In today’s orthopedic world, what does it truly take to innovate? When it comes to standard medical practices or even the medical franchise, innovation in treatment is always at the forefront of thought. Orthopedic manufacturers are looked up to as industry innovators on the cutting edge of technology and sometimes procedure. Physicians trust manufacturers to come up with new and better ways to treat standard ailments.
There are obstacles to all innovation. Specifically, in the orthopedic device industry, lack of funding on one end or the other can impact innovation. Real innovation comes with upfront costs in the hopes that practitioners will adopt the technology and it will see a return on investment. In addition, all products come under cost scrutiny by hospitals and payors. Even physicians are beginning to question whether true innovation is happening in the orthopedic industry.
A recent trend among manufacturers has been to put out a new version of a traditional device every few years. This “new” device is largely similar to what exists on the market but comes with new branding and marketing, as well as an increased price tag. As a result, many surgeons have started to stick with the tried-and-true device or method. For example, there may not be a huge difference in result between using a $300 suture and a traditional $100 suture on a patient. Because hospital budgets are shrinking, innovation in the industry is being affected – especially when some new products don’t seem to bring anything innovative to the practice but come with an increased price tag.
True innovation typically comes from small companies. However, this poses a serious problem when it comes to financing. Recent changes in the willingness of investors to provide capital have facilitated less innovation. Getting new products through regulatory and clinical challenges requires capital and because of the lack of funding, innovative devices aren’t able to find their way into the market.
Not only do smaller companies that are the largest innovators face problems with funding, these companies have issues with market share. Larger companies with most of the market share (more than 70%) have more pull when it comes to influencing hospitals in whose products they purchase. Bigger companies can sell their products to hospitals at a discount as long as that hospital agrees to only stock their products. Small, innovative companies don’t have either the capital or the influence to do this. In addition, physicians are driven by relationships. The physician-sales rep relationship is crucial to brand loyalty. Small companies don’t have the reach that larger companies do when it comes to a salesforce.
Some ways companies are innovating in the orthopedic industry is through the medical franchise. Instead of finding new devices to treat patients, the innovation comes through the service of treatment. Franchises like OrthoNOW are providing a convenient care service for specialized segments like orthopedics. The medical franchise industry has the opportunity to provide innovative in a very competitive segment without needing a ton of funding or risk.