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Augmented Reality in spine surgery: a promising market niche with an uncertain business future

by Ziwei Pan | December 16, 2022

Imagine you are driving to a friend’s house. You have been there a few times and have formed some general impressions of the route. In the old days, you would only have your imperfect memory to guide you. Now you can use GPS not only to navigate the route, but also to see live traffic conditions along the way.

Similarly, technology can provide neurosurgeons with guidance during spine surgery. Before, surgeons used to rely exclusively on their knowledge of anatomy to conduct the surgery freehand, but now, they have the option to use augmented reality (AR) to navigate through the patient’s spine during the surgical process. With more and more hospitals and medical schools adopting this new technology, AR in spine surgery appears set to take off with exponential growth.

Spine surgery assisted by a navigation system

Most people will experience back pain at some stage in their lives. According to the World Health Organization’s analysis of the Global Burden of Disease (GBD) data from 2019, musculoskeletal conditions are the biggest contributor to disability worldwide, with the most common being low back pain. In the US, up to 80 percent of Americans will struggle with back pain in their lifetime, and it costs the US economy $635 billion annually.

While non-surgical treatment for back pain is always the first choice, some significant painful conditions or specific medical cases might require spine surgery. Spinal fusion, which permanently joins two or more bones, is the most common spine surgery. Around 1.62 million people in the US receive the procedure each year.

In a spinal fusion, the surgeon implants pedicle screws into the vertebral bone to stabilize and align the spine. The screw has to be inserted at a very precise angle to prevent injury due to the close proximity to critical neural structures such as the spinal cord or nerve roots. Surgeons usually complete a spinal fusion procedure with a surgical navigation system that collects and updates images of patient’s anatomy and positions information from a preoperative or intraoperative computed tomography (CT) scan.

The procedure is complex and requires surgeons to multitask. Traditionally, the screw insertion is performed freehand, while images from the CT scans are placed on nearby screens for live anatomical visualization. Surgeons shift their attention continuously between the patient and the screen to match the images with the surgical field. At the same time, they have to mentally reconstruct the 3D structure from the 2D scan based on limited image information and their experience.

Augmented reality is reshaping spine surgery navigation 

Augmented reality (AR) could provide the solution to many of the issues surgeons face during traditional spinal fusion procedures. Whereas virtual reality (VR) places users in a closed immersive environment with computer-generated simulation, AR technology integrates real-world elements and computer-generated information with a real-time interactive experience. AR is not an empty buzzword. In recent years, it has already provided valid solutions to a wide range of healthcare applications, from medical training and education to neurodiagnostic and surgical navigation. According to Fortune Business Insights, the global AR market will be worth $97.78 billion by 2030, up from $4.16 billion in 2020. ABI Research believes that more than 2 million patients and healthcare workers will utilize AR by 2025, and there are a growing number of peer-reviewed publications that describe AR applications for healthcare purposes.

One segment of the health market in which AR technology is making a particularly significant impact is surgical navigation in spine surgery.  AR surgery was first introduced for training purposes for residents and surgeons, but it began to transition into a clinical setting in 2019. In 2020, surgeons at Johns Hopkins University performed the first AR spinal surgery with a head mounted display in the US. Dr. Timothy Witham, the director of the Johns Hopkins Neurosurgery Spinal Fusion Laboratory and professor of neurosurgery at the Johns Hopkins University School of Medicine, led that surgery, and he still remembers every single detail of his first AR-guided surgery. He recalled, “We wanted to start with a relatively straightforward surgery as the first case. The patient had a common problem called lumbar stenosis andspondylolisthesis. I needed to place six screws into the spine. This time when we did it, we used the AR headset. When we checked the instrumentation placement, it was very accurate. So, it helped build our confidence in using AR devices in future spine surgeries.” Since that first procedure, Dr. Witham has finished around 150 AR-guided spine surgeries.

The AR-embedded headsets that surgeons wear during the procedure receive 3D images of the patient’s anatomy as the surgeon places screws to stabilize the patient’s spine. Staff collect and calibrate key patient imaging data from preoperative registration to identify the anatomical structures and surgical targets. But during the surgery, surgeons do not need to look away from the patient. Instead, the AR headset displays a synchronous digital 3D rendering of the CT scans into the virtual field of the surgeons. Information from the surgical navigation system is superimposed over the physical reality of the procedure in real time to help surgeons track the marker and instrument.

The biggest benefit of AR-guided spine surgery is improved patient safety. Surgeons traditionally have lost time checking back and forth between the patients and the screen, but now they can operate without pausing. Dr. Witham said, “With AR, we place six pedicle screws in about 20 minutes.” Additionally, AR provides improved visualization of the operating field and reconstructs the 3D path of the pedicle screw as it is inserted into the spine. Dr. Witham said that he loves how the AR-embedded headsets “combine the advanced technology with the surgeon’s instincts and knowledge” without negating the surgeon’s agency. “We published the first 200 screws that we placed. The results show that 98 percent of the time we get it in the right spot. The other two percent of the time, if they are not in the right spot, they’re pretty close. It rarely requires any kind of revision.” Such benefits are also confirmed by the patients. Dr. Isaac Moss, chair of the UConn Health Department of Orthopedic Surgery and co-director of its Comprehensive Spine Center, told us that most patients are trusting of the procedure.

