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2016 Orthopedics Landscape ... US Market, 2016–2026 Sg2 IP Forecast Population-Based Forecast Sg2 OP Forecast Discharges Millions 5-Year 10-Year Hip Knee Outpatient Hip/Knee Replacement

Jun 21, 2020

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  • 2016 Orthopedics Landscape

    Mike Graham

    Director, Orthopedic Intelligence

    Sg2

  • Confidential and Proprietary © 2016 Sg2 2

    How does the

    Sg2 forecast

    work?

    Can we expect

    continued growth

    in Orthopedics

    over the next

    decade?

    Sg2 Forecast Overview

    • What are we thinking about?

    • 10-year overview for Orthopedics

    • Procedure Highlights

    Total Joint Replacement

    Spine Care

    Rehabilitation

  • 3Confidential and Proprietary © 2016 Sg2

    Sg2’s Impact of Change® Forecasts

    Sg2 Impact Factors

    Population

    Epidemiology

    Economics

    Policy

    Innovation & Technology

    Systems of CARE

    System

    of CARE

    Days, LOS,

    Volumes,

    Sg2 Impact

    Factors

  • 4Confidential and Proprietary © 2016 Sg2

    ORTHOPEDICS SPINE

    What are we thinking about?

    ASC Urgent Care Post Acute Virtual Health

    Total Joint

    Replacement

    Foot &

    Ankle

    Upper

    Extremity

    Hip

    Fx

    Sports

    Med

    Rehab Neuro

    Spine

    PainPM&R

    Ortho

    Spine

  • 5Confidential and Proprietary © 2016 Sg2

    Sg2 ANALYTICS

    400

    440

    480

    520

    560

    600

    2016 2021 2026 2.0

    2.2

    2.4

    2.6

    2.8

    3.0

    2016 2021 2026

    +11%

    +21%

    Orthopedics Experiences Outpatient Shift

    Note: Analysis excludes 0–17 age group and includes orthopedics service line only.

    Sources: Impact of Change® v16.0; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP). 2013. Agency for Healthcare Research and Quality,

    Rockville, MD; OptumInsight, 2014; The following 2014 CMS Limited Data Sets (LDS): Carrier, Denominator, Home Health Agency, Hospice, Outpatient, Skilled Nursing Facility;

    The Nielsen Company, LLC, 2016; Sg2 Analysis, 2016.

    +2%

    +7%

    +14%

    +7%

    +6%

    Inpatient Orthopedics Forecast

    US Market, 2016–2026 Outpatient Orthopedics Forecast

    US Market, 2016–2026

    Sg2 IP Forecast Population-Based Forecast Sg2 OP Forecast

    Discharges

    Millions 5-Year 10-Year

    Volumes

    Millions 10-Year5-Year

    +12%

  • 6Confidential and Proprietary © 2016 Sg2

    Sg2 ANALYTICS

    Orthopedic Procedures:

    10-Year Growth Projections

    Sources: Impact of Change® v16.0; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP). 2013. Agency for Healthcare Research and Quality,

    Rockville, MD; OptumInsight, 2014; The following 2014 CMS Limited Data Sets (LDS): Carrier, Denominator, Home Health Agency, Hospice, Outpatient, Skilled Nursing Facility;

    The Nielsen Company, LLC, 2016; Sg2 Analysis, 2016.

    21% 3%

    IP

    Hip Fracture

    11%

    29%

    82%

    103%

    OP

    IP

    Shoulder Replacement

    Sg2 IP Forecast

    Population-Based Forecast

    Sg2 OP Forecast

    6%

    19%

    136%

    –4%

    Cervical Spinal Fusion

    Lumbar Spinal Fusion

    4%

    13%

    595%

    –31%IP

    OP

    IP

    OP

  • 7Confidential and Proprietary © 2016 Sg2

    Sg2 ANALYTICS

    0.8

    1.0

    1.2

    1.4

    1.6

    2016 2021 2026

    +12% +25%

    TJR Procedures will continue to

    transition to the OP Setting

    Note: Analysis excludes 0–17 age group.

    Sources: Impact of Change® v16.0; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP). 2012. Agency for Healthcare Research and Quality,

    Rockville, MD; IMS LifeLink® PharMetrics Health Plan Claims Database, 2011, 2013; The following 2013 CMS Limited Data Sets (LDS): Carrier, Denominator, Home Health

    Agency, Hospice, Outpatient, Skilled Nursing Facility; The Nielsen Company, LLC, 2015; Sg2 Analysis, 2016.

