Other Articles

AAOS Political Action Committee
Active players in the orthopedic field know the importance of the AAOS Political Action Committee (PAC). On the cusp of hot topics affecting physicians and patients, the AAOS PAC works diligently to provide data to members of Congress and improve the present and future of orthopedics.

Who ARE These Guys?
Every 60 seconds or so a surgeon tears the cover off an Integra LifeSciences package. Quietly, this company has become the seventh largest medical implant manufacturer serving orthopedic surgeons in the world. Where to now? Would you believe $1 billion in two years? How about $2 billion by 2015?

Redemption in a Mechanism of Failure: The TOPS™ Story
Impliant’s TOPS™ System had a “squeaker” in its clinical study. After a voluntary suspension of the study by the company and finding the mechanism of failure, the FDA has approved a resumption of the study. What insider lessons were learned? Class starts here.

Who is Numero Uno in the PearlDiver Database!! Are You Surprised?
The answer may surprise you. Is it sore backs, aching hips, sore knees, fingers? PearlDiver details 3.8 million spine related complaints—complete with demographic information and charging information. But that’s not #1. PearlDiver also lists 3.5 million large joint complaints. Sorry, still not #1. What could the most common orthopedic complaint possibly be? To get the surprising answer…read on.

What the Knees Need: Baby Boomers and Their Options
Knee patients often show up at the doctor’s office with recurrent mechanical symptoms. It is up to the orthopedist, says Dr. Giles R. Scuderi, Director and orthopedic surgeon with the Insall, Scott & Kelly Institute in Manhattan, to thoroughly assess the patient and then determine if nonoperative treatment will do, or if the person needs a unicompartmental or total knee procedure.

Physician: Report Thyself
The government says its healthcare anti-fraud efforts are working and it wants to encourage physicians to self-report possible fraud. How well did the government do in 2007 and what about those deferred-prosecution deals with undisclosed evidence? Read about it here.

Revising the Statistics
The word that orthopedic patients least want to hear is “revision.” Who, in the universe of large joint patients, do we expect to see on the receiving end of this news? If you guessed “the elderly” you would have been wrong. The reality of who is hearing “revision” may come as a surprise. Read what we found when probing PearlDiver’s database.

Where Is Ben Now? Trends in Venture Capital
What is being funded by VCs and why? First of all, spine is having to share the spotlight, says Gary Stevenson, Managing Partner at MB Venture Partners, LLC. Here Stevenson outlines what constitutes an attractive investment…he also highlights issues that are affecting the distribution of VC funding.

The Hounds of Wall Street
Conventional wisdom on Wall Street is that ArthroCare is in a bare-knuckle fight to the finish with short sellers. Which leaves us with the dominating question: If ArthroCare is essentially a “lame duck” growth stock, then why are sales, earnings, and the stock price contradicting the short seller’s dire predictions and even outperforming consensus analyst forecasts? We have the answer.

The Era of “Tell Me Right Now” Dawns at FDA
The FDA wants the next phase of post-market oversight to change from self reporting to proactive surveillance. How? Through the Sentinel Initiative. Read what it means to device manufacturers here.

The Day After Tomorrow: Complication Rates and Instrumentation Trends in Posterior Lumbar Fusion
Could PearlDiver be the Nostradamus of spinal instrumentation? This most commonly performed surgery on the lumbar region of the spine increases fusion rates and improves spinal stability—but what about complications? Using PearlDiver’s database we find the answers. Are you ready for some quatrains about what happens next?

You Try It. No You Try It First: New Technology Adoption
What are the forces working for and against new technology adoption? Youth versus age, risk taking versus conservatism, and the economic realities of the day, says Dr. Rick Guyer, President of the Texas Back Institute.

Cheaper, Thinner, Faster, Stronger
In this, the second of our series of three articles on innovation, we tackle the question: How do you measure medical technology innovation? While difficult, measuring innovation is NOT impossible. Why? Well to start, and in the immortal words of Supreme Court Justice Potter Stewart, “We know it when we see it.”

SAS Crosses the Rubicon in Miami Beach
The SAS 8th Annual Global Symposium in Miami Beach may have crossed the Rubicon. How? Read about the Society’s opportunities for growth and collaboration as its new President lays out a vision for the future.

