In the previous section of this guide, we went in-depth about the financial issues surrounding 3D printing in hospitals, which includes discussions on reimbursement, revenue strategies, and cost analysis for 3D printing in hospitals. In this final section of this guide, we created a sample financial analysis spreadsheet, which you can use as a basic framework to construct a financial plan for setting up a 3D printing service. (29,30) The following is a discussion of two hypothetical scenarios to demonstrate how this spreadsheet works. Please be aware that the values used could vary widely and should not be used as reference numbers. For example, the construction of a dedicated area for a 3D printer is highly variable depending on the hospital, geography, type of machine, regulatory requirements, etc. Also, the pricing of machines, tools, and materials has also changed significantly as 3D printing is an ever-changing landscape that experienced exponential growth since the publication of the original book. While we update these guides regularly to reflect such changes, the numbers should be used as hypothetical, and not literal, values.

1. Introduction:  What is operational management?
2. Technical Background
3. Strategic Issues
4. Tactical Issues
5. Financial Issues 
6. Financial Worksheet
7. Acknowledgments/References

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In Hospital 3D Printing Service Financial Plan:

Downloadable version (Paid Members Only)

The Worksheet:

Revenue:

A community-based subspecialty hospital wants to justify setting up a 3D printing center for cardiothoracic surgeries. They want to expand this service to other specialties but want to start with the cardiothoracic department, using 3D printed models as part of patient education and pre-surgical planning.  For this service, they plan to charge $5000 per printing service. After accounting for all Medicare/Medicaid discounts, or insurance reimbursement, they are receiving $4000 per print in net revenue.  The hospital has determined that 30 patients out of 300 patients per year would benefit from the model and that the new service will attract two new patients as a result.  Thus, the hospital will start their planning calculations for the first year at 32 prints at $4000/print leading to $128,000 in revenue. The two new patients per year each increased an additional $40000 surgical revenue to the hospital.  The total net revenue is $168,000 for the first year.  

Capital Expense:

Next, they determine what equipment is to be purchased based on their application and needs.   Since this is used in pre-surgical planning, precision/accuracy, good resolution, and sterilizable material are all important. In cardiac cases, time is often of the essence where turnaround time needs to be in 1 or 2 days.  Thus, a high-speed printer is required. Multicolor is useful in showing complex anatomies including the vascular structures.  Options for a flexible material to create models with tactile features are also gaining popularity for pre-surgical practice in high stake cases. A typical machine that meets these requirements would be Stratasys Objet500 Connex 3, which costs roughly $300,000 including a maintenance contract.  

The hospital has a well-developed radiology team that is versed in 3D imaging.  To make the 3D print, a radiologist will spend on average 4 hours more than their usual time, at $200/hr to perform the detailed segmentation.  Approximately $26,000 will therefore be spent on radiologists’ time per year for 32 cases. 

The technologist requirement is estimated to start and remain at a one-half person for 10 years.  Their salary is estimated at $60,000 per year so the technologist’s cost is $30,000 per year. 

The installation fee (including transportation) is $1000.  Remodeling costs are estimated at $400 per square foot in a 150 square foot room, for a total of $60,000.  The cost of training is estimated at $5000.  It is assumed that any insurance needs are already covered by the hospital, thus no additional insurance is required. Again, these numbers are highly hypothetical and will vary significantly, depending on existing infrastructures.

Results:

The “results” spreadsheet looks at the cash flow over 10 years. First, the gross revenue is calculated by multiplying the number of procedures by the amount charged per procedure.   The revenue is then adjusted to take into account the mix of discounts and patients with Medicare, Medicaid, etc.   Added to this is an additional revenue generated, such as from new patients, over and above that from the new procedure.    This sum is the net revenue – the additional cash taken in due to the 3D printing.  In our example in the out-source model in Year 1, we have 32 procedures at $5000 per procedure for gross revenue of $160,000.  After discounts, our revenue drops to $128,000. However, we attract new patients who have additional procedures. That additional revenue of $40,000 brings our net revenue to $168,000.

Next, the costs are accounted for. As described earlier, there are fixed and variable costs, which are seen in the in-house model.  For the in-hospital model, there is a significant cost of acquisition, which amounts to $367,600. 

 The annual fixed cost is estimated to be 32,000, assuming an additional half-time technologist is needed. The variable cost is about 800 per print, assuming a total of four hours of post-processing time is needed from the radiologists. The total annual fixed cost is, therefore, again, 25,600.

The sum of the costs is the net expenses. In our Year 1 case, the costs are what we are paying to set up the 3D printing center and to hire a new technologist.  In addition, we have the additional cost of a radiologist’s time at $200 per print, assuming approximately 4-hour post-processing time from the radiologist.  The total of these costs is $425,200 of expenses.  

The net income is the difference between the net revenue and the net expenses. If the number is positive, you have a profit. If it is negative, there is a loss. Our example shows a loss of $257,200 for the first year.

The breakeven volume is the number of procedures needed to have no profit – where the revenues and the expenses match.  In this spreadsheet, the additional revenue comes from new procedures attracted due to the employment of the new technology. We assume two new patients will be attracted for year 1. We also assume a subsequent 10% increase in new patients in subsequent years. Obviously, patients come in integer, and 10% is more of an average annual percentage growth spread over a 10-year period.  The Year 1 breakeven is 125 prints. Since we only did 32 prints, we end up with a loss, even accounting for additional procedural revenue.

The net present value (NPV) is the value of the 10 years’ worth of net income in today’s dollars.  Due to inflation, $10 today is worth more than $10 a year from now. To determine the total worth of the project for 10 years in today’s dollars, the values for Years 2 – 10 need to be discounted.  The rate at which they are discounted is decided by the analyst. That rate is filled in on the Worksheet tab and is used to calculate the results.  Using a 2% discount rate, which is set on B57 on the “worksheet” section of Table VI, we see an NPV of approximately $ $1,359,600 over 10 years.

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Outsource 3D Printing Service Financial Plan:

Downloadable version (Paid Members Only)

A community-based subspecialty hospital wants to justify setting up a 3D printing center for cardiothoracic surgeries. They want to expand this service to other specialties but want to start with the cardiothoracic department, using 3D printed models as part of patient education and pre-surgical planning.  

Similarly, for this service, they plan to charge such that after all Medicare and various discounts, they are receiving $4000 per print in net revenue.  However, hesitant to invest significant capital upfront, they decided to use a third-party vendor to both design and manufacture the 3D prints. This vendor has a minimal turnaround time of one week for each procedure, therefore limiting usage to less emergent cases that would require a 1-2 day turnaround time. 

Subsequently, the hospital has determined that 20 patients out of 300 patients per year would benefit from the model and that the new service will attract two new patients as a result.  Thus, the hospital will start their planning calculations for the first year with 22 prints at $4000/print leading to $88,000 in revenue. The two new patients per year each increased additional $40,000 surgical revenue to the hospital, assuming each surgery will generate 20,000 in revenue.  The total net revenue thus is $128,000 for the first year.   

The hospital will pay  $4000 per print with the outside vendor. 

Results:

The “results” spreadsheet looks at the cash flow over 10 years. First, the gross revenue is calculated by multiplying the number of procedures by the amount charged per procedure.   The revenue is then adjusted to take into account the mix of discounts and patients with Medicare, Medicaid, etc.   Added to this is an additional revenue generated, such as from new patients, over and above that from the new procedure.    This sum is the net revenue – the additional cash taken in due to the 3D printing.  In our example in the out-source model in Year 1, we have 22 procedures at $5000 per procedure for gross revenue of $110,000.  After discounts our revenue drops to $88,000 however, we bring in new patients who have additional procedures. That additional revenue of $40,000 brings our net revenue to $128,000.

