The Future of Surgery

SEPARATING HYPE FROM REALITY

Today, we are still in the very early stages of the robotic surgery revolution.

Robotic surgery (or robotic-assisted surgery) promises to alleviate some of the anticipated surgeon shortage, but, for now, the technology doesn’t necessarily mean better health outcomes, decreased cost or across-the-board efficiencies.

Current data on the clinical benefit of robotic surgery is equivocal. For soft tis-sue, most studies show (at best) parity between robotic surgery and established methods of minimally invasive surgery. Though robotic surgery often cuts down on post-op recovery time, actual operative time is increased for many procedures (decreased for fewer), due in part to surgeons’ learning curve with the technology. Except in certain situations (prostate cancer, for example) there has been little ironclad evidence for robotic surgery’s improvement in morbidity or mortality.

ROBOTIC SURGICAL SYSTEMS COST A LOT UP FRONT AND HAVE HIGH RECURRING COSTS

A da Vinci laparoscopic robotics system (Intuitive Surgical) will set you back $1.5–$2 million. Annual service contracts run between $100,000 and $170,000, not including the cost of consumables—single use tools and supplies. It’s estimated that a facility needs to perform 100 robotic surgeries per year to produce a viable financial return within six years. Per case, da Vinci costs $3,000 more than traditional laparoscopic surgery for removal of an ovarian cyst, and up to 3x more for gallbladder removal.

Orthopedic robots can cost about $1 million up front. Knee joint replacement costs $2,700 more with a robot.

However, in a value-based reimbursement environment, costs will eventually be outweighed by improved outcomes and consequent savings.

» The economics of robotic surgery will win out. As the financial sophistication of healthcare organizations increases, and as value-based medicine takes hold, there will be more rigorous evaluation of major purchasing decisions, i.e., for surgical robots and robot assistants. Joint replacement, for example, costs more when performed with a robot. But with the advent of new bundled cost containment models (CMS’s Comprehensive Care for Joint Replacement Model), improved outcomes (fewer hospital admissions and joint revisions) will result in increased institutional revenue. If robots improve outcomes, thereby lowering overall costs, institutions will buy them. Goldman Sachs estimates that the number of robotic surgeries will double in the next two years.

» Efficacy data will improve. Robotic platforms that can demonstrate improved clinical outcomes and greater efficiency will dominate the market. In the next 20 years, premier robotics companies will lock in their customer base, and continue to make money off recurrent revenue streams (service contracts and consumables).

» Efficiency will improve as surgeons become more familiar and comfort-able with robotic platforms.

» New models of financing robot utilization (e.g., OMNIBotics’ pay-per-procedure) will lower the barrier to entry for healthcare organizations.

» The calculus behind whether to purchase a robot will change. Currently, the decision to purchase a surgical robot is often not based on cost considerations or improved patient outcomes, but rather on marketing and recruiting objectives: patients want the newest technology, conflating technology with quality; new surgeons, trained in robotics, want to employ those skills. Smaller hospitals in particular feel they are in an “arms race” for patients and talent against larger institutions, but their surgical volumes can be low. With increased hospital consolidation and the move toward providing surgical care at high-volume centers, smaller, lower volume institutions will evaluate hard cost-benefit metrics against softer ones like marketing and recruiting.