In this first of two episodes, John Pracyk, MD, PhD, MBA, MAPS President of the Americas Region, speaks with Patrick Vega of Vizient Advisory Solutions about ways that device companies can capitalize on the shift from inpatient surgical settings to hospital outpatient departments, ASCs and outpatient sites of care. Presenters hypothesize that device companies that better understand the outpatient setting can more effectively adapt their products, services and support to meet customer needs.
MODERATOR: John Pracyk, MD, PhD, MBA
PANELIST: Patrick Vega, MS
Following is an automated transcription. Please excuse inaccuracies.
JOHN PRACYK: Welcome to the Medical Affairs Professional Society’s Perspective series, conversations with MAPS President of the Americas Region. This is Dr. John Pracyk. This is an interview series with thought leaders that impact all aspects of Medical Affairs. Unfortunately, this is the inaugural podcast for the series. The views expressed in this recording, are those of the individual and do not necessarily reflect on the opinions of the companies in which they are affiliated. In this section, we’ll discuss some foundational aspects of the transition that we’re seeing taking place in the orthopedic space in regards to COVID, so let’s get started. As I said, this is the first installment of what is going to be a two-part podcast. And it’s an interview with Patrick Vega on his recent Orthoworld article entitled entitled “How COVID-19 Disruption Accelerates Orthopedic Opportunities in Ambulatory Surgery.”
First we’ll start out with some quick introductions. Patrick, it’s great to have you, Patrick. Would you provide our audience with just a very brief introduction
PVEGA: Sure, thank you very much Dr. Pracyk. I appreciate the opportunity to talk to your membership today and to share the perspectives of frontline providers and to some degree, vendors in the space. I have worked in healthcare for more than 20 years, most of that in orthopedics spine and neurosciences, conducting strategic assessments planning development and implementation with hospitals health systems and physician practices across the country and have had the opportunity to work in most parts of the country. I currently am employed as the director of orthopaedic consulting with Vizient and a large group purchasing organization that has multiple subsidiaries that span data collection and analysis, as I said, purchasing in strategy and assessment. Appreciate the opportunity again. Thank you.
JOHN PRACYK: This is John Pracyk. I am the President of the Americas Region for Medical Affairs Professional Society. We are an organization of some 3700 plus Medical Affairs professionals from all aspects of the career spectrum and we represent over 200 companies. My day job is that I work for Johnson and Johnson specifically Depuy Synthes Spine which is the orthopedic company of Johnson and Johnson and there I serve as the Integrated Leader of Preclinical R esearch, clinical research and Medical Affairs for diffuse in the spine. So, Patrick, it’s an absolute pleasure to have you with us. I’m going to start out with the very first question is, why is the topic of COVID-19 disruption moving orthopedic opportunities for ambulatory surgery important to our MAPS membership?
PVEGA: Well, the it’s important to all of health care in terms of the impact of COVID as we have seen, there has been a substantial and long lasting impact of COVID 19. First off, relative to orthopedics really shut down. All elective procedures in virtually all hospitals across the country due to concerns about the spread of COVID. And again, this has caused tremendous operational financial and medical staff strain across the country and also it has impacted companies that sell into this particular market for many hospitals and health systems Orthopedics and spine represents a substantial portion of their revenues and as I mentioned a moment ago, elective procedures represent a majority of their surgical procedures and most profitable. So, relative to hospitals health systems and physician practices and those companies, particularly orthopedic and spine this represents both an economic loss as well as a substantial challenge in terms of how to recover from it. Presumably, this would apply across much of the MAPS membership. Relative to other companies that have, that have lost opportunity because their services or products are not being purchased by hospitals and health systems.
JOHN PRACYK: No, thank you very much. Patrick, I think our MAPS membership is predominantly pharmaceuticals, but we also have life science. We have diagnostic devices. We have implantable devices representing two major sectors of med tech. And also we’re seeing that those lines are starting to blur where pharmaceutical companies are looking at combination products. So there’s been quite a bit of interest recently in the transition of products, particularly as they kind of place would apply to both the pharmaceutical as well as the med tech. So I think this topic, although it’s specific for orthopedics is particularly cogent at this time. So let’s let’s dig into it a little bit. You’ve written a column for Orthoworld so vendor manufacturer facing publication with an audience of over 1000 industry experts. How did you come about to write this column?
