature Solutions, a suite of clinical services and technologies to help streamline care and optimize patient outcomes. The company is offering the CJR-inspired service to select academic hospitals nationwide and planning a broader launch for 2017.
Zimmer Biomet might want to augment its Signature Solutions before fully releasing it, though: In late July, CMS proposed expanding the CRJ program to include hip and femur fractures. (The agency is also envisioning a new mandatory bundled payment system for heart attack treatment and bypass surgery billed through Medicare).
“The [new] models,” CMS claims in its formal announcement of the plan, “would...create a healthcare system that provides better care, spends healthcare dollars more wisely, and makes people healthier.”
Not necessarily. The American Academy of Orthopaedic Surgeons (AAOS) warns that CMS’ bundled payment initiatives could “severely disadvantage surgeons” and lead to care that is not as cost-effective as anticipated. “AAOS strongly believes that...orthopedic surgeons should be the primary responsible party, or at least be equivalent in status to the acute care hospital. It is the orthopedic surgeon who is involved in the patient’s care throughout the episode of care,” AAOS President Gerald R. Williams wrote in a Sept. 7 letter to the U.S. House Budget Committee. “No other party in the total episode of care is as involved in all aspects of the patient’s care, and no other party is as important to the final patient outcome and overall cost efficiency as the operating surgeon. Therefore, it is logical that all episodes treated under the program be overseen by orthopedic surgeons and not an acute care hospital facility.”
Why not both?
Read more: http://bit.ly/odtyir1603
Next Stop: The Third Dimension
Remember the “Terminator 2” T-1000 robot? Well, it’s real.
Metaphorically speaking, that is. The technology for it is real.
Australian engineers have created self-operating switches and pumps from a liquid metal alloy, and they are hopeful their invention can eventually be used to create electronic devices that act more like living tissue—or even a version of the formidable shape-shifting T-1000.
“We adjusted the concentrations of acid, base, and salt components in water and investigated the effect,” RMIT University Professor Kourosh Kalantar-Zadeh told British online newspaper The Independent in August. “Using this discovery, we were able to create moving objects, switches, and pumps that could operate autonomously—self-propelling liquid metals driven by the composition of the surrounding fluid. Eventually, using the fundamentals of this discovery, it may be possible to build a 3D liquid metal humanoid on demand—like the T-1000 Terminator.”
Albeit a friendlier version, hopefully.
Johnson & Johnson has other ideas for the RMIT breakthrough, though. The global medtech behemoth is eyeing ultra-fast Continuous Liquid Interface Production (CLIP) technology for customized surgical devices, teaming with Redwood City, Calif.-based Carbon 3D Inc. on the venture. Carbon 3D’s CLIP technology—a photochemical process—uses both light and oxygen to build objects, projecting ultraviolet (UV) images generated by a digital light projector through an oxygen-permeable win- dow into a reservoir of UV curable resin. The UV images, when projected, solidify as the build platform rises.
The CLIP process could potentially revolutionize the 3D printing industry, as it reduces build time to mere minutes and produces gadgets that rival the strength of injection-molded items. Ford Motor Co. and special effects studio Legacy Effects LLC are already using CLIP technology, with the automaker in particular finding the process ideally suited for manufacturing prototypes.
“A lot more potential remains untapped in 3D printing,” Ellen Lee, Ford’s team leader of additive manufacturing research in Dearborn, Mich., told Forbes. “It’s really going to change the way we manufacture in America. We want to understand how best to use it.”
So does the medtech industry, though it has a good head start on Ford and other automotive companies. Medical device manufacturers have fully embraced 3D printing for its ability to quickly develop prototypes, create products with intricate surface textures, and cut production costs, among other benefits. Orthopedic implant makers, specifically, like the technology for its customization potential—especially for parts of the skeleton that have complex geometries unique to each individual, like the pelvis.
Leading orthopedic device firms have invested substantially in 3D printing technology over the last few years as they realized the enormous business prospects of patient-specific implants and product design software. Acceptance continued unabated in 2016, as evidenced by Stryker Corp.’s construction of a $400 million 3D printing manufacturing facility in Ireland, J&J’s springtime collaboration with HP and mid-summer partnership with Materialise on customized 3D-printed devices, and Zimmer Biomet’s early autumn purchase of Clinical Graphics B.V., a Netherlands-based imaging company specializing in 3D range-of-motion simulation technology for hip conditions.
