The need to cut costs across the U.S. healthcare system is motivated by several factors. One is the implementation of the Affordable Care Act. Another is the increasing consolidation of the industry through mergers and acquisitions of hospitals. The third is the growth of group purchasing organizations (GPOs), integrated delivery networks (IDNs), accountable care organizations (ACOs) and value analysis teams (VATs).
Combined, these factors are driving patient-centric approaches to health care while, at the same time, emphasizing and incentivizing an increase in fiscal responsibility.
The U.S. spinal implant market
The spinal implant market has been particularly affected by this drive to cut costs. Most billion-dollar medical device markets, like reconstructive orthopedics and cardiac rhythm management markets, are dominated by a small handful of companies. The spinal implant market, however, includes hundreds of small companies selling minimally differentiated products, many of which target smaller regional markets based around a single state or even a single city. At the same time, buying decisions are increasingly moving away from physician preferences and towards centralized decision-makers in large hospital groups, ACOs and IDNs, and the lack of differentiation between many of these spinal implant devices means that competition is intense and often focused on price.
Valued at over $5.6 billion in 2017, the U.S. spinal implant market is expected to show minimal growth through 2025, with price constraints largely offsetting an expected 2% to 3% annual growth in procedures. Specifically, growth will be strongest in the anterior thoracolumbar and anterior cervical segments with the continued emergence of artificial discs and adoption of stand-alone plate/cage hybrid devices. Moreover, the use of minimally invasive approaches to spine surgery is on the rise, with penetration in lumbar fusion expected to approach ~50% by 2025, bringing with it an increase in premium-priced minimally invasive implants and access instrumentation.
Facing the challenges
To be able to compete in this dynamic market, spinal implant manufacturers must be able to spot gaps where their products are underutilized and target the right surgeons and hospitals with the right products. Spine sales teams also need evidence-supported arguments and value propositions to differentiate their offerings and demonstrate clinical and economic value. This requires access to the most recent data on the market and its growth trends, information on procedures, diagnoses and hospital metrics, and clinical and economic data that supports the use of the product in the real world.
While the company and statistics in the following example is illustrative and not real, the scenario reflects both real-world challenges and the possibilities that data and analytics can support in the dynamic spine market.
Big Data Use Case Study: Identifying Opportunities in Cervical Spine Surgery
This big data use case study creates an illustrative example of a fictional medical device company that manufactures cervical spinal implant products – ABC Spine – using real data, it demonstrates the typical challenges in the marketplace.
As a manufacturer of cervical implants attempting to identify territories and markets where cervical spine fusion is underutilized, ABC Spine tapped into analytics from IQVIA to help identify and quantify potential opportunities for growth. One market identified as having significant upside for market growth was Spokane, Washington; here's how ABC made that determination:
- Most of Spokane's key indicators for meeting healthcare needs were near national averages, such as beds, operating rooms, physicians, and surgeons per 100,000 adults
- Spokane's ratio of spine surgeons per 100,000 adults matched U.S. averages
- Yet, cervical spine fusion metrics showed statistically significant differences from national averages per 100,000 adults:
- A combination of patient-level medical claims and local epidemiology data showed that cervical spine fusion rates were 8.2% lower in Spokane
- The same sources showed elevated rates for posterior cervical laminectomy without fusion
- Spokane hospitals purchased 9.3% fewer cervical spine surgery medical devices
- Spinal injection rates were 7.9% higher in Spokane
- Muscle relaxants were prescribed at a rate 9.1% higher in Spokane
- Moreover, an examination of claims at the physician level showed that utilization rates were significantly lower for orthopedic trained spine surgeons (versus their neuro spine counterparts)
- There were also tendencies for dominant IDNs in the region to route the majority of claims through certain payers which were likely to over- or under-reimburse certain procedures compared with regional averages
ABC's conclusion? Spokane had enough beds, operating rooms, and spine surgeons to provide cervical fusion surgeries at U.S. rates, but was relying on laminectomy procedures, medications and non-surgical treatments to serve its community. These trends are amplified for orthopedic trained spine surgeons.
Combining clinical studies showing spine fusion result in higher productivity and fewer sick days with irrefutable data analytics, ABC was able to develop a persuasive value proposition for the VATs and ACOs in Spokane. The data also enabled ABC to calculate challenging but achievable sales quotas and compensation models, then send its top salespeople to hospitals and physicians with the largest gaps in actual vs. expected cervical spine surgery rates. ABC was also able to target physicians prescribing muscle relaxants, to encourage patient referrals to surgeons loyal to its brand.
The next steps
Data analytics can support sales efforts in the spinal implant space in a number of different ways. Analytics help companies to find the right markets, then plan and deploy their sales teams effectively, and provide the information that salespeople need to demonstrate the value propositions that their customers seek. Working with an established and experienced service provider with a strong history in getting the right information to the right people at the right time will put companies specializing in spinal implants, and indeed any company working in the medical devices and diagnostics arena, ahead of the curve in a very competitive sales space.