Sur­gi­cal-ro­bot costs put small hos­pi­tals in a bind

Modern Healthcare - - NEWS - By Jaimy Lee

OB-GYN Dr. Brian Rether­ford re­cently op­er­ated on a pa­tient who trav­eled six hours to Me­mo­rial Hospi­tal, a crit­i­cal-ac­cess hospi­tal in Dou­glas, Wyo., be­cause the 25bed fa­cil­ity of­fered da Vinci ro­botic surgery as an op­tion for a rou­tine hys­terec­tomy. Me­mo­rial Hospi­tal of Con­verse County last year pur­chased a $2 mil­lion da Vinci Sur­gi­cal Sys­tem, the sec­ond hospi­tal in Wy­oming to do so. Me­mo­rial ex­ec­u­tives said they ex­pect their fa­cil­ity to per­form about 100 ro­botic surg­eries a year. That’s far be­low the es­ti­mated vol­ume ex­perts say is needed to pro­duce a vi­able fi­nan­cial re­turn within six years on the ro­botic sys­tem, whose aver­age cost ranges from $1.5 mil­lion to $2 mil­lion.

Me­mo­rial, which re­ported an op­er­at­ing loss of $2.2 mil­lion in the first half of fis­cal 2014, used cash re­serves to buy the da Vinci sys­tem, man­u­fac­tured by Sun­ny­vale, Calif.-based In­tu­itive Sur­gi­cal. Me­mo­rial said 40% of its cost will be re­im­bursed by Medi­care as a cap­i­tal ex­pense be­cause it is a crit­i­cal-ac­cess hospi­tal.

Ryan Smith, the hospi­tal’s CEO, said he doesn’t mind if it takes awhile for the pricey new piece of equip­ment to pay off be­cause it’s al­ready at­tract­ing pa­tients who pre­vi­ously would have trav­eled to other hos­pi­tals in Colorado or Utah to get ro­botic surgery. Also, it helps his hospi­tal re­cruit and re­tain surgeons, and is ex­pected to re­duce sur­gi­cal com­pli­ca­tions and lengths of stay. “We did not buy the da Vinci sys­tem to get a very high re­turn on in­vest­ment,” Smith said. “It was the right thing to do for our pa­tients.”

While over­all sales of da Vinci sys­tems are on the de­cline, a num­ber of small and ru­ral hos­pi­tals are con­sid­er­ing fol­low­ing in Me­mo­rial Hospi­tal’s foot­steps, be­liev­ing it will help them at­tract and re­tain surgeons and ap­peal to pa­tients. The govern­ment sys­tem for fi­nanc­ing crit­i­cal-ac­cess hos­pi­tals helps un­der­write some of the costs.

But small hos­pi­tals go­ing down that path will face the same is­sues now con­fronting ma­jor sys­tems that have in­stalled sur­gi­cal ro­bots. Some stud­ies have raised doubts about whether ro­botic surgery of­fers bet­ter out­comes than stan­dard la­paro­scopic pro­ce­dures. And In­tu­itive Sur­gi­cal faces dozens of prod­uct li­a­bil­ity law­suits across the coun­try filed by pa­tients who claim in­juries from the de­vice.

The ef­fect on mar­ket­ing

“It’s not just the clin­i­cal ben­e­fit or the bot­tom line,” said Dr. Martin Makary, sur­gi­cal di­rec­tor at Johns Hop­kins Pan­creas Mul­ti­dis­ci­plinary Cancer Clinic. Hospi­tal CEOs “also look at the power to mar­ket the en­tire hospi­tal.”

There are no avail­able sta­tis­tics on how many crit­i­cal-ac­cess hos­pi­tals and other small hos­pi­tals have pur­chased a da Vinci Sur­gi­cal Sys­tem. Cost is cer­tainly an is­sue. In ad­di­tion to the pur­chase price, the sys­tem has an an­nual ser­vice con­tract that costs be­tween $100,000 and $170,000, and each pro­ce­dure costs about $1,200 to $2,000 more than a la­paro­scopic oper­a­tion be­cause of the need for sin­gleuse tools. In­sur­ers, how­ever, pay the same rates for ro­botic and la­paro­scopic pro­ce­dures.

