MUSC Office of the President

The Future of Medicine: Shooting from an Unreplaced Hip
Conference of Joint Replacement Surgeons
May 7, 2009

It is a great privilege and pleasure for me to address you this evening. I'm really here tonight because of my good friend and colleague Del Schutte, who invited me to participate. Since I have asked many favors of Del, usually involving caring for a generous donor or a political big wig, I was hardly in a position to say no to Del. To be honest, if Del asked me to mow his grass, or pick up his dry cleaning, or just about any other task, I would gladly agree. Fortunately for me, Del seems to think that I am more dependable behind a lectern than behind a lawn mower. Hopefully, the next few minutes will not serve to completely dispel that notion.

Having never presented to a distinguished group of joint surgeons before, I must confess that I'm a little nervous about this talk. Of course, I have never presented to an undistinguished group of joint surgeons either, so I'm hoping that you'll cut me a little slack here. We all know that this is a group for which the expression "cut me a little slack" has a whole different meaning, so I use it here advisedly.

When you stop and think about it, university presidents and joint surgeons actually have a lot in common. I realize that may be a very disturbing thought to you, but consider the parallels. First of all, we only get called when things are either broken or very painful. When we do get called, one of the biggest challenges is getting things put back into proper alignment, and sometimes that requires a mallet and some pretty heavy blows. When we've finished our work, even if we did the best that we could, it's never quite as good as the original. And, of course, most people think that we've got big egos and that we're overpaid.

Now, I realize that being compared to a university president is like being damned with faint praise, but please don't take any offense. The last thing that I want to do is to have to go to India to get my hip replaced because I offended the best joint surgeons in the region. So, let's just set the record straight here. At the end of your work day you've probably improved the lives of a number of people. At the end of my day, I'm just hoping not to be surprised by what appears in the next morning's newspaper. And so it goes.

For a guy whose focus is pretty much on the next day's news cycle, being asked to talk about the future of medicine is a little daunting. In fact, most of our faculty would find it pretty amusing if they knew that Del asked me to address that topic. After all, a good portion of them are convinced that I don't know that much about the present of medicine, much less the future. And after this talk, you may well agree with them.

Still, as indicated earlier, I will do pretty much anything that Del asks of me, so here we are. The truth of the matter is that most people who pretend to know anything about the future of medicine are either liars or fools, or both. There are people who call themselves medical futurists, and I am sure that these are well-intentioned folks. A few, no doubt, are able to discern trends and see possibilities that are less clear to the rest of us.

On the whole, however, my sense is that anticipating the future of medicine is a bit like predicting the stock market - even the so-called experts have a pretty dismal track record. All of which brings to mind one of my favorite quotes from Yogi Berra, who said that: "It's tough to make predictions, especially about the future." In no field is that more true than medicine.

There is a long and curious history of misguided predictions in medicine. For example, Pierre Pachet, a Professor of Physiology in Toulouse, famously pronounced in 1872 that "Louis Pasteur's theory of germs is ridiculous fiction." Needless to say, Pasteur's legacy lives on today through the internationally famous research institute that bears his name, but sadly, there is no Pachet Institute for Bad Predictions.

A decade after Pachet's forecast, a more celebrated scientist, Lord Kelvin, the mathematical physicist and engineer who served as President of the Royal Society, famously stated that: "X-rays will prove to be a hoax." Kelvin's contemporary, Sir John Ericksen, who was appointed as the Surgeon-Extraordinary to Queen Victoria said that: "The abdomen, the chest, and the brain will forever be shut to the intrusion of the wise and humane surgeon." Even the title Surgeon-Extraordinary could not protect Ericksen from the infamy of such a constrained view of the future of surgery.

When the best minds of the day have proven time and again to be such poor prognosticators, why would anyone else have the temerity to try to predict the future in medicine?

It seems to me that in order to avoid looking completely ridiculous at this game, one should make forecasts that are hedged with doubt, restricted in scope, and targeted to the not-too-distant future. We might think of this as the ‘risk management' approach to prognostication - be humble, be conservative, be seated.

So, with those guidelines in mind, I am clearly not going to talk tonight about emerging technologies. Although there is a good bet that some of them will transform the way that medicine is practiced, none of us really know which ones will be the winners. If we did, we would all be investing in them with what little remains in our 401(k)s.

Another area that I am going to avoid discussing tonight is federal health care reform. It's an easy topic to bypass because, for all of the proposals that are out there, the political reality is that in the near term, I believe that any changes are likely to be modest and incremental. In order to make sweeping changes, one has to upset a lot of the current stakeholders - from private insurers, to pharmaceutical companies, to device and equipment manufacturers, to hospitals, to physicians. Through financial contributions and lobbying efforts, each of these constituent groups has a powerful influence on policy. In such an environment, it is very difficult to change the status quo in the absence of a groundswell of public support for moving in a different direction.

