DePuy Synthes, the largest orthopedic company in the world, has a simple message for orthopedic surgeons, affiliated healthcare providers, their hospitals and clinics:
We’re your service and product partner—for the new bundled orthopedic reimbursement system, for your new outpatient, ASC care center and for what seems like an ever changing and certainly challenging orthopedic environment.
Johnson & Johnson (JNJ), which was founded in 1886, is the world’s most comprehensive and broadly based manufacturer of health care products. Combining DePuy, which it acquired in 1998, and Synthes, which it acquired in 2012, makes JNJ the most comprehensive orthopedic and neurological solutions company in the world.
Wall Street views DePuy Synthes with jaundiced skepticism. Said one analyst: “It seems like JNJ has been content to maintain its strong total ortho market position and scale (rather than invest further) with the expectation that vendor consolidation and other macro factors will push the market towards a bundled environment across ortho.”
But DePuy Synthes has been reinventing itself, quietly and now publicly. Working against that is the size of the company—imagine turning an ocean liner, and you’re the biggest of them all. But being big also affords access to the smartest people.
And those smart people, two of whom we interviewed for this article, are taking this massive company in surprising and innovative directions.
DePuy Synthes, believe it or not, has put on the mantle of change agent.
In this week’s Part I of “Inside DePuy Synthes’s Strategic Playbook”, we talked to DePuy’s Director of US Joint Reconstruction and Outpatient Marketing Scott Zellner about two of the most disruptive trends currently powering through orthopedics—bundled reimbursement and the explosion of outpatient care.
Bundling: 90 days as the focus of success
OTW: Recent data indicates that more than half of the hospitals in the U.S. are not ready for a bundled payments program. Do you think that is an accurate assessment and, if so, why?
SZ: I think it’s a very fair assessment on readiness. When you look at bundled pay it’s a transition of focus for our customers.
Not too long ago the questions I’d get from surgeons were along the lines of ‘show me the evidence that your implants are going to last and survive 15, 20, 30 years.’ We’ve gone from that to ‘show me that you can help us improve outcomes, increase patient satisfaction, and reduce overall cost in 90 days.’ Literally, in the blink of an eye we’ve gone from 30 years to 3 months as the focus of success.
So DePuy Synthes has a heritage of great implant success. We’re adding services, solutions, programs, education which help our customers win in a bundled pay and frankly outpatient setting as well.
We focus on the triple aim of outcomes, patient satisfaction and cost. It’s the recipe for success in either of those environments. We’re really talking to our customers about partnering to implement solutions that ensure those patients are ready to have a successful outcome and are going to have a terrific patient experience.
We truly believe that an educated and engaged patient will lead to lower overall costs.
Then our conversation moves to how we can make the operative period as efficient and cost effective as possible.
Probably 50% of the episode of care cost is in those 87 days of post-operative care.
We’re talking to our customers about digital care patient pathways, remote patient monitoring, and collecting data so that they know when they hit that 90 day mark the patient has had a great outcome, they’ve enjoyed a terrific patient experience and they’ve done it at an efficient total cost.
That’s the conversation we’re having with hospitals today.
DATA IS KEY
OTW: I think hospitals really want to understand how best to evaluate each patient, the risks inherent in each patient, which patients fit where. The CJR (comprehensive care for joint replacement) program [bundled payments] has penalties as well as rewards.
SZ: I was speaking with a prominent surgeon yesterday. He had a patient whose X-ray looked perfect but, unbeknownst to the surgeon, had a re-admission. He called it a “bundle destroyer.” What initially looked like a perfect outcome; an ideal patient experience; average, if not more efficient cost; surprised the surgeon when he learned that that particular patient destroyed his bundle.
Data is key.
We have an exclusive licensing agreement with MedTrak, Inc. to offer subscription-based services through a software known as Care Sense. It allows our customers to collect triple aim data (outcomes, patient satisfaction and cost) real time throughout the episode of care.
The customers who are going to win in this market are those who have the data that allows them to react and succeed in the market, as opposed to the customers who will be surprised by that letter from CMS in January that says had 2016 been a real year that you’d be owing thousands of dollars in the form of penalties.
Another thing that CareSense does is collect data real time. There are no surprises. If a patient is having a negative experience, for whatever reason, the clinic or hospital knows that they need to talk to that patient, determine what’s going on and correct for it.
We found that patients are very forgiving of an issue if the provider recognizes it and makes up for it.
So, instead of getting surprised and having a patient upset about something that happened two months ago, our customers have an opportunity to correct for that.
We just launched, for example, CareSense Patient Pathways. Most of our customers have a joint camp. This is where, typically, the patient receives a 50, 60, 70 page booklet of information to prepare them for surgery. It’s hard for patients to digest all the information in that book. There’s just too much.