For crit­i­cal-ac­cess hos­pi­tals, Medi­care helps sub­si­dize the pur­chase as a cap­i­tal ex­pen­di­ture on a de­pre­ci­ated ba­sis, cal­cu­lated by what per­cent­age of pa­tients are Medi­care ben­e­fi­cia­ries. But “it’s a big ques­tion in terms of pri­or­i­ties and where your scarce re­sources are best used,”

said Brock Slabach, se­nior vice pres­i­dent of the Na­tional Ru­ral Health As­so­ci­a­tion. “Pa­tients per­ceive it to be bet­ter. But is the cost worth the ben­e­fit?”

To make buy­ing a da Vinci fi­nan­cially vi­able, hos­pi­tals gen­er­ally need to per­form 150 to 300 pro­ce­dures an­nu­ally for six years to off­set the up­front and on­go­ing costs of ac­quir­ing it, said Vi­jay Ku­mar, as­so­ciate man­ag­ing di­rec­tor for ISI Group.

In­tu­itive Sur­gi­cal, which de­clined to com­ment for this ar­ti­cle, no longer re­ports a break­down of the types of hos­pi­tals that own and op­er­ate its sys­tems. But a 2010 Wall Street Jour­nal ar­ti­cle re­ported that 131 hos­pi­tals that had in­stalled da Vinci sys­tems had 200 or fewer beds. Over­all, about 1,500 U.S. hos­pi­tals have in­stalled the da Vinci Sur­gi­cal Sys­tem since it came to mar­ket in 2000. In­tu­itive of­fers the only ro­botic sur­gi­cal sys­tem ap­proved by the Food and Drug Ad­min­is­tra­tion.

A re­cruit­ing tool

Mar­ket an­a­lysts say smaller hos­pi­tals face pres­sure to buy the da Vinci sys­tem be­cause many new surgeons in train­ing, par­tic­u­larly those in urol­ogy and gyne­col­ogy, re­ceive ro­botic sur­gi­cal train­ing as res­i­dents and want to work at hos­pi­tals that have the tech­nol­ogy. And pa­tients may choose a hospi­tal with a da Vinci sys­tem based on the per­cep­tion that it’s a state-of-the-art fa­cil­ity.

More small hos­pi­tals view the da Vinci sys­tem “as a tool they need to re­cruit and re­tain surgeons and to stay vi­able,” said Liz Tier­nan, a con­sul­tant in the Ad­vi­sory Board Co.’s re­search and in­sights groups. “It is con­sid­ered a stan­dard of care .… but it’s rarely fi­nan­cially vi­able for them.”

Hos­pi­tals of all sizes say they are de­vel­op­ing cre­den­tial­ing pro­grams and lim­it­ing ac­cess to the sys­tem to the most ex­pe­ri­enced and skilled surgeons. Train­ing and cre­den­tial­ing are a big con­cern be­cause there is a steep learn­ing curve in us­ing the da Vinci sys­tem, with a risk of se­ri­ous in­juries to pa­tients if sur­gi­cal mis­takes are made. Ex­perts say surgeons need ex­pe­ri­ence with 20 to 30 ro­bot-as­sisted pro­ce­dures be­fore they are ad­e­quately trained.

Me­mo­rial Hospi­tal ac­quired a sim­u­la­tor to help train its surgeons. “We are not con­cerned about the pro­fi­ciency of our surgeons,” a Me­mo­rial spokesman said. “We owned the ro­bot for six months be­fore any surg­eries were per­formed. Dur­ing that time, the surgeons trained on the sim­u­la­tor and

trav­eled to other ac­tive da Vinci sites to work with surgeons.”