The pipeline of 3D-printed products flowed amply throughout the year as well: Stryker and Zimmer Biomet received FDA approval for a posterior lumbar cage and ankle fusion system, respectively, while K2M Group Holdings Inc. earned the agency’s blessing to add the Cascadia Lateral Interbody, Cervical, and AN Lordotic Oblique systems to its minimally invasive spinal offerings. The company’s Cascadia implants are made from its proprietary Lamellar Titanium technology, which incorporates titanium with a 3- to 5-micron surface roughness and 500-micron diameter pores that run through the walls of the device, forming channels for bony integration. Cascadia’s surface roughness has been shown in pre-clinical data to encourage osteoblastic (bone growth) activity more than smooth metals or biomaterials such as PEEK (polyether ether ketone).
Moreover, 4WEB Medical expanded its spinal truss portfolio to include the Curved Posterior Spine System, an open architecture-designed product that allows up to 75 percent of the implant to be filled with graft material to maximize bone integration. Likewise, Benvenue Medical Inc. added the Luna Multi-Expandable Interbody Fusion System to its lineup, Additive Orthopaedics Inc. augmented its offerings with a 3D-printed hammertoe implant and osteotomy wedge system for fractures and/or foot/ankle osteotomies, and Smith & Nephew plc unveiled a porous titanium hip implant that mimics the structure of cancellous bone and uses variable-angle locking screws to enhance implant stability and minimize micromotion after surgery.
J&J meanwhile, quietly tended to its growing nursery of 3D printed innovations, including a sunlight-enabled personalized contact lens, a patient-specific osteoconductive bone graft cage, the TriFlange Acetabular hip system, and cutting guides for the Attune and segment knee platforms.
“We are collaborating with tissue regeneration systems to develop a 3D-printed bone graft cage,” Martin Fitchet, J&J’s global head of medical device R&D, told Wall Street executives in May. “This is a unique bio-resolvable, patient-specific osteoconductive scaffold. And it will support bone graft placement in very difficult scenarios, for example, where you have a bone void and bone non-union or in cases of bone cancer. We’re also refining a 3D-printed, patient-specific TriFlange Acetabular hip system, which will be used in severe acetabular revision cases. And we’re currently providing 3D-specific personalized cutting guides to support our Attune and segment knee platforms, which will help to ensure optimal placement of the device for old patients.”
Until the T-1000 Terminator technology is perfected, anyway.
Read more: http://bit.ly/odtyir1604
More Merger Mania
Paul Teitelbaum saw it coming.
Two years ago, the investment banker predicted a series of “big acquisitions” in the spine sector, followed by a wave of smaller mergers from companies searching for “innovative growth areas.” He also forecast a considerable spike in small to mid-size deals in “niche areas” through 2017.
Teitelbaum’s prognosis, of course, was based on facts—namely, the two “megadeals” that occurred in the first four months of 2014: Smith and Nephew plc’s $1.5 billion merger with ArthroCare Corp. and Zimmer Holding Inc.’s $13.4 billion buyout of Biomet Inc. Still, the financial guru may want to consider a side career in fortune-telling, as his June 2014 prognosis has been remarkably accurate to date.
Validation of Teitelbaum’s precognitive prowess has come from companies large and small, through deals both major and minor over the last 27 months. Indeed, the “big acquisitions” have continued this year almost precisely as Teitelbaum envisioned, with Stryker Corp. buying Sage Products LLC for $2.78 billion, adding a complementary group of surgical items that help prevent hospital-acquired infections, and Physio-Control Inc. for $1.3 billion, expanding its emergency medical services offerings; and Zimmer Biomet snagging LDR Holding Corporation for roughly $1 billion, increasing its share of the global spine market. LDR’s primary products are based on its VerteBRIDGE fusion and Mobi non-fusion technologies, designed to provide less invasive solutions for cervical and lumbar spine surgeries. The company’s product portfolio is expected to help Zimmer Biomet establish a foothold in the cervical disc replacement sector (projected to reach $1.8 billion by 2021) and minimally invasive surgical segment.
Market share aside, however, the Zimmer-LDR union confirms OEMs’ appetites for spinal innovations despite the risks that have plagued the industry over the last several years, including regulatory challenges, pricing pressures, legal issues, and declining procedural volumes. “It means there’s clear interest in the space,” an anonymous source told financial news and services website TheStreet. “Some of the guys similar to LDR from a size and scale perspective become almost easier acquisition targets...It affirms the view that the spine market is an enormous market opportunity.”