PVEGA: I’ve had a relationship with ortho world for probably about 10 years periodically writing columns around Orthopedics and spine. And then I was approached two years ago by their chief content officer about the opportunity to bring more of a provider perspective to the publication and historically articles and content in ORthoworld have really centered around vendors and manufacturers, both from a new product standpoint, from a strategic standpoint, from a capital and financing standpoint and what was missing or at least what we had speculated at the time was missing was a provider perspective where vendors might better understand how their products are used beyond just the sale in the hospital. So, for example, a joint replacement vendor might sell products to the hospital for a knee replacement oftentimes that vendor is supporting the physician in the operating room. Supporting this position in the operating room with technical expertise access to various sizes of products and so on. But they really oftentimes don’t have much of a view beyond the operating room and providing the invoice to the hospital and being paid. So one of the, one of the approaches and perspectives that I wanted to share with vendors and manufacturers is, for example, how do you navigate the value analysis process. For those folks in map that aren’t familiar with that. It’s really a product evaluation process where combination of physicians hospital executives purchasing and perhaps finance people will review new products to ensure that they need safety and clinical needs and either accept or reject them for use in the organization. Oftentimes vendors don’t have much view to this, they might be yes for data or for capabilities for their product, but they don’t have much of you to what happens. And so I’m thinking back to a column that I wrote on about how small companies can navigate the value analysis process and that provided some insights to them on whom they might contact how they might strategically approach that process. So it’s really about bringing provider level insights into the organizations — the vendor and the manufacturer organizations. In addition to that, doctor pricing. One of the other phenomena that I have seen is that whereas maybe 15-20 years ago, vendors were selling to the individual physician perhaps somebody in supply chain or purchasing now oftentimes those particular processes and approvals are being done on a integrated delivery network or multiple hospital basis, maybe regionally, maybe even nationally, where there is many more individuals that evaluate the products and they have much better access to data in terms of that evaluation process. So my contention has been through a series of articles that I’ve written is that from the vendor and manufacturers standpoint, this also requires some additional supplemental skills that sometimes direct sales representatives don’t have and that would be the ability to navigate these other parts of the organization hope that’s helpful.
JOHN PRACYK: No, it’s absolutely helpful and framing it up so that our MAPS colleagues from the pharmaceutical side understand what is a very common process on the med tech side. Is that the value analysis committees really had their foundations within the pharmacy and therapeutics committees. So the P AMP T committees and the value analysis committees are analogous one for the pharma world and the other for the med tech world. So let’s transition a little bit to ambulatory services. Can you give us a brief history of ambulatory services in orthopedics and spine.
PVEGA: So when we talk about ambulatory services, we’re talking about everything that happens outside the hospital walls. Now, increasingly, they can actually or this can actually occur within the hospital walls as well. So when I think about the places of service. And those options for a military services they might include what we call hop D or hospital outpatient department, perhaps something called CD surgery. In those might be hospital based they’re not necessarily based out in the community in terms of freestanding facilities or operations, they would include the outpatient sites, whether it’s rehabilitation, whether it’s the surgeons clinic, it could include urgent care could include and excuse me ancillary services diagnostics interventional procedure rooms.
And the standpoint of the ambulatory surgery centers or as sees the common shorthand, they would be comprised of really driven by an ownership model, whether they’re exclusively physician owned, whether they are jointly owned and managed by a ambulatory surgery center ownership model. Where they might co venture with physicians, it could be exclusively hospital or they could be a hospital physician jointly owned and operated ambulatory surgery center. So the history of these is perhaps 2025 years ago. Physicians and Surgeons understood that there were opportunities to to deliver some of their services on an outpatient basis, those would include minor orthopedic procedures, perhaps sports medicine. Treating fractures and so on. And initially, again, going back many years physicians did not have the capital oftentimes to invest in build these services, whether it was facilities equipment and so on. And oftentimes what occurred was that they would approach hospitals as potential partners. Oftentimes, that that at that particular point in time, hospitals, would, would go believing that that the these procedures would not leave the hospital, oftentimes. Their response was that they would not support the development of those not invest in that so over time, physicians found capital elsewhere, start to develop outpatient, ambulatory ambulatory surgery centers and they flourished in the, in some cases, started taking cases from hospital to the ambulatory setting.
Hospitals started to see this occurring and believe that there was that there was a need for them to be involved in this particular marketplace and the delivery of services on an outpatient basis and we approached oftentimes physicians at that point, oftentimes the physicians were adequately capitalized didn’t need the support from the hospital. And they as as direct owners were benefiting financially in greater control over their services. So now, hospitals, find themselves in the position that either they must develop the services, themselves in collaboration with their physicians or with new medical staff. So the challenge at this point across this whole continuum of places of service is who owns and manages the services. So what we find is a high level of interest for hospitals to strategically understand what their opportunities are to identify prospective partners in to seek the development of the services.
JOHN PRACYK: Thank you. Thank you very much. It’s a comprehensive history and you can see how it has evolved over time. So there’s a fair amount of provenance there. Let me pick up on a theme that you just introduced at the very end. And that is, could you help characterize for our listeners who are the main strategic stakeholders in ambulatory services, Patrick.
PVEGA: The, the main strategic stakeholders would be for Orthopedics and spine are going to be orthopedic surgeons perhaps neurosurgeons orthopedic spine surgeons. They’re going to be hospitals health systems and then development companies or management development companies that might partner with hospitals or physicians in the development of ambulatory services. They the developmental companies have acquired and are able to bring extensive expertise in the financing operations promotion. Supply chain to the industry and many physicians have found them to be. The a very comprehensive and capable partner. So again, hospitals, health systems, surgeons and management companies.
JOHN PRACYK: Now, thank you so much. As we look at the location. You’ve already touched briefly on the ambulatory places of service, whether that be a full blown ASC ambulatory surgery center or hospital outpatient department or same day surgery. I’d like to transition now to really sort of setting the stage before the pandemic and that is what was happening in this sector immediately before COVID 19.
