How Responsive Orthopedics defied the industry norm to make knee, hip devices more affordable — 6 key insights

Spinal Tech

Twin Cities (Minn.) med-tech executive Doug Kohrs and two partners started Responsive Orthopedics with the goal of providing affordable knee and hip devices, according to Star Tribune.


Here are six key insights:


1. Bundled payments allow providers to offer patients low-cost, standardized medical devices. However, many major device manufacturers will not sell the models due to low profit margins, and many venture firms are hesitant to fund start-ups if the start-up offers low premiums.


2. On April 1, CMS enrolled 67 metro regions, including the Twin Cities, in their Comprehensive Care for Joint Replacement program. The program awards providers for quality outcomes, with CMS setting a goal of tying 85 percent of its 2018 payments to value-based care.


3. In a 72-page analysis, Citrigroup Global Markets analysts argued many dominant orthopedic players are not keeping pace with bundled payments, which then allows start-ups to come into the market as they are more willing to utilize such payments.


4. Therefore, Mr. Kohrs and his partners self-funded Responsive Orthopedics, with the intent of offering low-cost systems for hip and knee replacements. Mr. Kohrs and his physician partners have thus far invested up to $10 million in Responsive Orthopedics, which will sell FDA-cleared devices.


5. The company will sell devices to hospitals using bundled payments for hip and knee procedures. Responsive Orthopedics will not sell physician-owned distributorships.


6. Responsive Orthopedics aims to lower devices' cost by up to 40 percent through changing the distribution process. Responsive Orthopedics' devices cost less than other orthopedic device companies' devices because they are standardized to fit about 90 percent of patients.


"We want to disrupt the industry in a way that benefits the industry," Mr. Kohrs said. "This should allow Mayo and the others to get [better] pricing from the other manufacturers."


More articles on devices:
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RTI Surgical outlines why stockholders should elect its director nominees on WHITE proxy card: 5 points
Stryker, Smith & Nephew, K2M & more: 18 key notes

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