If a recent CNN poll of Americans is any indication, there is hardly a public mandate for change. According to that March telephone survey of a thousand adults, about four out of five Americans are satisfied with their health care, and nearly three out of four are content with their health insurance coverage. This hardly seems like an environment in which politicians are going to undertake any massive reforms.

The one area in which growing public unrest is apparent with respect to health care is its cost. The CNN survey found that only about half of Americans were satisfied with what they had to pay for health care. Even more disturbing was the fact that only about a third of the respondents were confident that they could meet the bills if someone in their family had a major medical emergency. This fear is not entirely irrational as, at least before the current housing mortgage crisis, about half of all the bankruptcies in this country were caused by medical bills.

The fact that Americans are concerned about the cost of health care cannot come as a surprise to this group. You are involved in work that by its very nature is expensive and consumes an increasing proportion of the health care dollar. Those of you who do knee and hip arthroplasties are riding on the wave of one of the most dramatic increases in demand for surgical services ever seen in health care.

For persons aged 65-74, the rate of total knee arthroplasties nearly tripled between 1990 and 2006. In 2005, about three-quarters of a million knees and hips were replaced in this country. The combined effects of the aging of the Baby Boomers and the growing epidemic of obesity are likely to produce an even greater rise in the numbers of joint replacements in the foreseeable future. In fact, the number of knee arthroplasties is expected to increase six-fold over the next 20 years. Over the same period, the number of hip arthroplasties is expected to double. So, it appears that you folks are going to be very busy for some time to come.

The challenge, of course, is how are we going to be able to pay for all of this demand for new hips and knees? In 2004, the costs were $6.3 billion for knee replacements and $5.3 billion for hip replacements. The DRG for primary replacements of lower extremity joints is the greatest single contributor to short-stay inpatient hospital cost for Medicare.

When it comes to the federal budget, we are growing accustomed to hearing billions, and now even trillions, of dollars mentioned so frequently that they may begin to lose their meaning. So, for a little perspective, it might be interesting to place the cost of lower extremity joint replacements into the context of what the government pays for other services.

The cost of these joint surgeries in 2004 amounted to about 90% of what the United States spent on all foreign aid and it was nearly 50% larger than what we spent on the Environmental Protection Agency. Far be it from me to propose any comparison of the relative utilities of these various investments. My only point here is that the price tag for joint replacements has grown so large that, sooner or later, the federal government will be forced to make some trade-offs. This is going to put even greater pressure on cost containment in repairing all of those failing American knees and hips.

So, how will this be accomplished? The truth of the matter is that none of us know. There are, nevertheless, some hints about possible strategies that may be invoked. First, there will be efforts to control the rising costs of the implant devices, which presently account for about half of the total cost of a joint replacement.

Over the decade ending in 2006, the cost of hip implants rose over 130% and the profit margins for the manufacturers were astounding. This rate of growth is unsustainable, and therefore, will be a principal focus of attention. To visualize how this might work, try to picture a diamond - hopefully, the symbolism of using a diamond will not be lost on you.

At one of the four points of this diamond, you stand in your operating room scrubs and shoe covers. At a second point stands the implant manufacturer, sporting an Armani suit and Gucci loafers. At a third point stands the hospital administrator, dressed in his Brooks Brothers' suit and wing tips. Finally, at the fourth point the payer stands with his T J Maxx sports coat and Rockport shoes.

In the present environment, the Armani clad manufacturer has pretty free access to you. Your relationship with the Brooks Brothers adorned hospital administrator is likely to be arms' length, and you view the T J Maxx wearing payer with distrust. Both the hospital administrator and the payer are nervous about your relationship with the manufacturer and are trying to figure out how to place some more distance between you.

My prediction is that your relationship with the hospital is likely to grow stronger over time. The hospitals are going to make every effort to get their incentives aligned with yours, either through employment contracts, joint ventures, or other business arrangements. Their goals will be to have greater influence over the choice of devices, more control over pricing, and greater efficiency in clinical operations.

The payers are going to be interested in one thing only - controlling costs. They will create incentives, both positive and negative, to help influence your behavior. On the favorable side will be pay-for-performance, and on the unfavorable side will be reduced or eliminated payments for re-hospitalized patients. They also will try to create a wider range of options for patients, with greater transparency about pricing. Patients will be encouraged both to defer procedures and to seek lower cost providers by increasing the magnitude of co-payments.

It is in this last context that I want to examine a trend, which arguably is indiscreet to discuss in the polite company of orthopedists. I am talking here about the phenomenon of medical tourism. That is, patients from the United States going abroad to receive medical care. In spite of how you and I may feel about it, the off-shoring of medical care is likely to become more commonplace in the future. There are no official statistics on the number of patients going overseas for care, but it has been estimated that three-quarters of a million Americans sought care abroad in 2007. By 2010, that number is expected to increase eight-fold to 6 million.

