Local Market Volume of Medical/Surgical Procedures

I continue my discussion of our use of the Medicare 100% file and other datasets to serve specific needs of medical product manufacturers.As I mentioned, the Medicare 100% file is large (measured in gigabytes) unwieldy and, as anyone who has purchased raw data from the U.S. government can attest, the file is not constructed in the most convenient format to allow simply queries, summaries or other processes that will reveal meaninful insights. And, given the cost, the need for HIPAA-related disclosure agreements to be signed,m the dataset is not quite amenable to data analyst with occasional interest or need in purusing it. Lastly — and this goes for all reimbursement or discharge survey datasets — whatever logic may govern the coding systems (DRG, ICD-9 and CPT4) used in this data, the reality of how clinicians fle claims and how survey data is collected can result requires that working with claims-based and survey-based datasets be done by someone with experience in these issues.

Now you might understand why the question, “So if this is in the public domain, how is your product in any way unique?” causes me to take a breath before answering.

MMD has joined with Medical Technology Partners (MTP) to capitalize on MTP’s use of these large datasets, which have been acquired for reimbursement consulting, to use them for answerng very technology-specific and facility-specific questions raised by medical product manufacturers.

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Megatrends in Medical Technology

(June 2006 MedMarket Outlook in MedMarkets)

Megatrends in Medical Technology
Aside from other trends in the medical product industry we’ve addressed previously in MedMarket Outlook, such as the dissolution of boundaries between device and pharmaceutical technologies, the increasing integration of information and information technologies with medtech, and the rise of “holistic research” (aka “systems biology”) that recognizes the value of studying pathology with a multidisciplinary scientific approach, there are specific overarching trends and forces that are changing medical technology and the markets for them on a grand scale.

Stem Cell Research
The debate about stem cell research was no more likely to end as a result of President Bush’s restriction on federal funding as it was that the established cell lines would be sufficient or appropriate for research (they weren’t) or that the case would abate (as they have not) for the use of stem cells in the treatment of diabetes, Parkinson’s, spinal cord injury or other disease and disorders. Here, we make no ethical case for or against embryonic or somatic stem cell research — the debate is likely to become wholly moot in a matter of time — we only comment on the inevitability of the science moving forward one way or another. In June, Harvard University’s Harvard Stem Cell Institute confirmed that two projects focused on cloning to produce embryonic stem cells will move forward under private funding. The projects employ the same general type of research, somatic cell nuclear transfer, that is underway at the University of California at San Francisco and at the University of Connecticut’s Center for Regenerative Biology. Aside from these approaches, a cursory review of the state of cell research in general and stem cell research in particular will reveal that researchers have both the innovation and the willingness to pursue cell therapeutics that lead to treatments heretofore not possible. It seems fairly certain that, looking back at progress in the development of the range of cell therapies, the Bush administration’s federal funding restriction will be seen to have produced a momentary hitch rather than the obstacle it was originally portrayed as producing.

Nano- and Microscale Juggernaut Forces
There are as many different functions — maybe even more — being provided by technologies designed around nanoscale or microscale level as there are different types of these technologies. The sole criteria for technologies grouped into the nano and micro categories is size. Aside from their size, there is then little common among these technologies, which represent an incredible array of devices, molecules, materials and other products that achieve functions not possible on the macro scale, even if one only considers nano- and microscale medical applications. These range from products that are largely nanoscale materials (e.g., silver nanoparticles as antimicrobials in wound management) to those providing functions such as artificial retinas, cancer diagnostics, drug delivery and biosensors. As an industry, nanotechnology (more so than MEMS, which has found considerable realized success) has been plagued by a combination of inflated promise and underestimated technical hurdles, but while MEMS (microelectromechanical systems) has found bigger initial commercial success, nanotechnology has begun scoring commercial success that will ultimately result in markets that will eclipse MEMS products by orders of magnitude.

Open Surgery in Decline, or the Rise of the Minimally Invasive, Less Invasive, Interventional, Percutaneous and Other Alternatives to Surgery
Often stated, but never emphasized enough, is the compelling drive for treatments (that were all too recently delivered exclusively via surgery) to be associated with, or replaced by, ever-decreasing invasiveness. Device manufacturers have well established records for producing devices that not only minimize the trauma of surgery (e.g., laparoscopy) but also promise to make open surgery obsolete (e.g., percutaneous procedures like coronary anastomosis). Driving this trend is the persistent recognition that “collateral damage” in achieving clinical outcomes is unacceptable, whether from the perspective of the physician seeking to optimize results, the healthcare system seeking to minimize the costs of healthcare (or optimize revenue streams by being able to market the latest less-invasive techniques) or the patient seeking to minimize the impact of surgery on his/her busy lifestyle.

