May 15, 2013 by Brian Johnson
Here's how the Arlington, Tenn.-based orthopedic device maker's new program, dubbed WrightDirect, works:
"In the traditional OrthoRecon model, the hip and knee implant products are not purchased by the hospital until they are actually implanted. The instruments are also typically on loan to the hospital," Wright spokesman Julie Tracy told MassDevice.com in an email. "In the WrightDirect model, the implant inventory and instrumentation would be purchased and held by the hospital."
Last year, Wright contracted Bain & Co. to study the U.S. knee and hip market. The study identified the roughly 10% of the procedures at hospitals that made purchasing decisions based on institutional preference rather than physician preference. That number, according to Wright officials, is up from 5% the prior year and is expected to double to 20% over the next 2 years, as more physician practices are snapped up by hospital systems.
Palmisano said in these "institutionally driven" hospitals, there would not be a Wright Medical sales rep in every case. Instead, the company would negotiate a price "meant to compensate the institution for taking on a lot of additional costs," he said.
"I think Wright is particularly well-situated to do this, because this would not conflict with our other business," Palmisano said. "We do not have a lot of business today in these institutions that will be cannibalized as other companies might. We don't have that issue. So I think that this is a – the Wright healthcare is going lower-cost. We will be able to provide very clinically proven, very effective products, and the institution would take over some of the logistics and some of the in-case support. And it will turn out, really, to be kind of a win-win, I think, between us and the institution."
Wright is currently building out an organization that "knows the ins and outs of the C-suite in hospitals," he added, noting that the project is unlikely to make much of a difference this year.
However, if successful, Wright Medical sees this program as something that could grow as more hospitals move towards the "institutionally driven" model. The company is confident that a portion of the other 90% of knee and hip procedures may become good targets for WrightDirect over time.
"We believe that Wright is particularly well-situated to take advantage of the changing dynamics already occurring in the U.S. healthcare market and the resulting cost pressures being faced by hospitals," Tracy told us. "Wright can provide a total solution, including clinically proven products at low prices and the training and logistics support for successful hospital implementation and surgeon collaboration."