Jess H. Lonner, MDPhiladelphia, PA

Disclosure

Royalties

Zimmer, Blue Belt Technologies

Consultant

Zimmer, Blue Belt Technologies

Speaker’s bureau

Zimmer, Blue Belt Technologies

Publishers: Saunders, Lippincott Williams Wilkins

Shareholder: Blue Belt Technologies, CD Diagnostics

“Conventional” Approach to

Knee Arthritis

90-94% “success” at 10-15 yrs

Total Knee

Replacement

Patients Decline Total Knee

Replacement Surgery

Few patients opt for TKA

12.7% of women

8% of men

Duke University Knee StudyAssessing the Impact of Medical Technology Innovations on Human Capital

January 31, 2006

Reasons for Declining Surgery

Concern: pain or worsened mobility

Duration of recovery

Financial

Lost work

“Friends of friends” with poor outcomes

Poorly informed re benefits/alternatives

Dissatisfaction after Total

Knee Replacement

19%-25% dissatisfaction

Recovery lengthy

Activity limitations

Expectations unmet

6-17% residual anterior knee pain

Knees don’t feel normal

Noble et al, Clin Orthop 2006

Bourne et al, Clin Orthop 2010

Not all patients need total knee replacements

Issue #1

Only 6% of knees have arthritis in

ALL 3 compartments

Patterns of OA in Symptomatic Knees

(Ledingham et al 1993)

Prevalence of Localized Knee

Arthritis

13-47% of the patient population

Willis-Owes 2009

Schindler 2010

Ackroyd 2010

Arno/Walker PS 2011

Continuum of Interventions

Partial Knee

Replacements

Total

Knee

Choice of Knee Replacement

Depends on:

Pattern of arthritis

Deformity

Contractures

Stability

Body habitus

Knee Replacement Options

Partial Knee

Total Knee

30%

70%

Advantages of Partial Knee

Replacement

Accelerated recovery Less pain Less blood loss Less postop morbidity Shorter hospitalization More conservative Lower costs Feels more normal Greater satisfaction

0

20

40

60

80

100

120

0 3 mos 6 mos 9 mos 12 mos

Pain

Partial

Knee

Total

Knee

“Recovery” after Partial Knee Replacement

Time to “Recovery”:

Partial vs. Total Knee Replacement

Extent of “Recovery”:

Partial vs. Total Knee Replacement

0

0.5

1

1.5

2

2.5

3

Abilitytoperformac vi esofdailyliving

"Feltnormal"

Partial Knee vs.

Total Knee Replacement

TKA

Par al

Nunley et al 2014

Patient Satisfaction

Total vs. Partial Knee Repl.

Total

75-81%

Noble (2006), Bourne (2011)

Partial

94%

Bhattacharya (2011)

Safety: Partial vs Total

30-Day Complications: Partial vs.

Total Knee Replacement> 20,000 pts (Medicare/Marketscan

Databases)

Lonner et al 2014

Durability of Partial Knee

Replacements

94% survivorship at 10-15 yrs in optimal

circumstances…

Durability: Partials vs. Totals(US Databases)

< Age 65

> Age 65

Ong, Lonner etal AAHKS 2014

Partials Totals

Partials Totals

Optimizing the outcomes and durability of partial knee replacement is paramount

Issue #2

What Impacts the Results of

Partial Knee Replacements?

Pattern of arthritis

Patient selection

Component design

Polyethylene quality

What Impacts the Results of

Partial Knee Replacement?

Accuracy of implantation

BadGood

Partial Knees with Traditional Instrumentation

Difficult to consistently align components

Malalignment leads to failures

Evolution

Bulky instrumentation

Computer Navigation

Robotics

Rationale of Robotics for Partial

Knees

Simplify the procedure

Reduce the amount of instrumentation

Eliminate surgical steps

Enhance accuracy

Bone preparation/component alignment

Soft tissue balance

Improve clinical results

Lonner JH. American Journal of Orthopedics 2009

Experience with Orthopaedic

Robots

Broader adoption of semi-autonomous systems

Expanded indications

Explosion

Newer companies/technologies

Market Penetration of

Robotics in Partial Knees

15% of partial knee’s in US (2013)

www.OrthopedicNetworkNews.com. 2013

Partial knees

~29% in five years

~37% in 10 years

Total knees

~10% in two years

~18% in five years

~23% in ten years

Robotic Landscape:

Projected Penetration

Medical Device and Diagnostic Industry, March 5, 2015http://www.mddionline.com

Semi-autonomous

Robotics for Partial Knees

Mako (Mako Stryker, Ft. Lauderdale, FL)

Initial FDA approval 2005; revised 2008

Image-based (CT scan)

Navio Surgical System (Blue Belt Technologies,

Plymouth, MN)

Initial FDA approval 2012

Image-free

Story of Robotics in

Orthopaedics

Study in patterns that define technological

progress and innovation, in general

Declining capital and maintenance costs

Smaller space requirements

Broadening access

Increased utilization

Downsides of 1st Generation

Robotic System

Capital expense

Preop CT scan

Additional expense

Denials common; high copays; bundled payments

Hospitals “eat cost”

Time/Inconvenience

Radiation exposure

2nd Generation Robotic System

Image-free (No CT scan)

