Startup aims to save orthopedic surgeons and patients money

The number of orthopedic surgeons practicing in America is growing. According to the American College of Surgeons Health Policy Research Institute, in 2009, there were 20,345 active orthopedic surgeons. In 2012, an American Association of Orthopedic Surgeons census found that the number had increased to 27,773. The majority of these surgeons – 44 percent – are part of a private practice identified as an orthopedic group. The costs to perform or receive surgery can be high for surgeons and patients. One Portland-based startup is looking to lower those fees.

Impact Medical recently started 3-millimeter headless compression screws, normally used in hip or knee surgery for the past 30 years, at 76 percent cheaper than the leading manufacturer, according to Upstart Business Journal, an online news site affiliated with the Portland Business Journal. The same screw that costs $382 is being sold for $90.

EJ Duffy, the founder and chief executive officer at Impact Medical, told Upstart Business Journal that the orthopedic implants are made from the exact same stainless steel as the screws from Synthes, Impact's competitor and the leading manufacturer in orthopedic surgery equipment. This industry has annual sales exceeded $1.7 billion, and Duffy wants to join that market.

Upstart Business Journal reported that the U.S. Food and Drug Administration cleared the company to sell a variety of products, including 11 types of screws, two different plates for bone fixation, K-wires and drill bits. The FDA backing means that Impact Medical's products are either identical or better than other products being sold to orthopedic surgeons and practices.

"We were able to reverse engineer a lot of products," Duffy told Upstart Business Journal. "We get our competitors' products, give them to our engineer and we find a manufacturer to build it to our specs. The point is, you can't tell the difference between them."

The need for cutting costs
This solution comes at a time when the orthopedic industry is looking to help patients and providers save money. A recent study published in Health Affairs and conducted by the RAND Corporation found that a cost-effective payment model for orthopedic procedures was unsuccessful. It reported that a bundled plan for payer and providers resulted in administrative burdens, state regulatory uncertainty and disagreements among the orthopedic surgeons and practices involved in the study.

The new generic orthopedic surgery parts might be the answer for cost-efficiency. Duffy stated that Impact Medical's goal is to bring value to doctors, patients and the health care system in general. The other parts are not manufactured by the company itself, but the savings on different products generally range between 40 and 60 percent, according to Upstart Business Journal.

"In today's world, with bundled reimbursement and Obamacare, where cost is an issue, the market is due for a correction, and we [are] excited about where we [are] at," Duffy told Upstart Business Journal.

Impact Medical sells to orthopedic practices in Oregon, Washington, Idaho, Montana, Utah, California and New Jersey. It also contacted customers in nine countries.