Robotic surgery and Intuitive Surgical – justifiable targets or targets of envy?

http://mobile.bloomberg.com/image/index/pKISbwVuPwu-CpydsHPB-_ZzUeF8YNn3pSP_hdYcB-jmbFsMemtmA2YRxe7mpv9Ysm4SPHQUfdFCOkPclMKfZ9CUybeuQ86QqPvbWMC5B-eh3lqkPqkgukhgoIa-eGsGCD4Qr_KDqIxEgIvT52jCFi-wMjcy7J1OELQFhliwvoYa7eu81HQi3QHgaQ**Media attention on Intuitive Surgical is increasing. The Sunnyvale, California company is attracting much attention for its aggressive marketing and sales tactics. It’s also being scrutinized for what some critics say is an increased incidence of patient injuries during surgical use of the da Vinci System.

I’ve written about Intuitive Surgical in a previous blog post. Their products are very good and their marketing is stellar, perhaps too good if that’s possible. The ongoing controversies are whether the healthcare market needs as much robotic surgery as it is getting right now and whether inexperienced users and inappropriate use of the technology are responsible for increasing patient injuries or even death.

Intuitive has played the market situation perfectly as noted in the Bloomberg article. Their sales reps use da Vinci Systems to instill greed in hospital administrators by asserting that the hospital can increase market share by offering robotic surgery. Worse, they create fear by saying that other hospitals will increase their market share at the expense of the robot-deficient medical center.

Intuitive even heightens competition among surgeons in an effort to justify demand for additional installations. The surgeons are powerless to stop the marketing machine. One surgeon admitted that if he does not offer robotic surgery, his colleagues will, and he will lose patients to them.

One interesting, even frightening, item from the Bloomberg article is that many consumers, i.e. prospective patients, believe that the system is controlled by robots. In their minds, that’s what gives da Vinci a competitive advantage. So…low information consumers are heavily influencing  a market situation that affects everyone.

The MassDevice article highlights an ongoing dispute between Intuitive Surgical and analysts at hedge fund Citron Research. Citron alleges that adverse surgical events associated with the da Vinci System and reported through the FDA adverse event reporting system indicate a growing problem with injuries caused by the da Vinci System. Intuitive counters with its own analysis, saying that FDA reporting is unreliable and not suitable for time-based analysis. It further states that surgeons should rely on peer-based reviews before making decisions about the technology. From the article:

“”In the 1st 8 months of 2013, 2332 Adverse Event records were posted – compare to 4603 records posted in the entire 12 year period since the 1st Adverse Event tracking for da Vinci  appeared in MAUDE in 2000,” Citron wrote. “It is the opinion of Citron that the only reason there is not a national outcry is because the da Vinci robot has yet to kill or injure ‘the right person’ – like the next of kin of a congress member or a celebrity.”

Intuitive stock closed at $389.16 today, off 33.5% from its 52 week high.

Takeaways: If you plan to be a disruptive or hyper-aggressive medical device company, you need to have thick skin. There will always be plenty of critics and competitors taking potshots at you.

The extra risk with healthcare companies, of course, is that patients can get hurt and die as a result of action or inaction by the company.

You need to decide just how aggressive to be, and whether to define an ethical line over which the company and its employees will not cross. Of course shareholders and Board members may react negatively at any effort to put a damper on the money-making machine. Being responsible for installing that damper could cost a CEO, marketing, or sales executive his/her job.

As we move further into the era of outcomes-based decision-making, opportunities like robotic surgery for anything other than clinically justified reasons will diminish. Robotic surgery could be one of the few remaining “land grab” chances to make a lot of money with little competition. Let’s hope that patients and the rest of the healthcare system aren’t stuck with the bill.

Read more:

http://mobile.bloomberg.com/news/2013-10-08/robot-surgery-damaging-patients-rises-with-marketing.html

Citron puts Intuitive Surgical on blast over adverse events | MassDevice.