Here are five key thoughts on the orthopedic device industry.
1. We can already see payers reducing reimbursement, which could lead to several cost-saving strategies. Fox Valley Orthopaedics CEO Chase Behrendt says payers will eventually eliminate the cost-plus percent contracts that don't incentivize cost control. As a result, implant manufactures will lower cost and "force much more aggressive price competition against current vendors."
(Read Chase's entire thoughts here).
2. In order to survive, big orthopedic companies will become multi-product segment providers and utilize lower margin products to gain exclusivity and guaranteed market share. They'll also streamline product delivery to maximize service rep efforts.
3. The new Republican Congress could repeal the medical device excise tax, according to Health Care M&A News, which would have a huge impact on device companies. There are also tighter regulations on the tax inversion strategy, but that hasn't stopped the biggest transactions of 2015.
(Read the entire report here)
4. The large orthopedic and spine device companies are taking their battles for market share overseas. Forbes recently predicted Medtronic will "win" China with established distribution partnerships and a partnership with China's National Institute of Hospital Administration and National Health and Planning Commission to educate the public and surgeons about new spine techniques and technology.
(Read the entire report here)
5. Large orthopedic device companies are looking for new ways to break into the low-cost provider market, including ambulatory surgery centers and hospitals on a budget. Programs like DePuy Synthes' DePuy Synthes Select and Smith & Nephew's Syncera are developed specifically for these providers, with other companies scoping out the market as well.