The New Math Of Ortho Innovation – An Interview With Zimmer CEO David Dvorak

Article preview from IN VIVO - November  22, 2013

After emerging from the DOJ settlements, the leading pure-play orthopedics company is emphasizing – and redefining – innovation to drive growth. Zimmer CEO David Dvorak talks to IN VIVO about his company’s commitment to innovation, and how the very notion of innovation is changing.

The New Math Of Ortho Innovation – An Interview With Zimmer CEO David Dvorak

Article preview from IN VIVO - November  22, 2013

Given everything that’s happened in the years since, it’s easy to forget that less than a decade ago, the US orthopedics industry was caught in the throes of a major investigation by the US Department of Justice (DOJ) and coping with the terms of the subsequent settlement with the US Attorney’s Office. And though both the investigation and the settlement affected all of the top US-based orthopedics companies – only Stryker Corp. was not part of the original settlement group – Zimmer Holdings Inc. stood out. Not only was the company cited for having the largest number of high-priced consulting agreements – the first public postings of surgeon consulting contracts post-settlement showed that there were 47 contracts worth more than $1 million, and Zimmer held 21 of them – it paid the most in fines of the four that eventually became part of the settlement. (See "Orthopedics Settlement: Puts the Issue to Bed--Or Does It? " — IN VIVO, November 2007.)How long ago that all seems now. The conflict of interest and related issues that roiled the industry – though in truth more orthopedics executives were happy about the investigation and its subsequent restrictions than were unhappy – now seem a distant memory. Certainly, the adoption of rigorous compliance programs, both at individual companies and across the industry, helped put any concerns about undue influence and improper behavior to rest. But much more than that, in the intervening years, a host of new dynamics – first a major global economic crisis, followed by continued cost pressures in health care and a major health care reform effort in the US, as well as the emergence of new markets in places like China and India – have made the issues raised by the DOJ investigations seem, if not irrelevant, then at least far less pressing than they did in the mid-2000s.

In short, the new reality that the COI investigations were supposed to usher in has been replaced by a new new reality. Two trends in particular seem to highlight the change – health care reform and the shift of orthopedic surgeons from independent practitioners to employees of hospitals – which many predict will introduce critical new rules for success for orthopedics companies. Often expressed as “value rather than volume,” the new rules suggest that device companies will succeed going forward only if they bring technology that offers not just superior clinical outcomes – in fact, sometimes not even superior outcomes – but in addition or instead, significant cost savings and system efficiencies, in the form of things such as shorter procedure times and lengths of stay and fewer hospital admissions.

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