Why in the world (no pun intended), would patients go to such extremes and potential risks to receive care? The answer is not that they are interested in visiting an exotic destination, although some of the companies who arrange these trips are happy to include sightseeing packages and spa treatments. The answer is simple - it is cost. A hip or knee arthroplasty that would cost more than $40,000 in the United States can be obtained for less than $10,000 in India, including the airfare and luxury hotel accommodations for rehabilitation.

It is estimated that in 2012, more than $4 billion worth of medical care will be provided to Americans in Asia, with half of that in India alone. For patients who will be paying the costs of care out-of-pocket, there is a clear and obvious motivation to find the lowest priced provider. Insurance companies have this same incentive, and Blue Cross/Blue Shield of South Carolina is one of the first to get into this field.

The Blues here created a subsidiary, Companion Global Healthcare, which assists its beneficiaries in receiving care abroad by providing information on providers, scheduling appointments, and making travel arrangements. Companion Global Healthcare has affiliated with Bumrungrad International Hospital in Bangkok, and anticipates adding another 10 or more hospital affiliates around the world. Bumrungrad has 150 physicians who hold board certifications in the United States. In 2006, this hospital provided care to 80,000 Americans. It would appear that more than a few South Carolinians are going to be heading there in the future.

Of course, even with American trained physicians, the quality of care provided in foreign facilities remains an open question. To help address that issue, the Joint Commission created an International division to review and accredit foreign hospitals. The Joint Commission International now has accredited over 125 facilities in 24 countries. There are some differences in the standards for domestic and international certification process, but even if these standards were identical, hospital accreditation alone does not guarantee quality of care.

Today, published patient outcome data are not always available for these foreign providers. As the volume of care grows and consumers have more choices, we can anticipate that morbidity and mortality data will be reported more routinely. Already, data from the larger foreign providers suggest that their clinical outcomes are as good, perhaps even better, than national averages in the United States.

As offshore medical care becomes more prevalent, we are likely to see the emergence of low cost alternatives in the United States. Already, there are some early adopters. For instance, Global Choice Healthcare has established an affiliation with the Black Hills Surgery Center in Rapid City, South Dakota for hip and knee arthroplasties priced under $20,000. That's still twice the price of a presumably similar procedure in India, but it is half the cost of other domestic providers, and patients don't have to travel across an ocean to get the care. Oh, and one more thing, if you always wanted to see Mount Rushmore, there really is only one place to get your knees redone.

There are other important issues about offshore medical care, including the risks of complications, such as deep vein thromboses from the long airplane flights involved. There are also concerns about how medical-legal issues will be handled, although some insurance policies are being developed to compensate patients for complications. For the present purposes, it may be sufficient to say that these remaining questions are not preventing Americans from seeking care abroad in very large numbers.

While medical care is a relative newcomer to the impact of global competition, there may be some lessons learned from other industries that have had a longer history of offshoring. An extreme example is the textile and apparel manufacturing industry. Between 1990 and 2005, the number of U. S. manufacturing plants in this sector declined by more than a third, while employment dropped by nearly two-thirds, and earnings fell by more than half. The driving force for these plant closings, job losses, and falling profits has been the shift to lower cost labor markets in developing countries.

Now, I would be the first to acknowledge that there are major differences between shifting manual labor abroad and sending technical work, like orthopedic surgery, offshore. Nevertheless, it probably is naïve to think that technical work cannot be sent to the developing world. If you doubt this, just ask a software engineer what has happened to employment in her industry.

Given the anticipated growth in demand for joint replacements in the United States, orthopedic surgeons here are going to be pretty busy even if a substantial portion of work is sent offshore. So the issue is not whether we will have unemployed joint surgeons, but rather whether their earnings will suffer in the more competitive climate ahead.

My answer, for what little it may be worth, is yes. Just when you thought that the payers could not turn the screws any tighter, they will find a way. While you may not like that prospect very much, I sort of thought that the whole "turning of the screws" motif might go over well with this crowd.

No doubt, there are those of you who disagree with me and you certainly have the advantage of knowing the field far better than I do. Clearly, we are in a period that can be characterized as a "boom" in the demand for joint replacement services. During a boom, it is easy to be convinced that business only knows one direction to head, and that is up. Nevertheless, this is precisely the time at which one needs to guard against what former Chairman of the Federal Reserve, Alan Greenspan, referred to as "irrational exuberance." If we have learned anything from the current economic crisis and its predecessors, it is the inevitably that a bust will follow every boom.

At the moment, you may not believe this, but I do consider myself to be an eternal optimist. Being able to see the silver lining in clouds is pretty much an occupational requirement for anybody trying to run an academic medical center. So, I refuse to end this talk on a somber note. The truth of the matter is that I am bullish about the future of medicine and the ability of physicians to adapt to the changing practice environment. With that in mind, I would like to close with the words of a much wiser observer of medicine - albeit one who passed away 90 years ago. His words, though spoken at a time when the wonders of modern joint surgery could hardly be imagined, are still poignant today. Sir William Osler said: "The best preparation for tomorrow is to do today's work superbly well." May you continue to do your work superbly well for many years to come.