Seven spine surgeons weigh in on how the newly-enacted medical device excise tax will impact the field of spinal surgery. The tax took effect Jan. 1 to fund reforms from the Patient Protection and Affordable Care Act. Ask Spine Surgeons is a weekly series of questions posed to spine surgeons around the country about clinical, business and policy issues affecting spine care. We invite all spine surgeon and specialist responses. Next week's question: Will you be adopting any minimally invasive techniques for procedures you currently perform? Why or why not?
Please send responses to Heather Linder at hlinder@beckershealthcare.com by Wednesday, April 10, at 5 p.m. CST.
Jeffrey Goldstein, MD, Director of Spine Service, NYU Langone Medical Center's Hospital for Joint Diseases: Those who develop new technologies need to be encouraged to improve patient care. Device taxes need to be considered with respect to how they may either inhibit or discourage the advances in healthcare, which we have all come to enjoy and anticipate. The medical device tax and taxes on pharmaceutical companies may increase costs to patients (consumers) and dampen innovation.
Jeffrey Wang, MD, UCLA Spine Center: We are seeing more and more pressure to decrease costs, and the implants are some of the largest areas of potential savings. Over the past five years, there has been a concerted effort to try to reduce implant costs and charges and limit access to newer, typically more expensive technologies. With the medical device tax, we will likely see more and more resistance from the manufacturers to reduce the costs, as they have been bearing most of the responsibility to lower costs. We may see more and more standardization of devices, in order to decrease the number of vendors, increase volume of a few select vendors and to have some volume discounts. Each institution will have its own strategy on how to keep the costs at reasonable prices.
We are starting to see more cross-technologies in efforts to reduce costs, such as pairing spinal implants with other surgical implants in another specialty from that same vendor in efforts to gain a higher discount when looking at all the products that one vendor may sell. Another example is pairing total joint replacements and spinal implants, or even adding in sports medicine technologies, all from the same overall company in hopes of having higher volume discounts. We will also see some new creative ways to save on the costs, and these new creative ideas may be derived from working together with our hospital systems and the vendors. It certainly will be challenging. The device tax will likely stimulate these discussions.
Richard Kube, MD, Spine Surgeon, CEO and founder of Prairie Spine & Pain Institute, Peoria, Ill.: I believe the device tax is a negative for the industry and for spine surgery in general. We already see implants as a major cost driver for the procedures that we do as spine surgeons. How then does an added expense for one of the major cost drivers help to lower the cost of delivery of medical services? Facilities continue to negotiate for lower costs to maintain their margins. This tax will invariably do what it does in any business situation. Some of that cost will be passed on to the consumers (increased cost for medical service). Some of it will be felt by layoffs or downsizing (lost jobs). The real issue is why there needs to be such a tax in the first place. The government, in my opinion, does not have a revenue problem, but it does have a very clear spending problem. This tax is simply fueling and enabling current bad spending behaviors. Imagine a college party out of control and the answer given is to put more booze in the punch bowl. That's about the same amount of sense this tax makes.
Walter Eckman, MD, owner of Aurora Spine Center, Tupelo, Miss.: The medical device tax will dampen efforts by small companies to develop new and innovative products. Large companies will reduce employment.
J. Brian Gill, MD, Orthopedic Spine Surgeon, Nebraska Spine Center, Omaha: The medical device tax is going to greatly limit spine manufactures' ability to innovate new products. Furthermore, they will have to be more judicious in their ability on which products to develop and deliver to the market. There will be fewer start-up companies in the spine field. There will likely be more companies that merge together, such as the recent DePuy and Synthes merger. I would anticipate three or fewer companies to have the far majority of the spine industry market share. The impact on spine surgery is that there will be less innovation and fewer technologies that will advance the field because it is cost prohibitive for the companies to do so. There will be less collaboration between companies and surgeons to develop techniques and technologies for spine surgery. There will be fewer choices of products to use for patients.
Kern Singh, MD, Rush University Medical Center, Chicago: The tax will have minimal effect. In most situations, the government will carve out an exception as is currently being debated in Congress. Additionally, implant companies have a huge profit margin and room to carve out this additional fee. It may affect smaller tiered companies that are struggling to be acquired. As such, innovation from smaller companies may be blunted, but major spinal device companies will be relatively unaffected.
Christian Zimmerman, MD, Neurosurgeon, Idaho Neurological Institute, Boise: The Patient Protection and Affordable Care Act passed in 2010 had many attached potential cost generators, the medical device tax being one. The stamina of this partition is currently under a repeal process at the Senate level, with most media outlets decrying its defeat because of a lack of funding substitution. Device manufacturers have argued the tax is unfair because they will not gain enough new customers from the healthcare overhaul to offset their new costs. Other healthcare sectors counter that the burden of paying for the healthcare law should be evenly distributed, and that they have already made financial sacrifices. Whatever the case and wherever one places themselves proximate to the fence, the costs will be definitively offset towards the hospitals and patients. These additional costs coupled with diminishing reimbursements will stymie research dollars and growth.