Arthroscopic Treatment for Tennis Elbow: Coming on Strong
“Tennis elbow” or lateral epicondylitis is, according to our PearlDiver database, one of the most reported diagnosis for problems with the elbow. Lately clinical evidence has shown that arthroscopic treatment for tennis elbow can provide long-term stability and, in most cases, return of the elbow to its optimal function. Check out the data from PearlDiver.

Do Republicans Make Better Orthopedic Surgeons?
A recent Nature Neuroscience journal study of the decision making differences between liberals and conservatives appears to argue in favor of Republican surgeons! Which, frankly, explains a lot—to BOTH sides and, to stretch an analogy almost to its breaking point, it may also explain why McCain’s health care plan is different from Obama’s. Read OUR take here.

"Sound of Music" Turns to Greek Tragedy for Smith & Nephew
Smith & Nephew’s Swiss (mis)adventure with Plus Orthopaedics is turning into a Greek Tragedy. The company’s whole acquisition strategy is being called into question. Read how CEO Illingworth explained it to the brutal British press.

“Dear John Letter” for Hip Resurfacing?
“Dear John H. Resurfacing: I hope this little note finds you well. We certainly have had some great times and, gosh, I’ll never forget those wonderful moments when the FDA approved your PMA. We’ve just celebrated our second anniversary together and, well, I’m just not feeling the magic anymore….” Two years after FDA approval, how happy are orthopedists with hip resurfacing? Read our analysis here.

In the Beginning, There Was the End: Manuscripts 101
Dr. Paul Manske, Professor of Orthopaedic Surgery at Washington University School of Medicine in St. Louis and Editor-in-Chief of The Journal of Hand Surgery, shares his thoughts and experience on the details of shepherding a manuscript through publication.

Did ConMed Get Re-Wired?
Ever hear about the neurosurgeon who used an $80 Bosch power drill to do brain surgery? It really happened. Surgeons like their power tools. Increasingly they also like a particular line of sterilizeable power tools from ConMed’s Linvatec unit. Did ConMed get re-wired? We have the details here.

Last month the eminent British neurosurgeon, Henry Marsh, decided to use an off-the-shelf, 9.6 volt Bosch cordless drill (available in Home Depot or Sears for around $80) for his surgeries. And what surgeries does Dr. Marsh perform? Complex brain operations, of course.

When Dr. Henry Marsh, who works as a Senior Consultant at St George’s Hospital in Tooting, South London, is back at his home hospital, he uses a £30,000 compressed-air medical drill. But when he’s a guest surgeon in the Ukraine, he prefers the Bosch 9.6V cordless drill. “There’s not a huge difference,” Dr. Marsh was quoted as saying in the London Times (March 16, 2008).

Except for, well, sterilization, battery life, power, and the range of bits, burrs and other components. You know―the important stuff.

How could any self-respecting orthopedic surgeon give up a compressed-air drill for an underpowered 9.6V off-the-shelf power drill? Power tools warm the heart of every orthopedic surgeon. The spirit of Tim Taylor (aka: Tim Allen), host of “Tool Time” on the television show “Home Improvement,” courses through the veins of most orthopedic surgeons.

Need more power? Maybe it’s time to…re-wire and put POWER into that drill. How about an 800-amp power booster attached to a 230-horsepower air compressor? (Cue Tim Allen’s “Argh, argh”!)

Bosch or Black & Decker in surgery? You bet. 3M, too. Not, it should be noted, Sears Craftsman or PORTER-CABLE. Both Black & Decker and 3M spent years selling power tools to orthopedic surgeons only to, ultimately, exit the business in the late 1990s.

A quick search of the patent filings uprooted 10―yes 10―patents assigned to Black & Decker for POWER tools in orthopedic surgery. We’re talking cordless drive assemblies for various orthopedic surgical instruments including drills, saws, everything. The good stuff. The stuff on the peg board in the basement. Power tools. Tool belts. Black & Decker!

Argh! Argh!

Today five companies pretty much dominate orthopedic surgical power tools—ConMed’s Linvatec, Stryker Instruments, Medtronic’s Midas Rex® and Xomed units, the Ansbach Effort, and MicroAire Surgical.