Next, the costs are accounted for. As described earlier, there are fixed and variable costs, which are seen in the in-house model.  For the outsourcing model, there is no cost of acquisition. The sum of the costs is the net expenses. In our Year 1 case, the costs are what we are paying a vendor for the prints, which totals $4050 per print.  In addition, we have the cost of a radiologist’s time at $200 per print, assuming approximately 1-hour of design time from the radiologist.  The total of these costs is $93,500 in expenses.  

The net income is the difference between the net revenue and the net expenses. If the number is positive, you have a profit. If it is negative, there is a loss. Our example shows a profit of $33,500 for the first year.

 The breakeven volume is the number of procedures needed to have no profit – where the revenues and the expenses match.  In this spreadsheet, the additional revenue comes from new procedures attracted due to the employment of the new technology. We assume two new patients will be attracted for year 1. We also assume a subsequent 10% increase in new patients in subsequent years. Obviously, patients come in integer, and 10% is more of an average annual percentage growth spread over a 10-year period.  The Year 1 breakeven is 23 prints. Since we only did 22 prints, we should have a loss. The additional revenue brought in gives us a positive result.

The net present value (NPV) is the value of the 10 years’ worth of net income in today’s dollars.  Due to inflation, $10 today is worth more than $10 a year from now. To determine the total worth of the project for 10 years in today’s dollars, the values for Years 2 – 10 need to be discounted.  The rate at which they are discounted is decided by the analyst. That rate is filled in on the Worksheet tab and is used to calculate the results.  Using a 2% discount rate, which is set on B57 on the “worksheet” section of Table VII, we see an NPV of approximately $523K.

 With these two hypothetical scenarios, a graph of return on investment over a ten-year period can be generated.

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The post Financial Analysis Worksheets (Downloadable) for 3D Printing in Hospitals – Guide 5/5 appeared first on 3DHeals.

In 2016, when I co-authored the first edition of ” A Roadmap from Idea to Implementation: 3D Printing for Pre-Surgical Application: Operational Management for 3D Printing in Surgery“, focusing on a systematic thinking process to address these questions by evaluating components of operational management with Michelle Gabriel. However, selling a book is not going to accelerate adaption, instead, I decided to publish this book as a regularly updated online version of 3DHEALS Guide in five digestible parts, focusing on and adding new information from field experts from all over the world to provide a foundation to any early adapters.

The first time I learned about 3D printing (a.k.a. additive manufacturing ) for pre-surgical planning was in 2012 during RSNA (Radiological Society of North America) in Chicago. As a small box containing pieces of a 3D-printed heart from a pediatric patient was passed around the conference room, I could tell that the room stopped breathing. For me, it was a sensational moment as a radiologist and as a healthcare provider. Having a patient’s disease in three-dimension in my hands was unimaginable. I immediately wanted to learn more about the technology and how I, as a radiologist, could use it to help my clinical colleagues. However, to me, the road to implementation was not simple and almost obscure.  The barrier to entry for such technology seems to require one to be a combination of a designer, a mechanical engineer, and a software developer, and lastly a healthcare provider. 

Not giving up, I started organizing meetings focusing on learning and discussing healthcare 3D printing solutions in San Francisco called 3DHEALS, hoping to create a community composed of various disciplines to start to have more practical conversations to accelerate the adaptation of the technology.

Michelle and I met at an after-work healthcare technology conference, and we instantly hit it off because of our complementary knowledge and interest in healthcare, operational management, 3D printing, and engineering. We are both fascinated with the complex process of integrating promising technologies into healthcare. On top of that, Michelle’s background in both operations management and material science and engineering, and mine in medicine and education add unique perspectives to this book. 

That said, we both are fully aware of our limitations in various aspects of the subject of 3D printed surgical planning and do not proclaim to be field experts. This post serves as part 7 of this Guide series to thank individuals and companies for their insights and relationship with us and publication reference. Since our Guides are regularly updated and our conversations with our ecosystem never stop, this page will be updated whenever our guides are updated when appropriate.

Now On Demand:

1. Introduction:  What is operational management?
2. Technical Background
3. Strategic Issues
4. Tactical Issues
5. Financial Issues       
6. Financial Worksheet         
7. Acknowledgments/References

Acknowledgements: 

We would like to give special thanks and acknowledgment to the following individuals: 

• Dr. Parit Patel (Assistant professor of plastic and reconstructive surgery at Loyola Medicine)
• Dr. Elliot Brown (Assistant professor of radiology and biomedical imaging at Yale University)
• Dr. Jose Morey (Medical scientist with IBM Watson project, adjunct professor of radiology and biomedical imaging at the University of Virginia)
• Mr. Glen Jett from Sutter Health for providing valuable financial insights.
• Dr. Justin Ryan (Arizona State University Post-Doctoral Researcher, Phoenix Children’s Hospital Research Scientist) for providing valuable feedbacks and research on 3D printing for pediatric congenital heart cases.

• Dr. Justin Ryan
• Mr. Shannon Walter (Stanford School of Medicine, Manager of 3D and Quantitative Imaging Laboratory)
• Mr. Chris Letrong (Stanford School of Medicine, 3D Technologist)
• Dr. Ben Taragin (Children Hospital at Montefiore, Director of Pediatric Radiology)
• Dr. Joaquim M. Farinhas (Neuroradiology, Montefiore Medical Center)
• Materialse Inc. 
• Whitecloud Inc. 
• Stanford School of Medicine

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3DHEALS Guides (Collective) – This is where we dive deep into subjects that you will find helpful for your projects and career.

3DEALS Expert Corner (Collective) – This is where we invite field experts to write their perspectives in a first-person narrative. To write for this column, please email: info@3dheals.com

3DHEALS From Academia (Collective) – This section features recent, relevant, close to commercialization academic publications in the space of healthcare 3D printing, 3D bioprinting, and related emerging technologies.

The post 3D Printing in Hospitals (Guide): Acknowledgement, References appeared first on 3DHeals.

In the previous section of this guide, we went in-depth about the tactical issues surrounding 3D printing in hospitals, which include an array of contributory elements ranging from talent allocation, hardware/software selection, to material management. In this section of the guide, I will focus on the financial issues of 3D printing in hospitals. To review, financial issues answer the question of  “how much”. In the healthcare arena, it includes a discussion of “reimbursements“. Doing business in healthcare is not a straightforward “profit-and-loss” spreadsheet. The reimbursement pathway of emerging technology is tortuous, and the pricing strategy of devices and services is even more opaque to most.

1. Introduction:  What is operational management?
2. Technical Background
3. Strategic Issues
4. Tactical Issues
5. Financial Issues       
6. Financial Worksheet         
7. Acknowledgments/References

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In this portion of the guide focusing on financial issues of 3D printing in hospitals we will break it down into the following components:

A. Reimbursement for 3D Printing in Hospitals

B. Revenue strategies for 3D printing in Hospitals

C. Cost Analysis for in-house 3D printing in Hospitals

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A. Reimbursement for 3D Printing in Hospitals

Healthcare is a highly regulated industry. Understanding the local healthcare market and reimbursement strategy is essential to the survival and growth of any new medical technology. In order to be viable financially, most U.S. 3D printing service providers need to answer two questions: 

1. How is the service paid now? 
2. How will the service be paid for in the future? 

Please keep in mind that these discussions on financials are mainly based on the U.S. system, and it may differ significantly in different parts of the world highly dependent on the existing healthcare payment system.  In our near future update, we will add U.K. and European experience to the discussion.

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How is 3D Printing in Hospitals paid for now? 