Enormous enough, in fact, to support various “niche” segments, which are attracting significant capital from both private investors and publicly traded orthopedic firms seeking to secure long-term growth. That capital has manifested itself mostly as Teitelbaum predicted—in small and mid-size deals—as organizations pursue these smaller markets to either fortify their specialized offerings or debut new services.
DePuy Synthes, for example, bought BioMedical Enterprises in May to infiltrate the burgeoning shape memory metal implant market. BME’s nickel-titanium (Nitinol) implants—used to treat bunions, hammertoes, and other foot/ankle deformities as well as hand and wrist conditions—come ready-to-use on a sterilized, pre-loaded fully disposable insertion tool. The products, according to analysts, help strengthen Johnson & Johnson’s position in elective surgery, currently the fastest-growing segment in orthopedics.
Similarly, Stryker Corp. absorbed Cooper City, Fla.-based SafeWire Holding LLC’s spinal device product line in April this year to improve the safety of minimally invasive (MI) spine surgery. SafeWire’s Tiger Jamshidi Needles—launched in the United States in September 2014—are used with the firm’s Y-Wire to mitigate potential issues with impact advancement and back-out during bi- and tri-cortical fixation. The Y-Wire is intended to prevent wire-based complications like inadvertent advancement of the guidewire through bone, accidental pullout, kinking, or wire migration. The company further complemented its MI device portfolio with the September purchase of Instratek, a Houston, Texas-based developer and manufacturer of extremity surgical implants and instruments. Its products include staple and hammertoe implants as well as MI soft-tissue recession instruments for foot, ankle and upper extremity procedures.
Zimmer Biomet’s foray into new territory included the second-half (2016) acquisitions of surgical robotic maker Medtech SA and 3D hip imaging startup Clinical Graphics B.V. Medtech’s ROSA surgical device—currently used in 20 hospitals in Europe, North America, Asia, and the Middle East—features a robotic arm with six degrees of freedom, advanced haptic capability, and a non-invasive and touch-free registration system. Its ROSA Spine System, meanwhile, has performed 100 minimally invasive spinal procedures since receiving CE Mark approval in 2014 and U.S. Food and Drug Administration (FDA) clearance in January this year.
Clinical Graphics’ online “Move Forward” imaging software converts medical scans into an interactive, 360-degree view of a moving joint that can help physicians make treatment decisions. The deal was one of several that added niche technologies to Zimmer Biomet’s overall product portfolio: Others included the mid-August acquisition of CD Diagnostics, a Claymont, Del.-based diagnostics firm that develops musculoskeletal immunoassays and biomarker testing, and the late October purchase of RespondWell, inventor of telerehabilitation technology that provides personalized, clinician-supervised post-surgical physical therapy to patients in their homes.
Niche markets have also attracted Össur, Merit Medical Systems Inc., and NuVasive Inc. this year. Össur, an Icelandic developer of prosthetic, osteoarthritis, and injury treatment technology, purchased Touch Bionics Ltd. in June to permeate the upper limb prosthetic market, while Merit Medical gained a whole new segment in spinal products with its $97.5 million buyout of DFINE Inc., inheriting the San Jose, Calif.-based firm’s StabiliT Vertebral Augmentation System for vertebral compression fracture treatment, and the STAR Tumor Ablation System, a minimally invasive option for removing metastatic spinal tumors. Both products have FDA clearance and CE Marking.
NuVasive broadened its horizons as well with the January purchase of Aliso Viejo, Calif.-based Ellipse Technologies. The $380 million deal (worth up to $410 million if specific revenue targets are met) allows NuVasive to expand its services to the ultra-specialized pediatric device market; Ellipse’s MAGEC (Magnetic Expansion Control) system treats patients with scoliosis and other spinal deformities, while its Precice system is used for limb lengthening.
“The acquisition of Ellipse will insert NuVasive into early onset and idiopathic scoliosis, an important and attractive part of the spinal deformity market…” Chairman and CEO Gregory T. Lucier said in announcing the acquisition. “Additionally, this investment expands NuVasive’s footprint into new niche markets with highly differentiated technology that—when coupled with our expertise—will be strategically applied in other spine and orthopedic applications, including degenerative spine disease, trauma and knee osteoarthritis.”
Industry analysts praised the deal, noting the investment will most likely benefit NuVasive in the near future. Leerink Partners analyst Richard Newitter (perhaps inspired by Teitelbaum) predicted “double-digit returns” from the purchase “within three to five years.”
Read more: http://bit.ly/odtyir1602
The irony is all but laughable.
After several millennia of trial-and-error practice, Homo sapiens are finally getting better at predicting the future—only they’re now being outshined by man-made machines.