Disease State-Centered Marketplaces
Certain technologies in certain clinical areas remain the predominant if not exclusive option for treatment in those areas. However, in 2006, any legitimate competitive analysis of a market considers a multitude of different technology types. Case in point: any treatment for coronary artery disease will of necessity consider the competitive threat of bare versus eluting stents, angioplasty, atherectomy (waning but not gone), products for identification/treatment of vulnerable plaque, traditional coronary artery bypass, MIDCAB, OPCAB and other bypass variants (e.g. robotics), percutaneous bypass, atherosclerosis-reversing drugs and others. Compelling arguments must be created through the intrinsic advantages of new technologies in order to secure sought-after shelf space in the cost-fixated healthcare system armamentarium.

Materials Science Creating/Upending Markets
Underlying a stunning number of new technologies, from biodegradable/resobable stents, cellular scaffolds and a wide arrange of other implant types are the advances in materials sciences that are leading to the ability to engineer implants that now go well beyond providing solely structural roles. Driving these advances are the needs to improve upon the function of implants as static, inert devices that do not fully reflect the in situ need upon implantation, fail to adapt to changing conditions or otherwise do not provide the functions that optimize the end results of the implants’ use. Whether by impregnation with different substances or by the nature of the implant material employed, implants have improved considerably in being able to not induce an anti-inflammatory response, to provide anti-microbial function to the device, to minimize formation of blood clots and to avoid the effects like restenosis of vasculature following interventional procedures. With the need for implants frequently changing at some point after their implantation, more devices — biodegradable/bioresorbable stents, matrices/scaffolds for tissue engineering and others — are being developed that are either resorbed completely by the body or just enough to be expelled in whole or in part once their purposes have been served. Lastly, materials science and implant engineering in general have also been able to simply produce implants that are more easily deployed through tortuous twists in vessels or through narrow channels in endoscopic devices. Expectations are that more complex functions will be served by implants as a result of these trends and forces in development, from the increasing sophistication of drug delivery in various passive and active forms, to the ability of implants to respond via biofeedback to changing conditions in situ, and to providing increasingly sensor-like functions. Increasing demands are being made of the medical product marketplace — cost, competitive technologies, financial performance of public companies, etc. — but it seems clear that these demands are driving the proliferation of technologies that indeed satisfy them, sometimes with each advance creating ever greater demand in an endless progression. It also seems apparent that this “technology burst” is taking place simultaneously with the increasingly strident need for healthcare costs to get under control. The focus in the U.S. Congress on the need for Medicare reform, and reform in the U.S. healthcare system overall (up to an including the increasing drive toward universal healthcare), is gaining greater intensity and may well yield more than nominal changes to the system. The medical product industry is likely to both respond to these changes and facilitate solutions that we can scarcely imagine even now.

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Categories on medtech companies tracked

Not a great picture, I know, but this is partly due to technology limitation (mobile phone pic sent to go@mobile.com). But this is a screenshot of the one of the database data entry forms used in our internal company database, which in turn is used to track medtech companies (and other entities (e.g., VCs, providers, etc.) active in medtech. The categories include technology type (biopharm, device, pharm, biotech), major clinical applications (cardio dx, cardio tx, surgery, orthopedics, cell therapy, tissue engineering, patient monitoring, minimally invasive therapies, etc., etc.). We also segment by manufacturer, distributer, healthcare provider, etc.

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Unnecessary Surgery and Throwing the Baby Out with the Bathwater

Here’s another reference from BusinessWeek today, “Bypass that Operation”, on the same vein about doctors who don’t know what they are doing, including performing unnecessary surgery.   It suggests that many if not most of 400,000 bypass surgeries and 1 million angioplasties are unnecessary. 