Primarily three methods: 

1. Bundled payment.
2. Marketplace.
3. Internal payment

1. Bundled payment

In the past, when 3D printed surgical guides or models are less widespread,  services provided by established 3D printing companies can get paid indirectly through contracts with medical device companies. The device companies (for example, a knee implant company) can charge payers for the cost of the medical device which includes the cost of 3D printing services and products.

For example, craniofacial reconstruction surgeons will use the pre-surgical planning 3D printed models and/or cutting guide made by a 3D printing company that has a contract with Stryker. Stryker bundles 3D printing services under a single medical device fee, and the hospital or surgeons can bill third-party payers for it. (Figure 1) 

Figure 1. An example of an existing 3D printing reimbursement process (arrows represent the direction of payment)

2. Marketplace

As the interest and supporting clinical evidence in 3D printing for medical applications grows, more providers are now willing to pay out-of-pocket directly for out-sourced 3D printing services and products (purple arrow), often bypassing the need for medical devices company (Figure 2).

More and more direct 3D printing service providers are venturing into the healthcare arena, not just anatomical modeling but also implants. Globalization, increasing sophistication and subspecialization are the definite trends in this space. We also actively collect and list such companies in 3DHEALS Company Directory.

Figure 2. An example of a burgeoning 3D printing reimbursement process (arrows represent the direction of payment)

3. Internal payment

Finally, a growing number of larger healthcare organizations and academic hospitals, such as Children Hospital Boston, Mayo Clinic, Stanford Hospitals, and the Cleveland Clinic have dedicated significant internal research and development grants to develop in-house 3D printing centers for decades to meet specific internal needs in their daily clinical practices.

Because there is not yet a well-defined reimbursement pathway, these medical centers are shouldering the cost from providing 3D printing services and products often as part of a larger research and development grant. To these organizations, long-term investments in new technologies can bring potential long-term financial benefits including improved patient outcomes, reduced hospital stay/complication, branding, and other indirect benefits.

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How will the service be paid for in the future?

In the U.S., there are three important concepts: CPT codes, RVU, and DRG.

1. CPT (Current Procedural Terminology) Code: 

As opposed to ordinary consumer products, the path to revenue for medical devices and procedures is more complex, because healthcare is a highly regulated and rationed commodity. 

For either “in house” and “outsourced” 3D printing services to be paid consistently, future work typically need to have current procedural terminology (CPT) codes created and the associated professional and facility pricing assigned.

The reimbursement for the physician and hospital services would then need to be negotiated with payers, insurance groups, and the Centers for Medicare and Medicaid Services (CMS).

To achieve such a “code-able” status by the AMA (American Medical Association), the procedure must be officially recognized as part of patient care, which has demonstrated sufficient clinical evidence that the procedure improves patient outcomes.

What is the CPT code?

CPT (Current Procedural Terminology) codes are a set of codes published and maintained by the American Medical Association. All the codes are also copyrighted by AMA. The CPT codes offer a system to doctors across the U.S. a uniform, accurate, and efficient process to communicating about and reporting on medical services or procedures performed for more than five decades. It is widely accepted by both the public and private sectors. [Ref]

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What are Category I and Category III CPT codes?

Category I codes represent services that are widely performed, have FDA approval or clearance (if needed), and are supported by a sufficient level of evidence published in the peer-reviewed literature. It is a “permanent” code in the CPT codebook published yearly. An example of Category I codes is “cataract surgery. 

On the other hands, Category III codes represent services using new and emerging technologies (such as 3D-printed anatomical models for presurgical planning) and were created to allow for data collection for new procedures or services and to limit the use of established Category I code for new technologies that are now described by existing codes. Category III differs from Category I codes in that they may not be yet widely adopted by healthcare providers and do not require FDA approval, nor need to meet a certain level of supporting evidence. These codes are considered “temporary”, which means if they are not converted into Category I status (by wider adoption and well-documented clinical evidence) in five years, they will be archived.   

Although many recent papers have documented significant improvements associated with multiple outcome metrics including reducing operating time and surgical accuracy, the results are not yet convincing to the payers. Several new entities including RSNA SIG have been an advocacy entity for this purpose in terms of anatomical modeling and surgical guides.

New Era of 3D Printing in Hospitals with Cat III CPT Code

On November 1^st, 2018, it was announced that the American Medical Association (AMA) CPT_® Editorial Panel accepted a Category III CPT code proposal led by the American College of Radiology (ACR) for 3D printed anatomic models and surgical guides.

The new Category III CPT codes will be effective on July 1, 2019.” More specifically, four temporary Category III CPT codes 055T, 0560T, 0561T, 0562T were accepted.  

“Codes 0559T, 0560T represents the production of 3D-printed models of individually prepared and processed components of structures of anatomy. These individual components of structures of anatomy include, but are not limited to, bones, arteries, veins, nerves, ureters, muscles, tendons and ligaments, joints, visceral organs, and the brain.

The 3D-printed anatomical models can be printed in unique colors and/or materials. Codes 0561T, 0562T represents the production of 3D-printed cutting or drilling guides (i.e. surgical guides) using individualized imaging data. 3D printed guides are cutting or drilling tools used during surgery and are 3D printed so that they precisely fit an individual patient’s anatomy to guide the surgery…”  

Getting paid for work that is done that is beneficial to patients, straightforward, right? For many who have worked in the space for many years, many of the amazing 3D anatomical models were underpaid work because of the reimbursement path.

Having a Category III code is a good start, but what does this really mean?

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What is the relationship between CPT codes and reimbursements?

Technically speaking, there is no published statement between CPT codes and reimbursement from payors (Medicare, insurance companies, etc.) Even having a billing code like the CPT Category I code does not guarantee that payers will provide payment for the procedure.

When a new procedure billing code is established, insurers base coverage decisions on a myriad of factors, including independent health technology assessments (which evaluate all available technical and scientific evidence supporting the intervention), peer-reviewed published clinical data, real-world evidence of clinical efficacy (outside a clinical trial environment), and practice guidelines published by relevant professional societies.

Often, Category I CPT code is tied with Medicare reimbursement. Private payers (i.e. insurance companies) reimbursements are variable but typically follow the trend of Medicare. In the past, many payors simply exclude any reimbursement to Category III procedures/services, often limiting the wider adoption of emerging technologies. However, there is a trend from the payor side to cover Category III code even before Category I code, largely depending on the willingness among physicians to embrace the new technology.

Therefore, physicians are critical players in making 3D printed products eventually Category I code status.

Who are the other major drivers in getting 3D Printing in Hospitals reimbursed?

Nonetheless, physicians are not the only important players on this path. The other major players are :

Patients/Consumers:

Patients/Consumers are often important drivers of adopting emerging technologies. Along with patient advocacy groups, they can be powerful forces that influence physicians’ treatment choices, practice guidelines, research funding, and government policies. For example, an organization OpHeart is a nonprofit organization that was founded by the mother of a patient who benefited from using 3D printing to treat her congenital heart disease. It is actively promoting the more widespread use of the procedure and also is at the heart of a large multi-center clinical trial focusing on the efficacy of the procedure.

Healthcare organizations

Healthcare organizations like hospitals and clinics must be willing to try new procedures and devices, despite potential burdens it may thrust upon their clinical and administrative staff. A great example is the 3D printing initiative at the Mayo Clinic. It not only has a large clinical staff supporting this initiative in their daily practices, it also organizes regular CME conferences to promote and educate other physicians and organizations about the technology.

Professional medical societies

Professional medical societies must be open to updating their guidelines to include new and innovative products once sufficient clinical evidence has been provided, as this is a huge driver in securing coverage from payers. Clearly, the American College of Radiology is behind the current Category III CPT code success.  Other subspecialties are already playing a critical role include but not limited to orthopedics, cardiology, neurosurgery.

