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Why healthcare needs to prioritize remanufactured robotic instruments

October 06, 2023
Business Affairs
Kevin Liszewski
By Kevin Liszewski

Last year, 19 hospitals filed for bankruptcy, closed or announced plans to close. And circumstances haven’t improved much in 2023. In the second quarter of this year, for-profit community health systems reported a net loss of $38 million.

At the same time, this summer, Intuitive Surgical, the leading manufacturer of surgical robotic instruments also reported its second quarter financial results. Revenues were up 15 percent year-over-year to $1.76 billion dollars, and the company expects its gross margin for 2023 to be as high as 69 percent.

There are winners and losers in all markets and industries. But when device manufacturers win big and hospitals lose big, the people who truly suffer are the patients. This is why it is critical to help our hospitals reduce costs on things like robotic procedures.

The rise of robotic procedures
In July 2000, the FDA approved the da Vinci Surgical System, the first surgical robot for general minimally invasive surgery. Since then, the number of robotic procedures has grown dramatically, and Intuitive Surgical’s da Vinci is the un-disputed market leader.

In robotic surgery, surgeons use computer-controlled machinery to perform surgical procedures. The aim of this technology is to enable less-invasive complex surgeries with greater visibility, precision, and flexibility than is possible with conventional techniques. In robotic procedures, the robot is not really doing the work. They are surgical procedures in which doctors use robots to guide their actions. One or more robotic arms may be used in robotic surgical systems, which doctors can operate remotely and accurately from a console nearby.

As an industry, we must prioritize the remanufacturing of robotic instruments as a key cost-savings measure for hospitals. Here’s why:

U.S. hospitals spend almost $14 billion on surgical robots every year, and this is growing rapidly. A surgical robot costs, on average, more than $1.5 million. However, the hospital spends almost twice as much on instruments and accessories, and services associated with the robot are about 50 percent of the acquisition price.

Why does the hospital spend so much on robotic instruments after acquiring the robot? Robotic instruments—or “arms”—often cost more than $2,000 when purchased new, and the manufacturer limits the amount of uses. After the manufacturer-imposed use-limit is reached, the hospital must buy a new instrument. With several robots and several arms on each robot, this represents a very large amount of money.

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