More Articles on Spine:
Mercy Medical Center – Des Moines Earns Blue Distinction
8 Strategies to Overcome Decreasing Spine Surgery Reimbursements
10 Statistics on Reoperation After Spine Surgery for Disc Herniation
Please send responses to Heather Linder at hlinder@beckershealthcare.com by Wednesday, April 10, at 5 p.m. CST.
Jeffrey Goldstein, MD, Director of Spine Service, NYU Langone Medical Center's Hospital for Joint Diseases: Those who develop new technologies need to be encouraged to improve patient care. Device taxes need to be considered with respect to how they may either inhibit or discourage the advances in healthcare, which we have all come to enjoy and anticipate. The medical device tax and taxes on pharmaceutical companies may increase costs to patients (consumers) and dampen innovation.
Jeffrey Wang, MD, UCLA Spine Center: We are seeing more and more pressure to decrease costs, and the implants are some of the largest areas of potential savings. Over the past five years, there has been a concerted effort to try to reduce implant costs and charges and limit access to newer, typically more expensive technologies. With the medical device tax, we will likely see more and more resistance from the manufacturers to reduce the costs, as they have been bearing most of the responsibility to lower costs. We may see more and more standardization of devices, in order to decrease the number of vendors, increase volume of a few select vendors and to have some volume discounts. Each institution will have its own strategy on how to keep the costs at reasonable prices.
We are starting to see more cross-technologies in efforts to reduce costs, such as pairing spinal implants with other surgical implants in another specialty from that same vendor in efforts to gain a higher discount when looking at all the products that one vendor may sell. Another example is pairing total joint replacements and spinal implants, or even adding in sports medicine technologies, all from the same overall company in hopes of having higher volume discounts. We will also see some new creative ways to save on the costs, and these new creative ideas may be derived from working together with our hospital systems and the vendors. It certainly will be challenging. The device tax will likely stimulate these discussions.
Richard Kube, MD, Spine Surgeon, CEO and founder of Prairie Spine & Pain Institute, Peoria, Ill.: I believe the device tax is a negative for the industry and for spine surgery in general. We already see implants as a major cost driver for the procedures that we do as spine surgeons. How then does an added expense for one of the major cost drivers help to lower the cost of delivery of medical services? Facilities continue to negotiate for lower costs to maintain their margins. This tax will invariably do what it does in any business situation. Some of that cost will be passed on to the consumers (increased cost for medical service). Some of it will be felt by layoffs or downsizing (lost jobs). The real issue is why there needs to be such a tax in the first place. The government, in my opinion, does not have a revenue problem, but it does have a very clear spending problem. This tax is simply fueling and enabling current bad spending behaviors. Imagine a college party out of control and the answer given is to put more booze in the punch bowl. That's about the same amount of sense this tax makes.
Walter Eckman, MD, owner of Aurora Spine Center, Tupelo, Miss.: The medical device tax will dampen efforts by small companies to develop new and innovative products. Large companies will reduce employment.
J. Brian Gill, MD, Orthopedic Spine Surgeon, Nebraska Spine Center, Omaha: The medical device tax is going to greatly limit spine manufactures' ability to innovate new products. Furthermore, they will have to be more judicious in their ability on which products to develop and deliver to the market. There will be fewer start-up companies in the spine field. There will likely be more companies that merge together, such as the recent DePuy and Synthes merger. I would anticipate three or fewer companies to have the far majority of the spine industry market share. The impact on spine surgery is that there will be less innovation and fewer technologies that will advance the field because it is cost prohibitive for the companies to do so. There will be less collaboration between companies and surgeons to develop techniques and technologies for spine surgery. There will be fewer choices of products to use for patients.
Kern Singh, MD, Rush University Medical Center, Chicago: The tax will have minimal effect. In most situations, the government will carve out an exception as is currently being debated in Congress. Additionally, implant companies have a huge profit margin and room to carve out this additional fee. It may affect smaller tiered companies that are struggling to be acquired. As such, innovation from smaller companies may be blunted, but major spinal device companies will be relatively unaffected.
Christian Zimmerman, MD, Neurosurgeon, Idaho Neurological Institute, Boise: The Patient Protection and Affordable Care Act passed in 2010 had many attached potential cost generators, the medical device tax being one. The stamina of this partition is currently under a repeal process at the Senate level, with most media outlets decrying its defeat because of a lack of funding substitution. Device manufacturers have argued the tax is unfair because they will not gain enough new customers from the healthcare overhaul to offset their new costs. Other healthcare sectors counter that the burden of paying for the healthcare law should be evenly distributed, and that they have already made financial sacrifices. Whatever the case and wherever one places themselves proximate to the fence, the costs will be definitively offset towards the hospitals and patients. These additional costs coupled with diminishing reimbursements will stymie research dollars and growth.
More Articles on Spine:
Mercy Medical Center – Des Moines Earns Blue Distinction
8 Strategies to Overcome Decreasing Spine Surgery Reimbursements
10 Statistics on Reoperation After Spine Surgery for Disc Herniation