Why Compete With Your Customers?
May 2019 Issue
For many years orthotics and prosthetics flourished in combination. Eventually though, their paths diverged and recently they've been in stark contrast to one another.
After enjoying a surge of research investments and innovation since the 1940s, the orthotics industry underwent dramatic changes starting in the late 1990s as manufacturers began deploying sales representatives to fit their own braces and then even acquiring O&P clinics that were heavy purchasers of orthotics. This business strategy was designed to control the dissemination of the manufacturers' off-the-shelf products. At roughly the same time, manufacturers began bidding against their clinical customers for payer contracts—with the advantageous ability to offer significant discounts.
The repercussions were significant. Orthotic-centric O&P clinics have become increasingly marginalized, reimbursement has been reduced or in certain instances eliminated altogether, and orthotics have become commodity goods. There has been minimal investment in new materials or designs for orthoses as the manufacturers seemingly appear more interested in competing with clinics than developing innovative products.
The prosthetics industry experienced the same period of growth in research, new material development, and product design. Prime examples are carbon fiber and fiberglass as materials, microprocessors in prosthetics, and liners with heat management technology. In the past ten years, people with amputations have experienced an incredible array of new technology that improves mobility, functionality, and quality of life.
Given these advances in prosthetics, it seems logical that manufacturers would recognize and wholeheartedly avoid the business strategy applied to the orthotic industry. Unfortunately, this doesn't appear to be the case, and it jeopardizes the industry.
Let me preface by stating that in a number of international markets, the structure of healthcare systems often requires prosthetic manufacturers to provide clinical care. The healthcare system in the United States has no such requirement, and there has been no indication of it being promoted by payers, prescribers, or regulators. Surprisingly though, prosthetic manufacturers have recently purchased U.S.-based, prosthetic-centric O&P clinics and begun offering clinical care. These manufacturers are now competing with their longtime clinical customers. Sound ominously familiar?
This business strategy is hard to comprehend, especially as we've witnessed the negative ramifications on the orthotic industry. Let's not forget what those ramifications were: reduced or eliminated reimbursement, minimal product innovation, and the standardization of technology. The commoditization of prostheses would not only be a disaster for O&P clinics, it would be terrible for the patients they serve—that we all serve.
Rather than divert efforts from developing new prosthetic products and technologies and investing in competing, let's instead collaborate with clinics. Let's work together to demonstrate positive patient outcomes and success to not only our industry stakeholders but to the larger medical community as well. Our prosthetic industry has repeatedly demonstrated that investing in innovation and that collaboration between clinics and manufacturers benefits the entire industry and amputees. Isn't this a better path than "forward integration"?
I truly hope now is not the pivotal moment the prosthetic industry initiated its own downfall. It is eerily parallel to what the orthotic sector experienced. Surely this can't be the way forward for our extraordinary industry.
Mahesh Mansukhani is the CEO of WillowWood, Mt. Sterling, Ohio. He can be reached at firstname.lastname@example.org.