    –1%

    +3%

    Inpatient Hip/Knee Replacement

    US Market, 2016–2026

    Sg2 IP Forecast Population-Based Forecast Sg2 OP Forecast

    Discharges

    Millions 5-Year 10-Year

    Hip

    Knee

    Outpatient Hip/Knee Replacement

    US Market, 2016–2026

    Volumes

    Thousands 10-Year5-Year

    0

    100

    200

    300

    2016 2021 2026

    +2%

    0

    500

    1,000

    2016 2021 2026

    +12%

    +187%

    +6%

    +457%

    +224%

    +633%

    +4%

  • 8Confidential and Proprietary © 2016 Sg2

    Sg2 ANALYTICS

    Big changes are coming!

    By 2026, more than half of all total joint replacements will

    occur in the outpatient setting.

    0

    500,000

    1,000,000

    1,500,000

    2,000,000

    2,500,000

    2016 2018 2020 2022 2024 2026

    Inpatient Outpatient

    85%

    15%

    75%

    25%

    68%

    32%

    63%

    37%

    57%

    43%

    49%

    51%

    Note: Analysis excludes 0–17 age group.

    Sources: Impact of Change® v16.0; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP). 2012. Agency for Healthcare Research and Quality,

    Rockville, MD; IMS LifeLink® PharMetrics Health Plan Claims Database, 2011, 2013; The following 2013 CMS Limited Data Sets (LDS): Carrier, Denominator, Home Health

    Agency, Hospice, Outpatient, Skilled Nursing Facility; The Nielsen Company, LLC, 2015; Sg2 Analysis, 2016.

  • 9Confidential and Proprietary © 2016 Sg2

    Adoption of Outpatient Joint Replacement Varies

    Substantially by Region…And Market

    Colorado 40% OP

    Massachusetts 1% OP

    Virginia 6% OP

    Sources: Sg2 Ambulatory Market Strategist; Health Intelligence Company, LLC; Sg2 Analysis, 2016.

    El Paso 3-year change = -8%

    San Antonio 3-year change = 64%

    Houston 3-year change = 20%

  • 10Confidential and Proprietary © 2016 Sg2

    Which Risk Factors Will Accelerate the Shift?

    My TJR surgeons

    are independent and/or

    own an ASC. Local payers have set a

    precedent in the market.

    A significant %

    of my IP TJR volume has

    an LOS ≤ 2 days.

    Direct-to-employer

    ortho bundled payments

    exist in my market.

    State law allows

    overnight stays.

  • 11Confidential and Proprietary © 2016 Sg2

    54%

    35%

    43%

    47%

    38%

    8%

    36%

    Patient

    education

    Prehab Pain

    protocols

    Physical

    therapy Anesthesia

    technique

    Virtual

    health

    software

    Navigators

    Process Needs to Be Seamlessly Executed

    Changes in Pathways and Protocols Indicates presence at XYZ Hospital

    Source: Sg2 Survey of Members 2016; Sg2 Interviews and Analysis 2016

  • 12Confidential and Proprietary © 2016 Sg2

    Additional Analysis That May Benefit Future TJR

    Opportunity Assessments

    Key Questions to Inform Your TJR Strategy Supporting Analysis

    Who are the patients in my market today and

    how will their needs change over time?

    • Patient acuity/comorbidity analysis

    • Consumer segmentation

    • Demographic and LOS analysis

    What are the current strengths and gaps in my

    System of CARE that would help or hinder the

    development of a bundled payment program?

    • Organizational or market System

    of CARE gap analysis

    • In-migration/out-migration analysis

    How can I strengthen alignment with physicians

    and other partners to prevent leakage and

    mitigate risk?

    • Physician referral patterns (eg,

    Patient Flow mapping)

    • Sg2 cost analysis

    • Physician supply/demand

    CARE = clinical alignment and resource effectiveness; TJR = total joint replacement.

  • Confidential and Proprietary © 2016 Sg2 13

    How can we

    optimize our

    growth in Spine?

    What will the role

    of OP Rehab

    evolve in a

    value-based

    environment?

    Sg2 Forecast Overview

    Total Joint Replacement

    Spine Care

    • Maximizing your local System of CARE

    • Preparing for Value-based Reimbursement

    • Changing role of PM&R

    • The essential nature of OP Rehab

  • 14Confidential and Proprietary © 2016 Sg2

    Sg2 ANALYTICS

    400

    480

    560

    2016 2021 2026 0.6

    0.7

    0.8

    0.9

    2016 2021 2026

    Utilization Shifts Redefine Growth Opportunities

    Note: Analysis excludes 0–17 age group. Sources: Impact of Change® v16.0; HCUP National Inpatient Sample (NIS). Healthcare Cost and Utilization Project (HCUP).

    2013. Agency for Healthcare Research and Quality, Rockville, MD; OptumInsight, 2014; The following 2014 CMS Limited Data Sets (LDS): Carrier, Denominator, Home

    Health Agency, Hospice, Outpatient, Skilled Nursing Facility; The Nielsen Company, LLC, 2016; Sg2 Analysis, 2016.

    IP Spine Forecast

    US Market, 2016–2026

    OP Spine

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