The human brain, despite all its wonder, is no match for computers. It simply isn’t wired to mine data and look for patterns, or think in terms of algorithms. Thus, it is surprisingly inept at one of the key skills necessary for accurate forecasting: probabilistic reasoning—i.e., finding patterns in similar past events to determine a plausible outcome.
Optimism could be at fault here. Research has shown that humans tend to overestimate the chances that the future will be different (perhaps better?) than the past. For proof, look no further than the mid-20th century forecasts of flying cars, glass-domed houses, jetpack mail delivery, space hospitals, and flying fire engines.
“It can be very dangerous to make predictions,” world-renowned theoretical physicist Michio Kaku, Ph.D., warned at the North American Spine Society conference in late October. “But physicists love to make predictions. And in the early days of the internet, one physicist thought the World Wide Web would be used mainly as a forum for high culture and high art—a place for ideas. Well, the internet today is about 35 percent pornography.”
Never saw that one coming.
Such soothsaying gaffes could be avoided, however, through better receptivity. Research spearheaded by University of Pennsylvania Professor Philip E. Tetlock found that open-minded forecasters—namely, those willing to consider multiple explanations and balance them together before making predictions—are more accurate prognosticators than those relying on a single big idea.
“What distinguishes superforecasters is their ability to put aside their opinions, at least temporarily, and just focus on accuracy,” Tetlock explained in a Wharton School interview last fall. “We found that people who scored high on psychological measures of active open-mindedness and need for cognition—those people who scored high on those personality variables tended to do quite a bit better as forecasters.”
Using Tetlock’s research as a guide, Orthopedic Design & Technology reached out to numerous open-minded medtech experts for their reflections on the past year and their predictions for 2017. The bold bunch of superforecasters included:
John Babitt, EY Americas medtech leader, and Arda Ural, EY partner in life sciences.
Jeffrey Wang, M.D., treasurer of the Burr Ridge, Ill.-based North American Spine Society.
Gerald R. Williams Jr., M.D., president of the American Academy of Orthopaedic Surgeons.
Michael Barbella: What was the most significant medtech news in 2016?
John Babitt and Arda Ural: The outperformance of the medtech sector compared to both the overall markets and the biotech sector was a very significant development in 2016. This performance was driven by many factors, including the shareholder-friendly steps of stock buybacks and dividends taken by many companies. However, we believe it is also a strong signal of confidence by the market in the long-term prospects for medtech.
Dr. Jeffrey Wang: The most significant medtech news in spine for 2016 was the consolidation of industry companies to form larger companies. This does not have anything to do with a specific product, but has a huge effect on the number of products available. As a surgeon, I see that companies are merging to form large companies, which has had an effect on the medical products available to surgeons. Some products we use at our hospitals are being phased out or have less support. In some cases, the products we have used for years are either no longer available or the instrumentation to support the insertion of the product is no longer available. Although the specific products are still around, there is less support, and in some cases, the instrumentation has changed. Perhaps instruments are no longer being replaced in favor of another product carried by the same manufacturer. Clearly when this happens, there appears to be an emphasis on one of the many products and a de-emphasis on the others.
This industry consolidation also has had huge effects on the societies and support of the meetings. Academic meetings are seeing less of the larger companies, and this is replaced by multiple smaller companies. Industry support is less for research, education, and academics/foundations, since the larger players hold a large portion of the market, and there is less competition at the larger level, with perhaps more competition of the smaller companies. Basically, fewer of the “middle-sized” companies result. The smaller companies perhaps have lesser resources for supporting research or charitable contributions to foundations, whereas the fewer number of larger-sized companies puts most of the burden of support upon fewer companies. I believe this is a trend that will continue, but certainly has had an impact on the spine environment in 2016.
Dr. Gerald R. Williams Jr.: Advances in additive manufacturing, or 3D printing continued to dominate orthopedic news in 2016. These advances, which include the creation of precision surgical tools; implants, from large joints to custom pins for fingers and toes; and customized, synthetic bone material and scaffolds, have the potential to significantly improve patient care. No skeleton is exactly the same; customizing orthopedics will lead to more precise treatment strategies, and ultimately, improved long-term mobility and patient satisfaction. Many large hospitals and practices are already using 3D technology to more accurately diagnosis and treat orthopaedic conditions. As the cost of 3D printers continues to drop, we’ll see this technology become standard of care.
— M.B.[Editor’s note: See “Last Word” these experts’ 2017 industry forecasts.]