Payors

Payors (e.g. Medicare, insurance companies) need to work with companies and organizations to provide fair and equitable coverage for innovative products.

Coding agencies

Coding agencies such as CMS and AMA must be willing to work with other stakeholders to create or amend existing codes when necessary to efficiently support the adoption of new, beneficial technologies.

At the end of the day, the complex path for a new procedure like 3D printed anatomical models to be fully and fairly reimbursed is ultimately determined by whether the procedure can be widely adopted by clinicians and if payors are willing to cover. 

In a simpler term, is there a “product-market fit”? Can the current proposed 3D printed solutions in healthcare be scalable and viable business models for hospitals or otherwise?

We have some time to see.

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2. RVU – Relative Value Unit

Even after a CPT code is established, it does not mean the procedure will be reimbursed with an adequate amount of payment. In fact, the pricing of the various 3D printed services and products currently used in the hospital will not only be challenging to determine due to lack of data but also will be critical to the long-term survival of the procedure. For example, an overpriced procedure will prevent more widespread use, which will trickle down to limited market size, impact, commercial value, clinical evidence. An underpriced procedure will also pose the same issue stemmed from a lack of economic incentives. Pricing a medical procedure is an art and a science and should be data-driven. 

3. DRG – Diagnosis Related Groups

A diagnosis-related group (DRG) is a patient classification system that standardizes prospective payment to hospitals and encourages cost containment initiatives. In general, a DRGpayment covers all charges associated with an inpatient stay from the time of admission to discharge.

In general, hospitals get paid based on DRG (diagnosis-related group) codes, meaning that they often receive a flat fee for specific procedures, regardless of the costs incurred. As a result, custom models are often not directly reimbursed and can significantly cut into the profits of these institutions. Demonstrating a clear cost-saving for models ordered for some of these procedures can translate goodwill into concrete financial benefits. (Albert Woo, M.D. Expert Corner)

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B. Revenue Strategies for 3D Printing in Hospitals

Although payers currently do not directly reimburse hospitals for the cost of 3D printed models, the use of 3D printing can reduce costs and increase revenue. Increasing income with 3D printing services is not a simple selling/buying transaction. Rather, revenue could come from many sources such as increased efficiencies, increased number of patients served and increased Medicare reimbursements.  

1. Patient Satisfaction

Improving patient understanding of their disease has direct benefits not only to the patient but also to the hospital’s bottom line margins. Via the Hospital Value-Based Purchasing Program, Medicare will adjust hospitals’ payments based on their performance on 4 domains that reflect hospital quality. The patient experience of care domain is weighted as 25% of the Total Performance Score (TPS). That score encompasses 8 important aspects of hospital quality.

One of these that is directly relevant is Communication with Doctors, shown as the percentage of patients who reported that their doctors “Always” communicated well. This means doctors explained things clearly, listened carefully, and treated the patient with courtesy and respect.

In addition, a second aspect that may be affected by the use of 3D printed models is the Overall Rating of the Hospital.  

The use of 3D representations to significantly increase patients’ understanding of their disease and treatment options can lead to higher patient experience of care ratings, which would lead directly to increased payments to hospitals.

The high scoring and improved reputation of a hospital will also drive more patients to choose it over other competing medical centers.

2. Improved Patient Throughput 

Clinical cases continue to show that training, strategizing, and practicing with 3D printed models increases the speed of operations. This can lead to improved throughput in the operating room, which would lead to additional revenue for the hospital.

There is anecdotal evidence that the improved patient understanding of their disease through the use of the 3D printed models reduces the amount of time the doctor spends answering follow-up questions. This frees up doctor time to see additional patients.

3. Specialty focus

Specialty surgeries targeted towards the rare, complex, and often deadly diseases benefit the most from 3D printing because the technology has provided new insights and opportunities to the surgeons before these high-risk and high-cost surgeries are performed. Some of the examples are well-documented cases in cardiothoracic surgeries. (30,31, 51) However, a simple literature search in Pubmed on 3D printing surgical applications can show the enormous creativeness demonstrated in every surgical sub-specialty from plastic surgery to interventional/vascular radiology. The number of published cases has compounded in the last few years. 

4. Cost Reduction and Avoidance

The case for cost reduction to hospitals is unclear for pre-surgical anatomical models and surgical guides as it is for applications such as prosthetics and surgical implants. The cost of initial setup and maintenance can be highly variable depending on end applications as we discussed in previous sections of this guide. However, there are definitely areas where hospitals can save money.

For example, a reduction in operating time, which can cost up to $180 per minute, can increase unit economics of a surgical procedure. Clinical cases have demonstrated a reduction of operating room time and length of hospital stay, leading to a decrease in risk for hospital-acquired infections which are not only detrimental to the patient but also no longer being reimbursed by Medicare.

On the implant side, less needs for expensive and large inventory with on-demand 3D printing service could improve hospital’s financial statement and increase agility of resource allocation.

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C. Cost Analysis for In-House 3D Printing in Hospitals

Capital costs are one-time, fixed set-up costs incurred on the purchase of equipment or construction after which there will be only recurring operational or running costs. Operational costs include fixed costs, which recur every year, and variable costs, which are volume-dependent.  All of these costs must be examined when reviewing a proposal for creating an in-house 3D printing facility.

Accumulation of high-quality data on costs is challenging since there are multiple reimbursement pathways and no reliable, repeatable process to collect costs.

For example, sometimes, the cost is less transparent. As in Figure 1, the true cost of 3D printing bundled in medical devices can be significantly higher than the true cost.

However, more often, researchers, providers, surgical centers, and some industrial partners have to absorb the costs of creating the 3D print. This again results in a lack of transparency in costs as these data are frequently not shared.

Methods to collect and document costs for every case should be standardized and organized, as each case can be considered a potential data point in a future larger scale (and possibly multicenter) clinical trial.      

1. Capital Costs

The cost of providing 3D printing service can range from a few hundred dollars to millions, depending on the goal of the medical/surgical center in providing such a service. Modest setups for simple models for patient education could have a capital expenditure under $10,000.

On the high end of the spectrum, the authors have seen proposals of more than $1 million for a fully equipped in-house 3D printing service with high-capacity (polymer and metal) printers and software. This kind of high-end facility would be performing in-house implant production.

Although it may be simple for a hobbyist to set up a printing machine at home, in a medical facility there are many factors to consider. The utilization of this technology is relatively new. Thus, there are many potential environmental, regulatory, and legal issues yet to be properly addressed.

For example, certain steps of the 3D printing process may potentially involve or create hazardous materials or work environments. Thus, upgrading facilities to handle power requirements, ventilation, and chemical and material handling for post-processing operations may add a significant amount in capital funds required.

Capital costs include the hardware, software, and built out facilities. For a frame of reference, some sample costs to be included in a proposal for capital funding are provided:

• 3D printer 
• Imaging software   
• Segmentation software 
• CAD/CAM software
• Standard computer for administrative functions 
• High powered computational computers 
• High resolution monitors 
• Fume hood/Ventilation setup

Some academic centers can allocate a portion of existing research grants to create a 3D printing service without expecting any near-term return.

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2. Fixed Costs

Fixed costs remain constant within a range of activities but vary per unit. For example, a technician’s salary is fixed for the year. If there were two technicians, the salary fixed cost would double. However, the salary is not changed if the facility makes 100 or 1000 3D models.

Ongoing fixed costs to maintain a 3D printing facility include personnel salaries, equipment maintenance contracts, facility costs, training costs, cost of material, and the labor involved in creating a final clinical acceptable print. 

