With a market capitalization of more than $15 billion, Intuitive Surgical is a major player in the medical device industry. It is also the only source in the world for robotic-assisted surgery products. An evolving controversy is whether the patient benefit from a robot-assisted procedure is equal or greater than the additional cost to the healthcare system.
In recent articles, the editors at Medscape (a physician-oriented professional website owned by WebMD) have raised the issue of whether robotic-assisted surgery is being adopted too fast and being promoted too aggressively.
- The number of procedures performed worldwide with Intuitive Surgical’s da Vinci Surgical System increased 25% from 2011 to 2012, to 450,000.
- The da Vinci Surgical System has been installed at more than 2,000 hospitals around the world at a cost per installation of $1.5-2.2 million plus annual service fees of about $160,000.
- Intuitive Surgical has about 2,400 employees and had 2012 revenues of $2.18 billion, $908k per employee. That’s getting close to the almost mythical $1 million per employee revenue level and in the same neighborhood as Google ($931k).
- The price for proprietary disposable instruments for the da Vinci System is $600-1,000. Each procedure uses 3-8 instruments.
- A recent analysis reported that da Vinci surgeries add costs of 20% per procedure on average. The incremental costs are currently absorbed by hospitals because reimbursement rates are set by procedure, not surgical technique or technology. It is not yet clear if the extra costs will eventually be reimbursed by insurers.
- Earlier this year, the president of the American Congress of Obstetrics and Gynecology (ACOG), issued a statement recommending against using robotic devices in routine gynecologic procedures – perhaps motivated by a 2013 JAMA study reporting that the percentage of robotically assisted hysterectomies increased from 0.5% in 2007 to 9.5% in 2010. Studies have shown that use of robotics has no clear clinical benefit over laparoscopy (the gold standard). Additionally, costs for robotically assisted hysterectomy were reported in the JAMA study to be $2189 more per case than for laparoscopic hysterectomy.
- Some hospitals appear to be hyping and/or aggressively marketing their robotic capabilities. Investigators reported In a 2011 study that 41% of hospital websites promoted their robotic surgery capabilities and that clinical superiority was claimed on 86% of these sites, while none mentioned risks.
- Just as with any new technology, there is a learning curve when adopting robotic-assisted surgery technology. During the learning curve, risks are higher.
- Intuitive Surgical has done a brilliant job in developing and marketing its da Vinci System, perhaps too good. The company shipped its first commercial system in 2000 and has averaged 25% annual growth ever since. The low-hanging fruit may be gone.
- Whether deliberate or accidental, Intuitive has created the perception among the public that robotic-assisted surgery is “better” than alternative approaches. This creates demand for the procedures and indirectly, demand for Intuitive’s products.
- There are few, if any, randomized clinical studies demonstrating a significant clinical benefit of robotic-assisted surgery over the gold standard technique, either open surgery or laparoscopic surgery. There are a few studies indicating limited advantages in outcomes in very specialized indications and a few others that show perioperative benefits such as reduced need for transfusion.
- Some hospitals have irresponsibly hyped the benefits of robotic-assisted surgery to patients. Perhaps this is in response to competition and perhaps partly to attract patients in order to justify the large investments in robotic equipment and training.
- Some surgeons are aggressively adopting the new technology even where there is no clinical advantage or indication. Perhaps they fear losing the revenue stream from patients or the patient stream from referring physicians.
- The winds of change (healthcare reform in Obamacare, negative publicity about complications and costs) are starting to blow. Intuitive’s share price is down more than 34% from its peak value reached in February 2013.
Takeaways: There is a fine line between aggressive promotion and hype. In this case, the urgency and greed triggered by the “robotic gold rush” may have caused the hype line to be crossed by more than one party. Few healthcare companies conduct randomized clinical trials unless required by regulatory bodies or customers. Given the changes occurring in healthcare today, it is prudent to include outcomes and clinical studies in your commercialization plans. If your technology or product is radically different from the gold standard, you must seriously consider learning curve effects as part of market adoption. Basic training, advanced training, certification, proctoring, and partnering with professional organizations are all options when introducing new technologies.
Read more: Robotic Surgery: Too Much, Too Soon?.