But when surgeons at a smaller hospi­tal don’t reach the es­ti­mated pro­fi­ciency thresh­old, that raises ques­tions about the ad­e­quacy of their ex­pe­ri­ence. “It be­comes even more dif­fi­cult to jus­tify this de­ci­sion,” Tier­nan said.

North Val­ley Hospi­tal, a 25-bed crit­i­cal-ac­cess hospi­tal in White­fish, Mont., has 11 surgeons trained in ro­botic surgery, in­clud­ing seven surgeons re­cruited since the hospi­tal im­ple­mented the ro­bot­ics pro­gram in 2010, ac­cord­ing to a hospi­tal spokes­woman. It per­formed about 250 ro­botic pro­ce­dures last year. When it bought the sys­tem, it was the only hospi­tal in north­west Mon­tana to have a da Vinci, though Kal­ispell Re­gional Health­care has since ac­quired two da Vin­cis.

Con­sider all vari­ables

“If a hospi­tal makes that de­ci­sion, they need to con­sider all of the vari­ables, which in­cludes tak­ing a look at ef­fi­cacy and cost-ef­fec­tive­ness and re­ally make sure they ham­mer out their train­ing pro­grams,” said Chris Sch­abowsky, se­nior project of­fi­cer for health de­vices at the ECRI In­sti­tute.

Mean­while, In­tu­itive Sur­gi­cal is fac­ing pres­sure to pump up sales. In an April 8 pre­view of its first-quar­ter re­sults, com­pany of­fi­cials braced in­vestors for a 24% de­cline in rev­enue as fewer hos­pi­tals in­vest in ro­botic surgery sys­tems.

In­tu­itive said it sold only 45 da Vinci sys­tems in the U.S. in the first quar­ter of 2014, com­pared with 115 dur­ing the same pe­riod in 2013. Full com­pany earn­ings are sched­uled for re­lease April 22.

There were 240,000 ro­bot-as­sisted gy­ne­co­logic pro­ce­dures in 2013, com­pared with 222,000 in 2012 and 170,000 in 2011. Nearly 80% of prosta­te­c­tomies per­formed in the U.S. now use the da Vinci sys­tem. The com­pany at­trib­uted lower gy­ne­co­log­i­cal-pro­ce­dure growth rates last year to mar­ket sat­u­ra­tion, pres­sure on hospi­tal ad­mis­sions, neg­a­tive me­dia at­ten­tion and in­sur­ers push­ing for con­ser­va­tive treat­ments and more treat­ments in out­pa­tient set­tings.

This month, the com­pany said it would book a $67 mil­lion pre-tax charge re­lated to an ex­pected prod­uct li­a­bil­ity set­tle­ment that will re­solve claims that pa­tients suf­fered com­pli­ca­tions from its monopo­lar curved scis­sors, which were re­called in 2013, and the scis­sors’ first­gen­er­a­tion tip cov­ers, which were with­drawn from the mar­ket in 2012.

The Amer­i­can Col­lege of Ob­ste­tri­cians and Gy­ne­col­o­gists is­sued a strongly worded state­ment last year urg­ing women to sep­a­rate “mar­ket­ing hype from the re­al­ity” when choos­ing a sur­gi­cal ap­proach to hys­terec­tomy. “There (are) no good data prov­ing that ro­botic hys­terec­tomy is even as good as—let alone bet­ter—than ex­ist­ing, and far less costly, min­i­mally in­va­sive al­ter­na­tives,” ACOG Pres­i­dent Dr. James Bree­den said in a March 2013 state­ment.

While some small hos­pi­tals see strong rea­sons for buy­ing a da Vinci, it’s not go­ing to be vi­able for many oth­ers, in­clud­ing most crit­i­cal-ac­cess hos­pi­tals, said Slabach of the Na­tional Ru­ral Health As­so­ci­a­tion. “I don’t think we should look any time soon for da Vin­cis to be placed in ev­ery sin­gle crit­i­cal-ac­cess hospi­tal in the coun­try,” he said. “Though I’m sure the man­u­fac­turer would love that.”

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.