The following are sample fixed costs:

• Technician and Engineer salaries
• Equipment maintenance and vendor service agreements
• Training
• High bandwidth network for file transfer

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3. Variable Costs

Variable costs change in direct proportion to volume.  

For 3D printing, the materials are variable costs. The choice of material is huge, and the costs vary widely also.  (Table III) The amount of material used will also vary with each application.  

If specific clinician time is charged to a project, that expense can be considered to be variable. If hourly labor was used to make the print vs. a salaried technician, it would be considered a variable cost.

In the final part of this guide, we will provide you with a few examples and a spreadsheet that you can use for your own internal financial analysis.

About the Author:

Jenny Chen, M.D.

Jenny Chen, MD, is currently the Founder and CEO of 3DHEALS, a company focusing on education and industrial research in the space of bioprinting, regenerative medicine, healthcare applications using 3D printing. With a focus on emerging healthcare technology, Jenny invests in and mentors relevant startups, especially companies pitching through Pitch3D. She believes a more decentralized and personalized healthcare delivery system will better our future.

Related Articles:

3DHEALS Guides (Collective) – This is where we dive deep into subjects that you will find helpful for your projects and career.

3DEALS Expert Corner (Collective) – This is where we invite field experts to write their perspectives in a first-person narrative. To write for this column, please email: info@3dheals.com

3DHEALS From Academia (Collective) – This section features recent, relevant, close to commercialization academic publications in the space of healthcare 3D printing, 3D bioprinting, and related emerging technologies.

The post Financial Issues of 3D Printing in Hospitals – Guide 4/5 appeared first on 3DHeals.

Hui Jenny Chen, MD and Michelle Gabriel, MS, MBA

(This blog is adapted from our A Roadmap from Idea to Implementation: 3D Printing for Pre-Surgical Application: Operational Management for 3D Printing in Surgery)

Printer/material selection:

For comprehensive lists of printing process/printers and materials used for healthcare 3D printing, the readers can refer to our book or return to see an updated list later this month.

1. Printers:

Key performance characteristics in selecting printers include the followings [36]:

– Speed

– Resolution

– Autonomous operations

– Ease of Use

– Reliability

– Repeatability

– Material/Multi-material capability

Of this list, speed is the most important issue for pre-surgical use since the need for the model may be urgent but printing usually takes hours and sometimes days. Improvement methods vary by process and include changing the printer head movement from a Cartesian to a Delta configuration (which allows for shorter paths from one point to another), optimizing the movements of laser, and using higher quality components. The multi-material and multi-head capabilities are also of particular interest. For example, models of the heart with color-coded parts such as veins, arteries, etc. can be made faster if the sections are not made piecemeal. Models for surgical practice often require materials with different haptic properties and would be made much faster if, once again, the complete model could be made at once and not in a piecemeal fashion.

2. Materials:

There are only a handful of 3D printing materials that are biocompatible and can be readily sterilized. [47] A variety of materials with different strength, elasticity, color/transparency will provide additional benefits for pre-surgical 3D prints. In addition to added materials, new sterilization techniques that do not require high temperature or toxic chemicals, and techniques that require less time will all prove useful in the future.

Currently, different 3D printer manufacturers also produce 3D printing materials presumably optimal for their printers. Therefore, the ultimate purchase decision should start with the current and potential future applications for which the printers are intended.

Three questions need to be answered:

1) Primary applications of the 3D printing — the requirements in terms of resolution, color, and texture of a model for conceptual purpose or device prototyping are significantly less than a model intended for hands-on practice before a complicated surgery. If the model were to be extensively used in close proximity to the surgeon intra-operatively, then selecting a system that avails more options in sterilizable material selection would be important.

2) Size of the print — this could be related to the specialty for which the setup is intended. For example, the print size capability of a system dedicated for craniofacial reconstruction will be very different from a system dedicated to Orthopedics. A printing system shared among different specialties will require a large enough platform for everyone, and therefore, it will be more expensive.

3) Other future healthcare-related 3D printing activities — other than pre-surgical applications, there are a variety of existing and future healthcare applications, from medical training, rapid prototyping, research, to patient-specific implantable devices. If one was to invest in a 3D printing system, calculations for potential future revenue stream may be necessary during the selection process. A 5- to 10-year revenue strategy may be necessary. We will elaborate more on this in the financial section.

Software selection:

1. The cost to use — open vs. commercial software.

“Free” may not be “cheap”. The cost of using free open source software includes lack of documentation or instruction, lack of technical support in case of dysfunction, lack of continuous development or updates. Although this is a viable option for users with a small 3D printing budget and technological savvy, be prepared to invest a great deal of time at the beginning to learn to use the software. Lack of time is often prohibitive for busy clinicians to learn the software themselves. Commercial software like Mimic (Materialise, Belgium) has very expensive annual licensing, discouraging many who only want to experiment with 3D printing. Nonetheless, these commercial options have more intuitive designs and great technical support and often offer personalized education/instruction time for users to fully grasp 3D printing within a very short period of time.

2. Future trend — automation and streamlined workflow.

Segmentation is the most time-consuming step of DICOM to STL conversion. Anecdotally, one radiologist can spend up to 13 hours to segment a complex heart model. Others have spent less time but still often in hours of magnitude. Automated segmentation will be a significant future development in the software area and will prove to be extremely valuable for cost-saving improvements. Additionally, more streamlined workflow from imaging acquisition to 3D prints from a software perspective is also what many users are hoping for. According to recent interviews with field experts, many larger PACS vendors are now developing DICOM to STL conversion capability with their newer software versions. Segmentation tools are also included in these newer versions. Many existing 3D printing companies are also actively developing products that are more user-friendly especially to the healthcare industry. Examples of these include Autodesk (CA, USA), and 3D System (NC, USA).

https://3dheals.com/idea-to-implementation-in-house-cost-consideration-for-3d-printing-for-surgical-applications-part-1/

The post Idea to Implementation: Tactical Issues — Printer and Material Selection appeared first on 3DHeals.

Hui Jenny Chen, MD and Michelle Gabriel, MS, MBA

(This blog is adapted from our A Roadmap from Idea to Implementation: 3D Printing for Pre-Surgical Application: Operational Management for 3D Printing in Surgery)

To demonstrate a financial analysis, we have created spreadsheets, which you can use as a basic framework to construct a financial plan for setting up a 3D printing service (Link). [29,30] The following is a discussion of two hypothetical scenarios to demonstrate how this spreadsheet works. Please be aware that the values used could vary widely and should not be used as reference numbers. For example, construction of a dedicated area for a 3D printer is highly variable depending on the hospital, geography, type of machine, regulatory requirements, etc.

In Hospital 3D Printing Service Financial Plan (Link):

Scenario (“Worksheet” part):

A community based subspecialty hospital wants to justify setting up a 3d printing center for cardiothoracic surgeries. They want to expand this service to other specialties but want to start with the cardiothoracic department, using 3D printed models for as part of patient education and pre-surgical planning. For this service, they plan to charge such that after all Medicare and other discounts, they are receiving $4000 per print in net revenue. The hospital has determined that 30 patients out of 300 patients per year would benefit from the model and that the new service will attract two new patients as a result. Thus, the hospital will start their planning calculations for the first year at 32 prints at $4000/print leading to $128,000 in revenue. The two new patients per year each increased additional $40000 surgical revenue to the hospital. Total net revenue is $168,000 for the first year.

Next they determine what equipment is to be purchased based on their application and needs. Since this is used in pre-surgical planning, precision/accuracy, good resolution and sterilizable material are all important. In cardiac cases, time is often of the essence where turnaround time needs to be in 1 or 2 days. Thus, a high speed printer is required. Multicolor is extremely useful in showing complex anatomies including the vascular structures. A typical machine that meets these requirements would be Stratysys Objet500 Connex 3, which costs roughly $300,000 including a maintenance contract.

