Case Interview Question #00150: Your client is Boston Scientific Corporation (NYSE: BSX) (abbreviated BSC), a worldwide leading developer, manufacturer and marketer of medical devices whose products are used in a range of interventional medical specialties. Recently, a surgeon who consults to Boston Scientific has developed a minimally invasive approach to hip replacement surgery — involving two 1.5-2 inch incisions to replace the hip joint instead of the standard 6-10 inch single incision.
The main advantage of the new approach is that the muscles and tendons surrounding the hip joint are avoided or separated and never fully cut through as they are in the traditional approach. Therefore, patients are in less pain from the incision and their recovery time is shorter. Rather than the standard 3-5 days in the hospital, 80% of patients go home the same day as the surgery. The major drawback of the surgery is that it requires longer time in the operating room — 3 hours versus 2 hours in the traditional approach — and so far has only been performed on younger, healthier patients with commercial insurance (versus Medicare). Also, the new procedure cannot be performed on obese patients.
The device used in the new approach is exactly the same as the device used in the traditional single-incision approach; however, the instruments are slightly different (smaller) and need to be specially manufactured by Boston Scientific.
Boston Scientific has hired your consulting team to advise them on commercializing the new hip replacement approach. Specifically, they want to know two questions:
1. Is there an economic benefit to this new approach to hip replacement surgery?
2. If so, how can your client reap financial success from it? If not, what can they do to make it economically successful?