For years Zimmer was the leader in power tools for surgeons with the Linvatec/Hall line until Zimmer’s then-parent Bristol-Myers sold the division to ConMed (in 1998 for $370 million). It wasn’t until 2006, when he was well clear of Bristol-Myers, that then-Zimmer CEO Ray Elliott returned to the power tool market with an agreement to distribute the Brasseler line of power tools.

Of the major orthopedic companies, only Stryker has successfully built and maintained a leadership position with power tools.

ConMed’s strategic decision to acquire Linvatec (and later 3M’s power tool business for $39 million in 1999) was a bit of a shocker when it occurred. Most analysts were impressed that ConMed was able to snare this prize away from Bristol-Myer’s Zimmer division.

With the purchase, ConMed added the following products to its family of surgical tools and instruments for orthopedic surgeons:

• The Hall® Surgical brand of power tools for large and small bone orthopedic, arthroscopic, oral/maxillofacial, podiatric, plastic, ENT, neurological, spinal, and cardiothoracic surgeries.
  
  
• The PowerPro® brand battery system. PowerPro is a full-function power system specifically designed for orthopedics. The PowerPro has a SureCharge™ option that allows users to sterilize the battery before charging—a significant advantage that competing systems do not have. Simply put, PowerPro won’t lose a battery charge during sterilization.

Linvatec’s line of large bone, neurosurgical, spinal and cardiothoracic powered instruments are sold hospitals while the small bone line of arthroscopic, otolaryngological, and oral/maxillofacial powered instruments are sold to hospitals, outpatient facilities, and physicians’ offices.

Acquiring Linvatec in the late 1990s wasn’t an unvarnished positive. Initially, revenue growth proved to be, well, underpowered.

As the following chart illustrates, ConMed’s power tool sales growth rate was up and down between 2001 and 2007.

Chart 1: ConMed Surgical Power Tool Sales and Growth Rate 2001-2007 ($ in Millions)



Source: Robin Young Consulting Group

However, as the dotted trend line shows in the chart above, ConMed’s power tool sales growth has been slowly but consistently improving.

At this past AAOS meeting, ConMed’s Linvatec unit introduced a number of new products including:

• PowerPro® PRO7020 Cordless Revision Attachment for Battery Handpiece – This is the only cordless revision attachment on the market today. The attachment interfaces with all of ConMed Linvatec’s burs and is designed to remove cement in revision surgery. The attachment gives spine surgeons the option to use cordless power in surgery.
  
  
• Intrex™ Blade Line – The Intrex Blade System has six blade profiles in seven different thicknesses, for a comprehensive system of large bone saw blades. Each blade is manufactured from high-quality enhanced chromium steel and has a ground tooth form for superior sharpness and maximum cutting efficiency.
  
  
• Sentinel™ Drill Bits – With diameters ranging from 5.5mm – 13mm, in half-size increments, ConMed’s new Sentinel Drill Bits give surgeons a safe and accurate way to drill the highly precise femoral tunnels that are required not only in standard ACL procedures but also for the increasingly popular double-bundle ACL technique. They facilitate an anterior medial approach by safely passing the condyles without scuffing the cartilage.

ConMed’s first quarter report last week confirmed that power tools are continuing to perform above historic levels. Sales in the March quarter reached $40 million, up 6.9% from last year—right on the power curve! (See chart above.)

Then CEO Joe Corasanti raised sales guidance for all of ConMed’s products in 2008, saying, “For the second quarter of 2008, we anticipate revenues in the range of $180 million – $185 million. For the full year of 2008, based on the strong first quarter results, we are increasing our sales guidance to $740 million – $750 million and the non-GAAP diluted earnings per share guidance to $1.50 – $1.58.”

In case anyone isn’t noticing, ConMed is a cash machine. Check out these numbers:

Source: Robin Young Consulting Group

Adding it up, ConMed generated a total of $427.8 million in operating cash flow these past seven years versus only $185.2 million in reported net income.

Apparently, however, no one is noticing. Although ConMed’s stock is up about 10% since the first of the year, the company’s market value of $724 million is roughly 1x its expected sales for this year of $749 million. Only ONE Wall Street analyst covers ConMed.

Here’s what we think. ConMed is, like its orthopedic surgeon customers, starting to channel “Tool Time” and re-wire its power tool business like a wimpy Bosch 9.6 volt drill plugged into a sterilizeable, 10,000 amp power booster. Argh! Argh!

It’s time to pay attention to ConMed.