The hospital has a well-developed radiology team who is versed in 3D imaging. To make the 3D print, a radiologist will spend on average 4 hours more than their usual time, at $200/hr to perform the detailed segmentation. Approximately $26,000 will therefore be spent on radiology time.

The technologist requirement is estimated to start and remain at one half person for 10 years. Their salary is estimated $60,000 per year so the technologist cost is $30,000 per year.

The installation fees (including transportation) is $1000. Remodeling costs are estimated at $400 per square foot in a 150 square foot room, for a total of $60,000. Cost of training is estimated at $5000. It is assumed that any insurance needs are already covered by the hospital, thus no additional insurance is required. Again, these numbers are highly hypothetical and will vary significantly, depending on existing infrastructures.

Results:

The “results” spreadsheet (Table VI) looks at the cash flow over 10 years. First the gross revenue is calculated by multiplying the number of procedures by the amount charged per procedure. The revenue is then adjusted to take into account the mix of discounts and patients with Medicare, Medicaid, etc. Added to this is any additional revenue generated, such as from new patients, over and above that from the new procedure. This sum is the net revenue — the additional cash taken in due to the 3D printing. In our example in the out-source model in Year 1, we have 32 procedures at $5000 per procedure for a gross revenue of $160,000. After discounts ,our revenue drops to $128,000. However, we attract in new patients who have additional procedures. That additional revenue of $40,000 brings our net revenue to $168,000.

Next the costs are accounted for. As described earlier, there are fixed and variable costs, which are seen in the in-house model. For the in-hospital model, there is significant cost of acquisition, which amounts to $367,600.

The annual fixed cost is estimated to be 32,000, assuming an additional half-time technologist is needed. The variable cost is about 800 per print, assuming a total of four hours of post processing time is needed from the radiologists. The total annual fixed cost is therefore, again, 25,600.

The sum of the costs is the net expenses. In our Year 1 case, the costs are what we are paying to set up the 3D printing center and to hire new technologist. In addition, we have additional cost of a radiologist’s time at $200 per print, assuming approximately 4-hour post processing time from the radiologist. The total of these costs are the $425,200 of expenses.

The net income is the difference between the net revenue and the net expenses. If the number is positive, you have a profit. If it is negative, there is a loss. Our example shows a loss of $257,200 for the first year.

The breakeven volume is the number of procedures needed to have no profit — where the revenues and the expenses match. In this spreadsheet, the additional revenue comes from new procedures attracted due to employment of the new technology. We assume two new patients will be attracted for year 1. We also assume a subsequent of 10% increase in new patients in subsequent years. Obviously, patients come in integer, and 10% is more of an average annual percentage growth spread over 10-year period. The Year 1 breakeven is 125 prints. Since we only did 32 prints, we end up with a loss, even accounting for additional procedural revenue.

The net present value (NPV) is the value of the 10 years’ worth of net income in today’s dollars. Due to inflation, $10 today is worth more than $10 a year from now. To determine the total worth of the project for 10 years in today’s dollars, the values for Years 2–10 need to be discounted. The rate at which they are discounted is decided by the analyst. That rate is filled in on the Worksheet tab and is used to calculate the results. Using a 2% discount rate, which is set on B57 on the “worksheet” section of Table VI , we see an NPV of approximately $ $1,359,600 over 10 years.

To be continued…)

Download Financial Spreadsheet for In-House 3D Printing Service here.

The post In House Cost Consideration for 3D Printing for Surgical Applications Part 2 appeared first on 3DHeals.

Hui Jenny Chen, MD and Michelle Gabriel, MS, MBA

(This blog is adapted from our A Roadmap from Idea to Implementation: 3D Printing for Pre-Surgical Application: Operational Management for 3D Printing in Surgery)

Capital costs are one-time, fixed set-up costs incurred on the purchase of equipment or construction after which there will be only recurring operational or running costs. Operational costs include fixed costs, which recur every year, and variable costs, which are volume dependent. All of these costs must be examined when reviewing a proposal for creating an in-house 3D printing facility.

Accumulation of high-quality data on costs is difficult since without a CPT code there are multiple reimbursement pathways and no reliable, repeatable process to collect costs. For example, sometimes, the cost can be bundled in an outsourced pre-surgical process by medical device companies, with a significantly elevated price tag. (Figure 1) However, more often, researchers, providers, surgical centers, and some industrial partners have to absorb the costs of creating the 3D print. Methods to collect and document costs for every case should be employed, as each case can be considered a potential data point in a future larger scale (and possibly multicenter) clinical trial.

Capital Costs

The cost of providing 3D printing service can range from a few hundred dollars to millions, depending on the goal of the medical/surgical center in providing such service. Modest setups for simple models for patient education could have a capital expenditure under $10,000. On the high end of the spectrum, the authors have seen a proposal for a Veterans Association facility requesting $1 million for a fully equipped in-house 3D printing service with high-capacity printers and software. This facility would be performing in-house prosthesis work with significant cost savings that would offset this high initial cost.

Although it may be simple for a hobbyist to set up a printing machine at home, in a medical facility there are many factors to consider. Utilization of this technology is relatively new. Thus, there are many potential environmental, regulatory, and legal issues yet to be properly addressed. For example, certain steps of the 3D printing process may potentially involve or create hazardous materials or work environments. Thus, upgrading facilities to handle power requirements, and ventilation and chemical handling for post-processing operations may cause a significant increase in capital funds required.

Capital costs include the hardware, software, and built out facilities. For a frame of reference, some sample costs to be included in a proposal for capital funding are provided:

3D printer

● Imaging software

● Segmentation software

● CAD/CAM software

● Standard computer for administrative functions

● High powered computational computers

● High resolution monitors

● Fume hood/Ventilation setup

Funding is required to pay for these capital costs. Most academic hospitals can allocate existing research grants to create 3D printing service without expecting any near-term return.

Fixed Costs

Fixed costs remain constant within a range of activities but vary per unit. For example, a technician’s salary is fixed for the year. If there were two technicians, the salary fixed cost would double. The salary is not changed if the facility makes 100 or 1000 3D models.

Fixed costs to maintain a 3D printing facility include personnel salaries, equipment maintenance contracts, facility costs, training costs, cost of material, and the labor involved in creating a final clinical acceptable print.

Ongoing costs of maintaining a 3D printing facility include personnel salaries, equipment maintenance contracts, facility costs, training costs, cost of material, and the labor involved in creating a final clinical acceptable print.

The following are sample fixed costs:

● Technician and Engineer salaries

● Equipment maintenance and vendor service agreements

● Training

● High bandwidth network for file transfer

Variable Costs

Variable costs change in direct proportion to volume.

For 3D printing, the materials are variable costs. The choice of material is huge, and the costs vary widely also. The amount of material used will also vary with each application.

If specific clinician time is charged to a project, that expense can be considered to be variable. If hourly labor was used to make the print vs. a salaried technician, it would be considered a variable cost.

In the next post, we will reveal our initial attempt in generating a financial spreadsheet that will help our audience with their own financial planning for a 3D printing service.

To be continued:

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Hui Jenny Chen, MD and Michelle Gabriel, MS, MBA

(This blog is adapted from our A Roadmap from Idea to Implementation: 3D Printing for Pre-Surgical Application: Operational Management for 3D Printing in Surgery)

Research firms generally agree that the healthcare sector of the 3D printing market is about 15%. But 15% of “what”? For example, Research Beam[1]estimates the total global 3D printing market to be at $2.8 billion, which would value the healthcare sector at $420 million. According to Wohlers Report 2016, the additive manufacturing (AM) industry grew 25.9% (CAGR — Corporate Annual Growth Rate) to $5.165 billion in 2015 — which would value the healthcare sector at $774 million[2].

