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Thread: Dr. Lloyd Hey leading cost-cutting measures - saved $10 million over 5 years

  1. #1
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    Dr. Lloyd Hey leading cost-cutting measures - saved $10 million over 5 years

    He found out the cost of the implants, investigated the cost to machine them, and found out the titantium screws were being marked up from $30 to $1,000. He set his own price and these companies still supplied Duke because they were still making a good profit. He also leverages his engineering training to research how much less instrumentation can be safely used.

    http://drlloydhey.blogspot.com/2013/...f-surgeon.html

    This guy is AMAZING. A high performance individual to be sure.
    Sharon, mother of identical twin girls with scoliosis

    No island of sanity.

    Question: What do you call alternative medicine that works?
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    "We are all African."

  2. #2
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    So it costs $30 to machine a titanium screw and they were being sold for $1,000. Dr. Hey negotiated $325 or less.

    I would think these medical implant manufacturers would be good stock investments at that mark up if they are publicly held.
    Last edited by Pooka1; 12-26-2013 at 12:32 PM.
    Sharon, mother of identical twin girls with scoliosis

    No island of sanity.

    Question: What do you call alternative medicine that works?
    Answer: Medicine


    "We are all African."

  3. #3
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    I don't know how common this is, but I know that those surgeons and hospitals that really care have all negotiated prices that are nothing close to list price. I hear all the time about how UCSF pays just a fraction of what other hospitals pay for implants. I guess, just like everything, that it's all about volume. I'm guessing that surgeons in private practice are the ones who have to pay the big bucks. The real beauty of this article is that he's going public with something that is probably going to piss the manufacturers off. Good for him!
    Never argue with an idiot. They always drag you down to their level, and then they beat you with experience. --Dilbert
    I'm sarcastic... what's your super power? --Unknown
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  4. #4
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    Dr Hey makes a point....and a lot of people need these surgeries and associated hardware. I was one of them.

    Where to start? Man-o-man! Some thoughts....

    Pricing is generally dictated by supply and demand.....another way to lower implant costs would be for surgeons to lead as a group, start their own manufacturing, and take it from there. As a former manufacturing plant owner, I will say that its not easy, inflation is out of check all across the board. It would take millions in seed money, and years of hard work but it can be done.....Once you figure the gross financials, the balance gets chopped quickly unless the organization is tight. Tight like a Swiss watch.

    I disagree on $30 pedicle screws. Funny how some will quote real cheap to get their foot in the door.... I don’t think $1000 screws is completely out of the question when you consider all the R&D, engineering, tooling and investment costs through the years. Those numbers can run quite high. A $350 screw in a production setting is fair considering the investment, knowhow, and expertise in making a titanium pedicle screw. The geometries are not easy shapes and the material will work harden, and wear will blow tooling quite easily. I will defend manufacturing in the United States since we have been through a bloodbath since NAFTA and 911. I lost 85% of my product to the Orient, and had to re-think once again. All of this so I could buy the best medical insurance! I had to make some pretty bold moves to make it all work. My scoliosis created 50 jobs for 17 years through the Global equalization process.

    Now the PEEK cage in the photo at $3200 is priced way too high....That’s pushing it over the cliff. The implant sales guys normally get around 12% off gross, they might be in for a surprise soon. The days of making 5K-10K on a combined sales call with dinner, while we have to go through brutal surgeries is something that bothers me. Sorry guys, I offer no sympathy.

    Income statements are online for public implant companies. Medtronic (MDT) nets 20% Check out the Selling, General, and Administrative costs. 5.7 billion off 16 billion. That’s 1/3 off gross sales. Wow! $333 off a $1000 screw. The invoice is worth $50, and the sales guy gets the rest.
    http://investing.money.msn.com/inves...nt/?symbol=MDT

    Remember, this is 44,000 employees, globally. This is a large company. Many people depend on this company.....

    Genco shipping (GNK) around 5 years ago netted a smoking 120% profit, just for dry bulk shipping.....(BDI)shipping rates have plunged because they built “too many ships”
    http://www.investmenttools.com/futur..._index.htm#bdi

    More ships and more screws means lower prices.

    Ed
    49 yr old male, now 58, the new 53...
    Pre surgery curves C12,T70,L70
    ALIF/PLIF T2-Pelvis 01/29/08, 01/31/08 7" pelvic anchors BMP
    Dr Brett Menmuir St Marys Hospital Reno,Nevada

    Bending and twisting pics after full fusion
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    http://www.scoliosis.org/forum/attac...3&d=1228779258

  5. #5
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    Good info Ed.

    A "little" defense for the sales guys. They have to be available 24/7 to bring trays into surgery, and have absolutely zero control over when something is done. They all seem to work ridiculously long hours. Most of these guys/gals don't have much of a life. I'm fairly certain there are many levels of sales management, with whom they most certainly share their commissions.
    Never argue with an idiot. They always drag you down to their level, and then they beat you with experience. --Dilbert
    I'm sarcastic... what's your super power? --Unknown
    ---------------------------------------------------------------------------------------------------------------------------------------------------
    Surgery 2/10/93 A/P fusion T4-L3
    Surgery 1/20/11 A/P fusion L2-sacrum w/pelvic fixation
    ---------------------------------------------------------------------------------------------------------------------------------------------------
    If you've signed up and are having trouble posting, please check your spam folder. An email was sent to the email address which you subscribed. You have to follow the instructions in that email. Done that and still having trouble posting? Contact Joe O'Brien at jpobrien@scoliosis.org.

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