Archive | January 2013

Robotic Surgery: Hospitals Absorb Costs to Gain Market Share

Robotic Heart Surgery Billboard

Robotic Heart Surgery Billboard (Photo credit: Marshall Astor – Food Fetishist)

Barron’s recently profiled Intuitive Surgical, maker of the da Vinci Surgical System.  The article was standard high quality work characteristic of the publication.  (Though today’s focus is not on investment quality, the phrase  “120 inch trocar” comes to mind when considering a company trading at twice the market multiple in an environment of slowing growth).

Robotic surgery is an important innovation, but has not yet proven to be a game-changing technology.  Though fascinating and impressive, robotic surgery hasn’t duplicated the impact seen in the laparoscopic revolution.

When laparoscopy emerged, gallbladder removal with a big incision and days in the hospital was replaced with several small cuts and an overnight stay; with a clearly shorter recovery (albeit with an increase in duct injuries until the procedure was mastered).  Other operations were soon improved using laparoscopy, with shorter hospital stays and lower complications.

The benefits of robot-assisted prostatectomies and hysterectomies continue to be debated by researchers.  But the technology is here, and it factors prominently in hospitals’ marketing efforts and clinical programs.

Robotic surgery has higher costs, roughly $2000 per case, but this is not paid by government or private insurers.   The costs are borne by hospitals, which hope to recoup them via capturing additional market share both in the robotic clinical areas as well as additional ones via increased exposure. Institutional reputations may improve with public perception as a high-tech clinical destination.

Right or wrong, the public tends to equate higher-technology care with better care, and it is generally easier to embrace this concept (get the robot) than try and resist and wait for research-proven superiority to be determined.  Residency programs also face a recruiting disadvantage without the latest technology.

Even in freer market areas such as cosmetic surgery, higher-tech is preferred to lower-tech – laser liposuction is a recent example, despite unproven benefits.  So even if patients paid the marginal cost of robotic surgery, it would still be opted for in most cases.

Despite hospitals absorbing the additional cost of robotic surgery, those capturing additional market share have not yet demonstrated lower costs.  And in the distorted healthcare market, such reductions are not likely to be seen unless hospitals are pressured by competitors, patients shoulder more of the cost, or payors take action (with the latter often the least-effective).

In taking on the additional cost of robotic surgery, hospitals assume some degree of risk and participate in another area of technological competition, the so-called ‘medical arms race’.  Should the additional costs not produce the desired results, other clinical programs and staff may bear the fallout.  But with additional clinical areas to be explored, it seems a reasonable risk.  If eventually the robot demonstrates open-to-laparoscopic-gallbladder improvement in some clinical area, it will be well worth it.

Read the Barron’s recent profile here.

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Remembering Transplant Pioneer Joseph Murray

Joseph Murray, M.D.At the end of every year, we recall the notable people who have departed our worldly domain.  Naturally, most are entertainers, political figures and other luminaries.  We should also highlight noted personalities in the sciences.  Before the first week of 2013 is past, recall one of the most noted individuals to pass in 2012 – an important figure who hailed from the scientific and medical arena.

Joseph Murray M.D. died on November 26, 2012, and though he may not be a household name, he was one of the most accomplished plastic surgeons in history, and one of the major figures in 20th century medicine.

Dr. Murray was the first surgeon to perform a solid-organ transplant when on December 23, 1954; he transplanted the kidney of Ronald Herrick into his identical-twin brother Richard, who suffered from end-stage renal disease.  The procedure ushered in the contemporary era of transplantation, and from this accomplishment Dr. Murray shared the 1990 Nobel Prize in physiology or medicine.

Today’s medical world is a bit different from the one in which Dr. Murray came of age and made his mark on medical history.  Laypersons may be surprised to learn that a plastic surgeon performed the first kidney transplant.  But in that era plastic surgery encompassed a wide domain, and surgeons could develop expertise in their areas of interest.  Dr. Murray became interested in transplantation after noting rejection patterns of skin grafts from unrelated donors during his work treating soldiers injured in World War II.

At this time, specialties developed based on advances in physiology allowing work that was previously not feasible.  Advances in anesthesia and critical care allowed bigger and bolder interventions to be attempted and accomplished.  The first kidney transplant was followed by refinements in technique, a better understanding of immunology, and an expansion of acceptable donor and recipient criteria.

Further advances led to success in liver, heart, heart-lung and other types of transplant procedures.  The early kidney procedures involved identical twins, avoiding the problem of organ rejection.  While developing the technical aspects of transplant surgery was critical, wider application came from better understanding of transplant immunology, which Dr. Murray helped lead.

Today transplantation of kidneys and other organs is commonplace.  That is largely due to the efforts of Dr. Murray and others in this developing field.  Science advances one step at a time, and in the field of transplantation many of those steps led to and from the work of Joseph Murray.