Many market research firms report on specific numbers for the healthcare sector of the 3D printing market, and once again, the results vary significantly. As shown below, Allied Market Research forecasts a market twice as large and growing at twice the rate as the Orbis Researchprediction.

Given this range of numbers, it is likely the market researchers are not measuring the same items. Thus, if you are willing to invest in buying a market research report, it will be important to understand what is and is not included in the report, and if it applies to your requirements.

The market for 3D printers for all sectors is growing even faster. In September 2015, Gartner predicted that the worldwide shipments of 3D printers would reach 496,475[5]in 2016. Again in October 2016, Gartner reported that the worldwide shipments of 219,168 3D printers in 2015 would more than double to reach 455,772 printers in 2016.[6] Although the forecast numbers have decreased by approximately 50,000 units, the rate of growth is still spectacular. The growth in 3D printers has been accelerated by the expiration of several major 3D printing patents, and rapid technological innovations and quality improvements. The added abilities of printers increase the end-use market, thus driving the demand for printers and the overall market size.

What is driving this growth in the healthcare sector?

Allied Market sees the primary demand growth coming from the need for customized external wearable devices for a growing geriatric population who are experiencing osteoporosis, a growing number of amputations, auditory loss, and dental problems.[7] Technological advancements driving market growth include printers able to use multiple materials, the ability to print in multiple colors, and an increasing set of available biocompatible materials. Orbis sees different growth drivers, such as the growing need for medical device manufacturers to produce automated products, the increasing number of cost-curbing initiatives, and the rendering of simulations to perform or prepare for medical procedures.[8]

Where is the healthcare market?[9][10]

Market researchers agree that the major market is currently in North America, with a market share ranging from 35–40%. This is due to the growing presence of high patient awareness levels, increasing healthcare expenditure, sophisticated healthcare infrastructure and increasing investments in R&D facilities pertaining to the development of 3D technologies based products. However, there are discrepancies around which sector is predicted to have the most growth. Allied Research sees the most significant growth is coming from Asia-Pacific. Orbis finds that Europe is expected to be the fastest growing regional market over the forecast period due to the presence of a large number of R&D funding programs, and the increasing demand for customized medical devices in this region. It is expected to drive market growth over the next six years.

Who are major market players?

The 3D printing healthcare market is largely consolidated. Majority of the market share is governed by the two leading players, 3D Systems Corporations and Stratasys Ltd. In addition, the key market players have adopted strategic partnerships to accelerate the product development process.[11] However recently, these companies are having difficulties.[12]Fox Business reports that Stratasys and archrival 3D Systems (NYSE: DDD) have struggled to grow revenue since early 2015 due to a widespread slowdown of 3D printer purchases among enterprise customers. Stratasys posted a year-over-year revenue decline of 6.2%, driven by a 20% drop in 3D printer sales. Adjusted earnings per share — the most important earnings metric — declined from $0.01 to nearly $0.00. 3D Systems has had a rough 2016 — discontinuing their entire desktop 3D printer line and management changes including a new CEO and CFO in April, and the resignation of both the CMO and COO in June 2016. [12][13][14]

At the end of 2016, a tough year for most, the Motley Fool Investor published an in-depth analysis of the two market leaders and events affecting the companies.[14] A key takeaway is that increased competition is on the way from HP and Carbon3D who are entering the polymer 3D space. GE is also making an aggressive entry into the industrial metal market with the purchases of Arcam and Concept Laser, while their attempt to purchase SLM Solutions fell through.

Other important companies involved in the healthcare sector include EnvisionTEC, Materialise NV, and 3D Systems Software. Companies specifically involved 3D bio-printing include[15]: Organovo, Cyfuse Biomedical, Ekso Bionics, BioBots, Aspect Biosystems, 3D Bioprinting Solutions, and Rokit.

What are the analysts’ materials and methods?

Allied Research and Orbis both agree that polymers are the most preferred materials in the 3D printing healthcare market, but once again they differ on the market share — Allied at 50% and Orbis at 35%. This is driven by the high usage rates in bio-medical models. Both agree that the ceramics segment is projected to be the fastest growing due to its use in the manufacturing of teeth and jaw bones. For technology, the firms agree that laser/electron beam melting is the fastest growing due the growing demand in manufacturing orthopedic implants and hip stems.

What are the market challenges?

The 3D market in healthcare still faces significant challenges to growth. First, there is a shortage of sufficient clinical data to justify expenditures and insurance reimbursements. Second, there is a lack of structured regulatory frameworks. For example, in the US, the FDA has issued a guidance paper but no rules. Legal precedent regarding liability, patents and copyright is still murky. In general, the high costs associated with advanced 3D printers is also a barrier to entry.

In conclusion, the outlook on the healthcare 3D printing market is bright. This is not only supported by analysts, but also by the recent growth of a vibrant 3D printing market as a whole. Given the multi-trillion-worth total U.S. manufacturing market, the upside potential of market growth for the healthcare 3D printing sector (currently <1 billion) is tremendous. Multiple organizations, companies, and government agencies are now organizing themselves to create manufacture standards, regulations, and laws specific for healthcare 3D printing to meet the challenges the market faces.

References:

[1] https://www.whatech.com/market-research/it/229633-worldwide-3d-printing-market-is-in-the-progressive-phase-of-its-life-cycle-valued-at-2-811-8-million-in-2014-and-is-growing-at-a-cagr-of-21-during-2015-2020

[2] http://www.forbes.com/sites/tjmccue/2016/04/25/wohlers-report-2016-3d-printer-industry-surpassed-5-1-billion/#18694ae97cb1

[3] https://www.alliedmarketresearch.com/3d-printing-healthcare-market

3D Printing Healthcare Industry — Market Size, Analysis Jan 2016

[4] Http://www.medgadget.com/2016/11/global-healthcare-3d-printing-market-analysis-share-trends-and-forecast-by-2020-market-research-report-2016.html

[5] http://www.gartner.com/newsroom/id/3139118

[6] http://www.gartner.com/newsroom/id/3476317

[7] https://www.alliedmarketresearch.com/press-release/3d-printing-healthcare-market.html

[8] http://www.medgadget.com/2016/11/global-healthcare-3d-printing-market-analysis-share-trends-and-forecast-by-2020-market-research-report-2016.html

[9] https://www.alliedmarketresearch.com/3d-printing-healthcare-market,

[10] http://www.orbisresearch.com/reports/index/healthcare-3d-printing-market-analysis-by-application-surgical-guides-implants-surgical-instruments-bioengineering-by-technology-electron-beam-melting-stereolithography-droplet-deposition-manufacturing-by-raw-material-metals-biological-cells-polymers-cera

[11] https://www.alliedmarketresearch.com/3d-printing-healthcare-market

[12] http://www.foxbusiness.com/markets/2016/11/16/stratasys-earnings-3d-printer-sales-drop-20-stock-plummets-12.html

[13] http://www.fool.com/investing/2016/11/23/3d-systems-vs-stratasys-which-3d-printing-company.aspx?source=djc&utm_campaign=article&utm_medium=feed&utm_source=djc,

[14]http://www.fool.com/investing/2016/11/25/the-7-top-happenings-in-3d-printing-in-2016.aspx?source=djc&utm_campaign=article&utm_medium=feed&utm_source=djc

[15] https://3dprint.com/88792/3d-bioprinting-companies/

https://3dheals.com/idea-to-implementation-out-sourced-financial-plan-for-3d-printing-for-surgical-applications%e2%80%8a-%e2%80%8asample-financial-worksheet/

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Hui Jenny Chen, MD and Michelle Gabriel, MS, MBA
(This blog is adapted from our A Roadmap from Idea to Implementation: 3D Printing for Pre-Surgical Application: Operational Management for 3D Printing in Surgery)

Healthcare is a highly regulated industry. Understanding local healthcare market and reimbursement strategy is essential to the survival and growth of any new medical technology. In order to be eventually viable financially, most U.S. 3D printing service providers need to answer two questions:

How is the service paid now?

