›Replacing Arthritic Knees Is Cost-Effective—Study
Mon Jun 22, 2009 4:31pm EDT
CHICAGO, June 22 (Reuters) - Knee replacement surgery is expensive but worth the cost, especially if performed by experienced surgeons, U.S. researchers said on Monday.
Some $11 billion is spent on 500,000 total knee replacements each year in the United States, and the number is projected to multiply seven times by 2030 because of the aging, overweight population.
Elena Losina and colleagues at Brigham and Women's Hospital and the Boston University School of Public Health set out to determine if the operations on Medicare patients aged 65 and older were cost-effective -- a subjective threshold based on years of life spent in good health.
Some 9 out of 10 knee replacements are successful -- knee pain goes away and patients become more mobile.
In the study, knee replacement surgery and subsequent costs added up to $57,900 per patient, which was $20,800 more than was spent on those who did not get the surgery.
Those who got artificial knees lived more than a year longer in good health than those who did not, and the researchers calculated the added cost per year of good-quality life at $18,300. They deemed that outlay, when compared to other procedures to treat aging bones, "highly cost-effective."
The surgery's cost-effectiveness rose with the experience of the surgeons who worked at high-volume hospitals, as is true with many complicated procedures. Results were generally not as good for blacks, Hispanics, and older patients, according to the report published in the Archives of Internal Medicine.
The prosthetics are made by companies such as Stryker Corp (SYK), Zimmer Holdings Inc (ZMH), Johnson & Johnson (JNJ) and Smith & Nephew (SN.L).
President Barack Obama has identified cost-effectiveness studies as a way to trim U.S. health costs and steer doctors away from wasteful procedures. Some $1.1 billion was included in the federal stimulus package to fund such studies.‹
[See #msg-42170088 for background on AdvaMed’s “successful” effort against Congress’ new tax on medical devices; the word “successful” is enclosed in quotation marks because the healthcare bill that passed in the US House merely cut the planned $4B annual levy in half rather than eliminating it.]
›Says Some Companies Are Overvalued Because of Their Sales and Marketing Practices
NOVEMBER 18, 2009 By JON KAMP
Stryker Corp. has been slow to spend on acquisitions as it fixes internal issues and because some target companies are overvalued due to unpalatable sales and marketing practices, Stryker's chief executive said.
The Kalamazoo, Mich., maker of replacement joints and other medical products added a head-count restriction a year ago and is also cautious about ramping up hiring, Chief Executive Stephen P. MacMillan said in an interview. He spoke on the sidelines of The Wall Street Journal CEO Council conference.
Stryker ended the third quarter with $2.9 billion in cash, and Mr. MacMillan has long talked about putting some of that cash toward acquisitions. But while the company announced two small deals last week, it has been slow to spend.
Some potential acquisition targets appear to have "explosive growth" but are generating that growth, in part, because of sales and marketing practices that don't comply with Stryker's, Mr. MacMillan noted.
"We think we'd have to apply a haircut in terms of their sales growth as we put them into our compliance systems," he said. He also talked about issues with other companies' compliance systems.
This is a sensitive area for Stryker, which, along with the replacement joint sector, reached deals with the Department of Justice two years ago following allegations of improper doctor payments.
The company is also fixing issues the Food and Drug Administration found at certain plants, and its small Biotech unit was recently indicted on allegations of improper product promotion.
The effort to fix these issues, on which Stryker is spending $200 million over three years, has also distracted the company from pulling the trigger on acquisitions, Mr. MacMillan said.
He has been cautious in saying where he will spend Stryker's money, for fear of inflating the price of target companies, but he indicated Stryker won't spend it all on a big deal.
"So you can quickly do the math and say we're going to stay more bite size," he said.
Stryker has been pinched by slowed growth in the market for replacement hips and knees, which are installed in elective procedures that can be delayed. It has also endured a sharp downturn in its "MedSurg" business, which includes equipment like hospital beds and stretchers.
Hospital budgets have been badly pinched by the economic downturn. The cycle from market decline to recovery is likely to look like a "Nike swoosh," MacMillan explained, which suggests a slow climb after a rapid dive.
With that outlook in mind, the company remains cautious about increasing its employee ranks.
Stryker has about 17,000 workers overall, mainly in the U.S. Its employee base has been basically static since last year, and Mr. MacMillan said his caution is due in large part to a looming tax on the devices industry.
The industry fought hard against a $40 billion over 10 years proposal that came from the Senate Finance Committee, and the recently passed House health-care bill included a delayed tax for half that amount.
Mr. MacMillan isn't the first medical-devices executive to note the potential effect of that tax on employment, and it is a big stick for the industry to wield because it has a large U.S.-based manufacturing base. Stryker is based in Kalamazoo, Mich., a state hard hit by the recession.
St. Jude Medical Inc. made waves when it recently dropped its membership in the Advanced Medical Technology Association, which is the industry's main trade group. The company disagreed with AdvaMed's proposal that companies making the most complex devices--St. Jude falls into that camp--should pay a heftier tax.
AdvaMed's stance reflects its diverse membership, including companies making low-tech and low profit-margin products. Despite that diversity, St. Jude's exit highlighted a rift that Mr. MacMillan chalked up to a fundamental disagreement: whether to fight the tax outright or settle for what is realistic.‹
Market Data 
Markets 
AI
