Good news! The daVinci helps drive costs down for prostatectomies. Photo: Intuitive Surgical.
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While shareholders of robotic surgery companyIntuitive Surgical are happy with their stock right now -- up almost 76% since May 2014 and currently flirting with all-time highs -- the story wasn't always so rosy.
Back in 2013, key opinion leaders in gynecology began to raise serious questions about the efficacy and cost-effectiveness of using the da Vinci robot for benign hysterectomy operations. At the time, hysterectomy procedures performed in the U.S. accounted for 37% of all da Vinci procedures worldwide. That skepticism, plus the onset of the Affordable Care Act and the tightening of hospital budgets, caused the stock to lose over 35% of its value in just six months' time.
Fast-forward to the present
Today, those benign hysterectomy procedures have stabilized and been replaced with growth elsewhere -- some of that coming from prostatectomies. During 2015, there were 145,000 prostatectomy procedures worldwide performed using daVinci -- 22% of all daVinci procedures for the year. That means that continually proving the cost-effectiveness of the robot in prostatectomies is paramount to the company and its shareholders.
A report released just last week by Dr. Ashutosh Tewari of New York's Mount Sinai Health System should give investors some comfort. Dr. Tewari wanted to investigate the cost-savings associated with using robotic-assisted Laparoscopic Prostatectomies over more the more traditional methods (technically, Retropubic Radical Prostatectomy). Tewari wanted to measure potential cost-savings on three dimensions: for the hospital, for patients or their insurance companies, and for society at large.
What he found was largely encouraging:
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- 99% of the time, the payers themselves saved money, at an average of $1,451 per procedure.
- 83% of the time, society's costs were lower thanks to da Vinci, with an average savings of $1,202 per procedure.
When it came to hospital costs, the results were more mixed. Dr. Tewari reported that between 38% and 79% of the time, hospitals saved money thanks to the da Vinci. When calculated on the basis of overhead costs, inpatient bed, and inpatient days, hospitals saved $1,094 per procedure. However, when calculated on the basis of the annual volume of robotic procedures, hospitals lost roughly $341 more than they would have if they used more traditional techniques.
Commenting on the discrepancy, Dr. Myriam Curet, Intuitive's chief medical officer, said, "This study further demonstrates that hospital administrators need to look beyond visible operating room costs when analyzing the robotic-assisted surgery value proposition. The ability of robotic-assisted surgery to reduce complications and shorten hospital stays undoubtedly leads to greater value for patients and healthcare providers."
There's always a catch
But investors shouldn't get too giddy over the results -- which seem to paint a glowing picture of da Vinci. At the end of the report, it specifies that "Intuitive Surgical provided funding for independent research and editorial support," and that "Dr. Ashutosh Tewari receives financial compensation as a lecturer from Intuitive Surgical."
While I -- as an Intuitive shareholder -- am glad to see such positive results, I'm not going to read too much into them. The most damning -- and supportive -- findings usually come from third parties that have no financial interests in the players involved.
The article Intuitive Surgical, Inc. Investors Can Breathe a *Qualified* Sigh of Relief originally appeared on Fool.com.
Brian Stoffel owns shares of Intuitive Surgical. The Motley Fool owns shares of and recommends Intuitive Surgical. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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