Handheld robotic instrument

Intraop registration/mapping/planning

Intraop gap balancing

Burr Speed/Exposure control

2nd Generation Robotic System

Cost-favorable

Open implant platform

Blue Belt Technologies, DePuy Synthes,

DJO Surgical, Smith & Nephew, StelKast

34% currently in ASC’s

Navio Technique:

Surface Mapping

Selection of Implant Size/Position

and Virtual Gap Balance

Technique: Bone Preparation

Prepared Surface

Alignment:

Robotic Techniques vs. Manual

RMS Error Robotic Manual

Flex/Ext (°) 1.6 4.1

Varus/Valgus (°) 2.3 6.0

Int/Ext (°) 1.7 6.3

Prox/Dist (mm) 1.3 2.8

Ant/Post (mm) 1.3 2.4

Med/Lat (mm) 0.9 1.6

Lonner et al CORR 2010

Dunbar et al J Arthrop 2012

Lonner et al CORR 2014

2.6x less variability than manual techniques (p<0.05)

Partial Knee Replacement Durability with Robotic Assistance

860 cases

Mean f/u 4.6 yrs (range, 6 mos-7 yrs)

Failure rate: 0.5%

(Lonner et al 2015

The value paradigm in knee replacement surgery

Issue #3

Problem Defined

Healthcare costs exceed 17% of GDP

Expected to exceed 20% by 2020

2009: $2.5 trillion spent on US healthcare

Projected to be >$4.6 trillion by 2020

2009: Per capita healthcare spending: $8000

Estimated to be $13,700 by 2020 (70% increase)

https://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-

Reports/NationalHealthExpend-Data/downloads/proj2010.pdf

Cost of managing musculoskeletal disease:

$849 billion (7.7% of GDP)

Volume growth 2005 to 2030:

Total knees: 450,000 3.48 million (673%)

Total hips: 208,600 572,000 (174%)

Growing “Burden” of Total

Knee and Hip Replacement

Kurtz et al J Bone Joint Surg 2007; American Academy of Orthopaedic Surgeons

Value Impact

Payers are encouraging value-driven choices

Payers are selecting surgeons/hospitals that they

consider high value, low cost providers based on their

outcomes

Payment incentives focus on quality over quantity

Penalties for readmissions

We need to optimize care (value)

Patient satisfaction?

Improved functional outcomes?

Implant durability?

Rapid recovery?

Quick return to work?

Patient optimization?

Minimization of complications?

Short-term cost avoidance?

Long-term cost-avoidance?

What is “Value” in Joint

Replacement?

“Value” in the New

Healthcare Paradigm

Value = Quality/Cost

(Health outcomes achieved per dollar spent)

Michael Porter, NEJM 2010

Minimize costs for EOC

Optimize patients medically

Minimize complications

Periop protocols

Educate patients

Re-evaluate cost of care at hospitals

Minimize use of inpt facilities postop

Transition select cases to ASC’s

Shift from total knees to partial knee replacements

How Do We Get Better Value?

Partial knee replacement must be provided as an outpatient procedure

Medicare “Mandate”

CMS policy 1589-P 2013

Is outpatient partial knee replacement safe?

Does robotic technology support the new value paradigm in healthcare?

Are robotics safe and cost effective in an ASC?

Issue #4

Feasibility Study: Outpatient

Partial Knee Replacement

200 consecutive “selected” cases

50% in an ASC

Patient age: mean 58 (range, 35-82)

100% discharged home

One (0.5%) return to ED on POD #1 for IV fluid

No readmissions

Lonner et al 2014

Costs of Care (Partial Knees)

Uhr A, Davis D, Lonner J. 2015

Cohort Mean Min Max

Hospital (Inpatient)N=50

$16,495 $12,784 $28,644

Hospital (Outpatient)N=50

$13,295 $7,249 $24,758

ASCN=50

$9,969 $3,406 $15,321

Economics of Robotic

Technologies

1st Gen Pricing 2nd Gen Pricing

-List price ~$1.0MM -List price $445k with 1 year of warranty

-$100k annual warranty list price

-$45k annual warranty list price

53

1st Gen Case Considerations 2nd Gen Case Considerations

-Per case disposables: $1,200 -Per case disposables: $600

-Confined to Mako’s RESTORIS, Stryker?

-Multiple implant options; leverage RFP’s

-CT scan required; insurance denials -No CT & pre-op planning required

-40 minute setup time -15 minute setup, no complex calibration

-Difficult to move from install location

-Portability; b/t rooms and facilities

Economics of Robotic

Technologies

Assumptions:

Avg. Medicare payment per case: $12,500

Lien Item 1st Generation 2nd Generation

System List Price $1,200,000 $450,000

Svc Costs (List Price)

$100,000 $45,000

CT scan $400-$800 $0

Implant/Disposable Costs

negotiated negotiated

Break even on ROI 240 cases 60 cases

ROI Pro Forma Analysis

55

Conclusion

Partial knee replacement

Conservative alternative to total knees

Rapid recovery

Greater return to work and sport

Normal kinematics/feel

Less morbidity/risk

Improved satisfaction

Conclusion

Robotically-assisted surgery

Improves precision of bone preparation

Optimizes ligament balance

Enhances position of components

Optimizes outcomes and durability

Conclusion

Partial knees and newer generation robotic systems:

Cost favorable for ASC

Support the value-paradigm