While I find fault with the general tone of this article, glorifying Dr. David Eddy, his brilliance and his blunt challenge to healthcare that it needs better proof for the efficacy of its treatments, because the tone of this article blithely understates the fact that there is a clinical basis for the decisions doctors make, some patients actually do get better by the treatments prescribed, and wholesale dismissal of physicians’ education and training may have less to do with the facts than it does with Dr. Eddy’s ego and BusinessWeek’s need to make brash statements to gain attention.  This is not to say that I do not believe there are flaws in the process, but there is little justification for the kind of criticism that the BW article. What bothers me most about this article is that its sensationalistic approach to the subject and its flippant consideration of clinical practice on a grand scale trivializes the benefits of medicine and medical technology to patients.

By the way, in 2003, I was diagnosed with coronary artery disease, with blockage at 90% in one artery. While Dr. Eddy may thrive on the debate challenging the value of angioplasty and stenting (“mesh tubes” are not angioplasty, BusinessWeek), I know that however true it may be that some “cheaper alternative” might have done as well as angioplasty/stenting, there was no such alternative at the time. I am alive now. Replicate my experience with all others similarly diagnosed and that is precisely the reason for the high utilization of angioplasty/stenting. BusinessWeek’s cursory analysis failed to consider such an obvious driver.

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“Medical Guesswork” Exposing the Ugly Truth

I have always had a rather sanguine understanding of medicine, having been sensitized to its practical limitations for most of my life. Having been the son of a general surgeon and the nephew of a pediatrician, I saw many aspects of medicine that have tempered my thinking about treatment alternatives in the medical device industry. For this reason, when I came across the article in the May 29, 2006, issue of BusinessWeek Online, asserting that healthcare professionals really know little about which treatments actually work, I found agreement with the idea, and in some cases strongly so, but in other cases I felt the premise misses a few big boats.

From BusinessWeek: “The problem is that we don’t know what we are doing,” says Dr. David Eddy (the“mathematician and health-care economist” who coined the term “evidence-based medicine”), arguing that, bluntly, there isn’t very much of this in healthcare today. Further, according to BusinessWeek, “even today, with a high-tech health-care system that costs the nation $2 trillion a year, there is little or no evidence that many widely used treatments and procedures actually work better than various cheaper alternatives.”

The point at which I agree with this is that physicians have always been given wide latitude in determining therapeutic choices, by virtue of their education, their consideration of many different variables affecting patient condition and the suitability of any given treatment. What drives the physician’s decision-making is the availability of a reimbursible therapeutic option that specifically addresses the clinical problem to address the medium term need of the patient. By “medium term” I mean the need to solve the problem now, get the patient back on their feet and keep them that way not in any permament sense, but in a medium term sense. Does any cardiothoracic surgery think CABG is a permenent solution? Perhaps long term, but not permanent. Does any interventional cardiologist believe even a drug-eluting coronary stent is a permanent solution? Perhaps more likely to be permanent than bare stents or angioplasty alone, but certainly not permanent. So, doctors are applying the available therapeutic option for the longest solution that is viable. There are many stakeholders interested in the more expensive option — medical product manufacturers, physicians, even patients (who want the high-tech quick-fix). There are not many stakeholders advocating for cheaper options — perhaps HMO’s — but who is listening to them?

However, medical devices and drugs are already aggressively evaluated for their efficacy against controls, so the premise of this article, however well-founded, overstates the case when it comes to the use of medical products. The upshot of this article otherwise is to suggest that the upward spiraling U.S. healthcare costs are attributable to expensive treatments alone, when indeed the focus should be on clinical decisions themselves. Physicians are the ones who have been given the latitude to apply them or not, and until they have a different incentive system or until the evidence is much stronger for alternative treatments, absolutely nothing will change.

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Endoscopic GERD Treatment

Market shares for key players supplying GERD devices in the U.S. are shown in the chart at right.

Gastroesophageal reflux disease (GERD) is a growing problem affecting approximately 5% of the population. An estimated $10 billion is spent on GERD in the United States each year. It is primarily treated with medical therapies (e.g., proton pump inhibitors, or PPIs) for the majority of patients who present. For the remainder of the patient population (approximately 20%) who do not respond satisfactorily to PPI therapy, surgery or one of a variety of innovative endoscopic therapies that treat GERD are the next best alternatives. For some patients, neither palliative drug regimens nor major surgery are attractive options. Trends indicate that this market is moving towards GI endoscopic therapies as less invasive therapies continue to evolve and enter clinical studies. In 2006, the GI endoscopic anti-reflux device market is expected to be $10 million and by 2011 the market is expected to reach $50 million.Related Tags: , , , ,