PVEGA: Well, the, the growth of ambulatory, the growth and volume of ambulatory services being delivered has steadily grown over many years to the point that joint replacement was happening pretty much on a regular basis. Oftentimes, paid for through commercial insurance of those CMS had recently approved joint replacement for knees on an ambulatory basis. So the volume of let’s just use joint replacement as a specific knee replacement of this specific example. The volume of cases that were commercially insured and then insured by Medicare had grown steadily. Other procedures simple spine procedures such as typo plasticity or fracture care simple lumbar fusion maybe other less invasive procedures again had grown steadily, but not at a rapid pace and then that was changed substantially we cope with this.
JOHN PRACYK: Thank you so much. With regards to the two or three critical COVID impacts on ambulatory care. Can you help frame up for our listeners what had been really the things that have affected ambulatory care. Obviously, to begin with, surgeries weren’t being done. There was a moratorium and prevention and suspension of elective surgery but as that is start to unfold help now characterize what you were learning for this sector of the market as cases started to return.
PVEGA: Correct, correct. So probably you cited. Probably the number one factor, and that is the elective cases were essentially brought to a standstill by COVID that hospital did not want to take the risk of exposing patients to COVID, as well as their staff. So the discontinuation of the elective procedures which an orthopedic spine represents a vast majority of the procedures that were done on an outpatient basis. So those procedures, not being able to be done on an inpatient basis conceivably provided an opportunity for them to be done on an ambulatory basis. The other factors that might be included here would be patient fears. So oftentimes patients have expressed fears about going on on the campus of a hospital for fear of being infected. Another factor would be that if patients still wanted for example a hip replacement or a joint replacement they might be looking at months of waiting for the hospital to open and re mobilize their surgical services versus being done on an ambulatory basis. So really, the combination of the three the discontinuation of elective procedures for the inpatient basis. Patient fears of going on campus. And then the availability of these procedures that historically has been done an inpatient basis conceivably could now be done. Safely for a select group of patients, I would add, Dr. Pracyk that for patients to be qualified for their procedure to be done on an ambulatory basis, they were likely going to face more scrutiny in terms of evaluation of co-morbidities patient risk factors. So not every patient that was appropriate for inpatient joint replacement for example, would necessarily be appropriately clinically safe to be done ambulatory basis is that helpful.
JOHN PRACYK: Very helpful. So there’s going to be a subset that will be able to migrate to the ambulatory setting. And potentially that could free up operating room throughput back at the main hospital.
PVEGA: That’s very helpful.
JOHN PRACYK: As we’re winding down this first podcast, I’m going to come to the final question. And that is what are the strategic and tactical considerations for this topic of Disruption accelerating the orthopedic opportunities for ambulatory surgery.
PVEGA: True, sir. Good question. I think the top strategic and tactical considerations would apply to both the inpatient setting and the outpatient setting. So, for example, one of the things that I often recommend hospitals and health systems and physician practices is to really have an accurate and thorough assessment. Both of the opportunity which, in which might include things such as demand in the marketplace for the procedures, they’re contemplating providing an ambulatory basis. Insurance access and so on, as well as understanding what assets they have. Do they have ambulatory space currently. How’s it being used, is it appropriately licensed that appropriately staff. And I think from a, from, from the standpoint of Evaluation and understanding assets, it’s a rather simple focus, it’s both simple and complex. And it’s really not for hospitals and health systems in for physician practice, it’s not necessarily a shift away from inpatient but in addition of system structure and resources to include ambulatory services, my own perspective over the years is that oftentimes hospitals and health systems because there are so many problems and challenges, day in and day out that oftentimes they are preoccupied with with simple financial survival in a particular marketplace that oftentimes they’re not able to marshal the focus to really apply research resources in intentional and deliberate fashion. And go through the process of assessment. Again, understanding the opportunity, understanding the assets. In understanding the relationships with their surgeons. So I would say that probably on a an overarching basis that probably a primary recommendation that I was made to hospitals health systems into vendors for that for, for that matter. Is to really understand what is the opportunity for each of them, respectively. In some cases, they’re going to be common themes like products, services, patient access and other ones that are going to be specifically focused. Let’s say for example on vendors. I think that oftentimes when, particularly when surgeons are comprised ownership for an ambulatory surgery center, they become less brand sensitive because they’re more at risk for the financing and the financial performance. So again, I would circle back to it’s really about strategic assessment understand current position and opportunity.
JOHN PRACYK: Well, thank you very much. Patrick that has been most comprehensive foundational work to help our listeners understand this migration of Orthopedic services to an ambulatory environment. Well, this is going to wrap up our first podcast first segment, I should say, of a two part podcast on this topic. My guest has been Patrick Vega, Senior Director at Vizient and consulting and he has been talking to us about his recent ortho world article entitled How COVID 19 disruption accelerates orthopedic opportunities in ambulatory surgery. We will make a link available to this publication on both of these podcasts, but until next time, thank you so much, Patrick. Thank you, our listeners for tuning in to this very first of perspectives conversations with MAPS president of the Americas region and we look forward to listening to you soon. Thank you.