There are several factors making an impact on spine research and innovation today, with some posing challenges while others offer opportunities for growth and development. "With change, there is opportunity, but don't try to stick to the old ways of doing things because we have to change," says Stephen Hochschuler, MD, co-founder of Texas Back Institute in Plano. He is also a founding board member of the Spinal Arthroplasty Society (now known as International Society for the Advancement of Spine Surgery) and chairman of Texas Back Institute Holdings, Inc. "You've got to look at the old models and new models to see that the pendulum swings one way and understand that it will come back. You don't know whether it will be five or ten years, but you have to consider what risks you are willing to take in the meantime."
Dr. Hochschuler discusses the biggest factors making an impact on spine research and innovation today.
1. Stricter FDA regulations and policies. The Food and Drug Administration is rolling out new regulations for 510(k) medical device clearance and investigational device exemption trials, which will make it more strenuous for device companies to study and achieve clearance for new products. "The future of spine research is going to be tremendously impacted by what the FDA decides is its role," says Dr. Hochschuler. "They have created tremendous tumult in the industry."
New regulations require more data on new devices, which means it will take companies longer to achieve the desired results. The extra time will also cost companies more money and, in the end, won't guarantee clearance. As a result, many companies and innovators are taking their ideas to Europe first, achieving the CE Mark of approval and using that data as a springboard for the more rigorous FDA clearance.
"All of the big boys in the industry don't want to do anything that requires a 510(k)," says Dr. Hochschuler. "They will buy something after its done being tested, but they don't want to see an IDE. They will take their products to Europe first because it's easier; it takes about two years longer and triple the cost to achieve approval in the U.S. That has put a real pinch on spine development."
2. Funding for spine projects is disappearing. While there was never a great deal of federal money available for spine research and innovation, now the private funds and venture capital is vanishing as well. "At least 50 percent of the venture capital has disappeared," says Dr. Hochschuler. "In the past, you could depend on a minimum of three to five times return on your money in anywhere from three to five years. Now, it will take at least six to 11 years and your return on investment is completely destroyed."
By the time surgeons and investors realize the return on their investment, inflation and other economic factors will likely make it much less than it would have been in the past. "The money available is decreasing and the FDA is totally unpredictable," says Dr. Hochschuler. "That's another reason why people are beginning to realize they can do research and innovation in Europe more efficiently."
3. Fewer start up companies exist today. There are fewer start up companies today than there were in the past for medical and spinal devices, and fewer opportunities for larger companies to purchase those start-ups.
"In the past, you could come up with a good idea and anyone could back you because spine was a hot field," says Dr. Hochschuler. "You could make a lot of money quickly with spine, whereas other markets like cardiology were down. Now it has switched and cardiology is warm while spine is completely cold."
Regulatory pressures on device companies have forced them to tighten their belts and a lack of funding for new ventures has stymied much of what was considered the booming spinal innovation field of the past several years.
4. Reimbursement issues persist despite proven effectiveness of spine surgery. Spine surgeons, along with many other medical specialists, are experiencing reimbursement difficulties. Payors are creating guidelines for which conditions to cover, and not covering surgery in some cases where surgeons feel their patients would benefit from that type of intervention. Despite studies showing surgery can be beneficial for patients in certain situations over conservative care, surgeons are still struggling to achieve coverage.
"North American Spine Society used to represent the surgeons, but now they represent everyone in spine," says Dr. Hochschuler. "For reimbursement, payors lump all different spine specialists together — including spine surgeons, physical medicine, rehabilitation specialists, pain management physicians and interventional radiologists — and black balled spine surgery with new restrictions on what surgeries could be done and what would be paid for."
The International Society for the Advancement of Spine Surgeons, an organization dedicated to spine surgeons only, has worked on behalf of the surgeon members to promote studies showing the effectiveness of surgical intervention, says Dr. Hochschuler. "ISASS differentiates out numbers from all of spine and shows if surgery is done for the right reasons, there is a cost reduction," he says. "When patients have surgery sooner, there are fewer injections, reduced pain medicine and a quicker return to work."
5. Cost effectiveness of spine intervention. Today's healthcare environment promotes cost-effective treatment, which means payors and patients are going to examine whether the cost of surgery is worth the potential outcomes. If the market doesn't support spine surgery as cost-effective, then it will be difficult to find support for spine surgery research and innovation.
"It's going to be difficult to separate out what is cost effective and what isn't with spine surgery and pain management," says Dr. Hochschuler. "From the pain management perspective, our practice has a three-injection max, but that has dissipated in the spine world. Reimbursements are going down and implant costs are declining."
In some cases, it will be more cost effective for interventional pain management physicians to treat patients with new techniques and technology on the market today.
"The model for case is going to change and you will have patients and procedures that cross over between specialists," says Dr. Hoschschuler. "Cardiovascular surgeons used to deal with all the patients, and now almost everything is done by interventional cardiologists; smart guys learn to work together. In spine, you are going to have other physicians doing injections and other procedures, so don't be threatened by it."
6. Disruptive device company business models will overhaul the industry. As the healthcare environment changes, so too does the business model for providers and device companies. Change is difficult, especially when it comes to distribution, but it will be necessary for companies to remain competitive in the future.
"If you look at a few corollaries, NetFlix, Amazon and iTunes, all three companies are downstream companies and they all cut out the middle man," says Dr. Hochschuler. "When I was a kid, we had music stores, but those are almost nonexistent now. There are very few movie rental stores and books stores are few and far between. These companies took away an area that might have been pleasant, but they made the whole system more efficient. In spine, the middle man is the 12 to 37 percent cost of the implant and that's going to change."
Dr. Hochschuler suggests device companies dispose of the present distribution model in favor of a more efficient and cost-effective system. "Big companies can't change their model overnight, but if they don't they'll have trouble," says Dr. Hoschschuler. "With change there is opportunity, but don't try to stick to the old ways of doing things because we have to change. Looking downstream means you have to look outside the box and that becomes key."
7. Downstream innovation still possible in spine. While some of the traditional ideas about research and innovation are become less possible by the day, downstream ideas and techniques are already finding a spot within the field. Innovators in spine still have opportunities for downstream innovation in:
• Image guidance and robotics
• Biologics beyond bone morphogenic proteins
• Nano and microelectronic medical systems
• Telemedicine
"Those kinds of downstream developments in spine are going to lower the cost of care and make it more efficient," says Dr. Hochschuler. "We need to get the right biologics and regenerative medicine in place and then we can satisfy physicians, lower the cost and increase survival rates for patients. There are tremendous downstream opportunities; you just have to figure out where the new rules are and build a better mouse trap."
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