So we digitize that. Every customer can put the necessary information they want the patient to receive. Each day the patient gets an email or a text or even a video from the clinic—however the patient wants to see the information—which tells the patient, for example, that it’s Day 3 pre-op and these are the important things that you need to focus on today. We take a 70 page book down to bite size information. And convey to the patient only what’s important now.
When a patient knows they’re doing the right thing at the right time they’re more compliant and actually feel more confident. So they go from fearing that something might be going wrong to knowing that they are doing everything they are supposed to be doing. And feeling very positive about either the surgery coming up or their recovery moving forward.
Services or Implants?
OTW: Why does DePuy Synthes care so much about these services instead of just going ahead and try to sell more hardware? What’s your strategy behind emphasizing services as much as you do implants and instruments?
SZ: If the patients have great experiences and great outcomes, it’s good for the industry and it’s good for a leader in the industry. That’s really our Johnson & Johnson Credo in action.
We want to be the partner of choice for our customers—surgeons, administrators, health system executives—we know that those that can thrive in a bundled payment environment, or even in an outpatient environment, their business is going to grow and we want to grow with them.
That’s why we’re so focused on the Triple Aim.
The other insight is that those who are proactive in this space are streamlining their processes, standardizing and putting new demands on their implant vendors.
In the future, you’ll find fewer and fewer hospitals working with multiple vendors and working with one or two instead.
We clearly want to be one of those one or two. We think focusing beyond the implant on services and solutions will differentiate us and help us be that partner of choice.
Bundling’s Impact on Innovation
OTW: One of the criticisms of the bundled program is that it makes it more difficult to bring innovation into the hospital or clinic. Is that a fair criticism?
SZ: Innovation just means something different now. It can’t just be implant survivorship. It needs to come in the form of advancing the outcome and finding ways to enhance the patient experience while reducing the overall cost. The implant may still have a premium but if it can allow more patients to rehab at home versus a skilled nursing facility or allows patients to return to work sooner, those are wins for the total cost of care.
How you define innovation has changed.
Outpatient is the NEW OR
OTW: Points of care for orthopedic patients and business models for care are changing. ASCs, urgent care centers, even Rite Aid and Walgreens. What do you think is going on? Where are we heading in terms of points of care for orthopedics?
SZ: We believe outpatient is the new OR. I’m not suggesting in any way every patient is meant for same day surgery. But for the healthy patient who may be injured but is not ill, it’s a good option.
There is growing evidence that that patient can be seen the same day and they’re going to have a great outcome. Their patient experience is significantly higher and overall cost is lower.
It’s interesting to note that the programs and solutions and services that we’re bringing to our customers on the bundled side are even more valued on the outpatient side. For example, a lot of our work around patient outreach and engagement is even more valuable when your patient is on-site for less than a day.
OTW: Do you think this is going to change instrumentation and the other products you provide. Does this move you to more of a single-use approach?
SZ: Yes, it’s a requirement. You cannot walk into an ASC with 10 or 12 trays for each patient. You’ve got to be efficient on the care side with, for example, digital templating or streamlining your trays. That’s become a core competency of our sales teams in the OR. Many of the key surgeons we work with will tell you that the value of the sales consultant actually goes up in the ASC.
DATA TRACKING
OTW: How does moving into these new markets like ASCs and in view of the overall fragmentation of sites of care affect your distribution systems?
SZ: The standard delivery model has been seven to ten trays delivered, on consignment, into an OR. That’s not good for our customers.
We have a solution called the OR Data Tracker which is an iPad app that tracks the efficiency of a procedure. Our data shows that more instrumentation in the OR, the slower the case. Not the surgery itself, but the set up and turnaround time before and after the surgery.
So, if we’re going to help our customers be more efficient, we need to find ways to get down to one to two trays, inpatient or outpatient. We’re working on some concepts around single use instruments and our TruMatch® patient specific instruments to deliver a one way kit. Think of a world where you’re not consigning inventory but rather receiving a kit with the patient’s and surgeon’s name on it—now that’s true efficiency of care.
We’re pleased with our progress but not satisfied. Whether it’s kitting of current systems or moving to entirely new systems we can be more efficient in what we bring in and out of the OR.
OTW: Do you think that the move to bundling will prompt these center city hospitals to expand their ASC services?
SZ: I do. I think it’s an option. You’re a surgeon, you have an option to participate in CJR with your hospital and/or work in an ASC. You’re going to see clinicians making those kinds of decisions. It’s a viable option that could help accelerate the ASC market.
End of Part I
Next: Inside DePuy Synthes Play Book Part II. DePuy Synthes’ new projects with IBM Watson, and Google and how they will could transform orthopedics as we know it.