There is currently no established stand-alone reimbursement process for pre-surgical planning 3D printing service. Occasionally, services provided by established 3D printing companies such as 3DSystems/Medical Modeling (Denver, U.S.A.) can get paid indirectly by their contracts with a medical device company, who bills third-party payers for the cost of the medical device which includes 3D printing services.

For example, craniofacial reconstruction surgeons will use the pre-surgical planning 3D printed models and/or cutting guide made by Medical Modeling, Inc. (3DSystems, Denver, U.S.A.), who has a contract with Stryker. Stryker bundles 3D printing services under a single medical device fee, and the hospital bills third-party payers for it. (Figure 1)

Figure 1. An example of current 3D printing reimbursement process (arrows represent direction of payment)

The result of such bundled billing is a lack of cost transparency. As the interest in 3D printing for surgical planning grows, however, more providers are now willing to pay out-of-pocket either at full price or at a negotiated price with 3D printing companies directly for similar services, bypassing any third-party (Figure 2). There is a trend towards more existing commercial 3D printing service providers venturing into the pre-surgical 3D printing arena. For example, Anatomics (St Kilda, Australia), 3D Ops (Tennessee, USA), and Whiteclouds (Utah, USA).

Figure 2. An example of future 3D printing reimbursement process (arrows represent direction of payment)

Additionally, a growing number of larger healthcare organizations and academic hospitals, such as the Harvard hospitals, Mayo Clinic, and Cleveland Clinic have dedicated significant internal research and development grants to develop in-house 3D printing centers. However, payers currently do not reimburse expenses for 3D printing at all if performed “in-house” or “in-office”. Thus, currently, 3D printing service appears to add costs to the overhead of health care facilities. Some have suggested potential cost savings for the hospital to provide 3D printing service as part of the surgical care, but these remain to be anecdotal [27].

How will the service be paid in the future?

For either “in house” and “outsourced” 3D printing services to be paid consistently, future work must be done to a have a procedural terminology (CPT) code created and the associated professional and facility fee assigned. The reimbursement for the physician and hospital services would then need to be negotiated with payers, insurance groups and the Centers for Medicare and Medicaid Services (CMS). [27] To achieve such “code-able” status by the AMA (American Medical Association) [48], the procedure must be officially recognized as part of patient care, which has demonstrated sufficient clinical evidence that the procedure improves patient outcomes.

Although many recent papers have documented significant improvements associated with multiple outcome metrics including reducing operating time and surgical accuracy [13], the results are still too early and too little to convince the payers. Another added challenge also includes lack of an advocacy entity for this purpose. However, this will likely change as the field matures.

https://3dheals.com/idea-to-implementation-in-house-vs-outsourced-3d-printing-for-surgical-applications/

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Hui Jenny Chen, MD and Michelle Gabriel, MS, MBA
(This blog is adapted from our A Roadmap from Idea to Implementation: 3D Printing for Pre-Surgical Application: Operational Management for 3D Printing in Surgery)

Clinical trial design should be an important part of the strategic consideration because more clinical evidence, especially in terms of clinical efficacy and outcomes, will strengthen arguments for reimbursement. According to ClinicalTrials.gov [52], a registry for clinical trials maintained by NIH and NML, “a clinical trial is a research study in which human volunteers are assigned to interventions (for example, a medical product, behavior, or procedure) based on a protocol (or plan) and are then evaluated for effects on biomedical or health outcomes.”

Good clinical trials serve several major purposes such as:

a) Informing consumers about the values of this technology.

b) Preparing data for new CPT coding and other reimbursement strategies from payers.

c) Inspiring creative innovations.

Data on clinical outcomes is crucial. In recently published studies, researchers have been focusing on the following outcome metrics: operating room time, hospital stay, surgical complication, and post-surgical accuracy. Non-quantitative outcome metrics include patient/family satisfaction.

There are two public clinical trials registered on clinicaltrials.gov for pre-surgical applications (Link). The first one is a recently completed randomized controlled clinical trial (Link) from Cleveland Clinic, “Acetabular Shell Positioning Using Patient Specific Instruments” which has shown a statistically significant increase in anteversion accuracy when using a 3D printed surgical guide over traditional planning methods in total hip arthroplasty (THA) [31]. A limitation to the study is a modest sample size of 36 patients although it is larger than most recently published studies. A second drawback of the study is the lack of information on other clinical outcomes, including hardware loosening and failure as a result of inaccurate placement. This latter issue will require long-term, continuous follow up with the patients.

The second study is currently enrolling (Link). It is focusing on 3D printed patient-specific simulations for endovascular aneurysm repair as a pre-surgical training tool.

https://3dheals.com/ideas-to-implementation%e2%80%8a-%e2%80%8awhat-are-the-major-operational-management-challenges-in-using-3d-printing-for-pre-surgical-application-today/

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Idea to Implementation: Talent Allocation in 3D Printing for Pre-surgical Applications

Hui Jenny Chen, MD and Michelle Gabriel, MS, MBA
(This blog is adapted from our A Roadmap from Idea to Implementation: 3D Printing for Pre-Surgical Application: Operational Management for 3D Printing in Surgery)

Currently, most medical centers rely on individuals who are 3D printing enthusiasts. These staff members are motivated and capable of learning new skills, often on their own time without additional compensation. Over time, as the demand for 3D printing increases, many centers will find themselves exhausted of manpower. Ultimately, letting hobbyists man the 3D printing center is not viable for a professional operating facility. To provide reliable 3D printing services consistently, talent allocation needs to be addressed. Typical skills necessary for staffing such center include the following:

a. Basic medical imaging knowledge: Knowing if the quality of the images acquired is adequate for 3D printing is crucial. This will require staff to understand the imaging protocol and why certain images cannot be used for printing

b. Good CAD/3D software understanding: Training staff to use basic (and sometimes open-source) 3D printing processing software is time-consuming. Familiarity with 3D visualization software will make the learning curve much lower.

c. Understanding of 3D printing hardware: Basic maintenance is often required when working with 3D printers. Although an engineering degree is not necessary since most commercial printers are fairly user-friendly, understanding the basic mechanics is necessary for troubleshooting.

d. Basic medical knowledge: Having a basic understanding of the clinical case is important to produce high-quality prints, with more attention to clinically relevant aspects of the case. This should also lead to better quality control of the final product.

Within the medical community, radiologists and radiological technicians are currently equipped with these professional characteristics and have the lowest barrier to entry to staff a 3D printing center. Due to the high cost of hiring a dedicated physician, the best choice to staff these centers is a highly trained and experienced radiological technician who is well versed in 3D software.

Many larger imaging centers have dedicated imaging post-processing labs (“3D labs”), where the technologist’s main role is to use various visualization tools to create 3D images for various clinical purposes. These staff members are ideal for future 3D printing centers because of their experience with existing post-processing software. If the volume for 3D printed models does not reach a level where a full-time technologist is needed, many of the same staff members can also be productive in other areas of the department.

Idea to Implementation: Clinical Trials For 3D Printing Applications

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