These early successes have been noted by regulators. The Food and Drug Administration (FDA)  patient engagement advisory committee recently pointed out that “AR has the potential to improve pre-operative planning by allowing surgeons to examine 3D visualizations of a patient’s anatomy based on actual patient imaging, and to investigate different surgical paths and techniques.” Consequently, more and more spine hospitals and health systems have added AR technology to their spine surgery. Thus far, over 2,500 cases have already been performed across US.

The Coexistence of feasibility and difficulty for AR deployment

Not all spine surgeries are suitable for AR guidance. Right now, the main application of the technology is for surgery because these procedures usually require screw placement in the thoracic or lumbar spine. However, AR usage is evaluated by surgeons on a case-by-case basis. “I don’t use AR every surgery. I use it when I think it will be helpful.” said Dr. Moss when talking about his choice criteria.

AR technology is not perfect. It has pros and cons. Dr. Witham said, “Sometimes we do have some technical glitches on either hardware or software. We have to deal with some troubleshooting from time to time.” On the plus side, though, performing AR-guided surgeries is not a difficult task to master. The headset is not too chunky, and the user interface is not complex. Therefore, it can be easily adopted. Dr. Moss said, “The usage is very intuitive. The first time you use it, it just works. And the headset is very comfortable. You kind of forget it’s on your head once you wear it.” Today’s surgical trainees will likely have an even easier time with the technology. Dr. Witham said, “My generation was not as savvy with computers, gaming, and that kind of thing. However, the generation of residents that we’re training can pick up these technologies very quickly.” Dr. Witham also sees the value of AR as a training tool. He said, “A lot of times when using AR, I call myself the coach. I can just look at the console and watch [residents] while they’re performing the surgery. It’s a nice way to help them learn and train.” The path to making surgeons feel comfortable and prepared while using AR technology in the surgery is not hard to see.

Costs are another factor. An AR device usually costs tens of thousands of dollars, but can vary widely depending on the vendor, brands, and surgical procedure. For example, John Hopkins hospital spent $125,000 to purchase three AR headsets, according to Dr. Witham.  However, AR headsets are relatively inexpensive in comparison to other advanced assistive equipment. For example, robotics systems, the biggest competing technology in spine surgery, typically require $1.5-2 million in capital. Still, AR-assisted surgeries carry additional operational costs for each case.  Dr. Moss said, “Spine surgeries are already tens of thousands of dollars. The AR will add $1,000 more.” Right now, no standardized reimbursement process is available for AR-guided surgery, although surgeons bill for it. Dr. Witham said, “I don’t know how often it gets reimbursed by insurance companies … What happens is the surgery might get approved by the insurance company, or they say ‘Well, we’re not paying for that part of the procedure.’ And usually what happens is the hospital ends up absorbing some of the cost.”

Navigating uncharted waters: the uncertain business future for AR-guided spine surgery

Although surgeons and hospitals are willing to purchase AR devices, commercialization of the technology is still in its infancy. To be in compliance with FDA’s medical device regulations, a company needs to show high-quality, real-world evidence of the device’s efficacy and evaluate human factors that could affect the device’s usability to win FDA’s authorization. The company can only market its device after it has provided proof to the FDA of the device’s safety and efficacy through either the 510(k) process (for products that are similar to existing products) or the De Novo process (for products that have no precedent). In some cases, the agency continues to monitor the device after it has been approved for the market. Although the FDA has made some effort to accelerate the process (i.e., Medical Extended Reality Program, Breakthrough Device designation), competing in the industry requires time and money. According to the report from Boston Consulting Group and the UCLA Biodesign Innovatin Hub, the median cost for a company moving its product through the FDA’s 510(k) process was $3.1 million, while the median cost for products moving through the De Novo process was  $5.0 million. The median time was 31 months for 510(k) and 66 months for De Novo. Not all companies can afford to make the necessary investments.

Despite these challenges, there are companies that have pursued the technology. Augmedics is an augmented reality surgical image guidance startup that was founded in 2014. Augmedics’s xvision spine system received FDA clearance in late 2019 and was the first AR navigation system to be used in spine surgeries in the US. For a long time, the xvision spine system was the only AR navigation system on the market, and Augmedics has seized a relatively large market share. In August 2022, the xvision spine system surpassed usage in 2,000 patient cases. However, three competitors have brought new AR surgical navigation systems to market this year. In January 2022, Surgalign Holdings received FDA clearance for HOLO Portal. In May 2022, VisAR, developed by Novarad, was cleared. Finally, in Sep 2022, the FDA approved Surgical Theater’s SpineAR SNAP. While Augmedics, Surgalign, and Surgical Theater all developed their own hardware, Novarad’s VisAR system adapted Microsoft’s off-the-shelf AR headset HoloLens 2.

It’s too early to ask for payback at this stage. Most companies are start-ups, so the business model and financial performance are unclear. The financial report from the only listed company Surgalign showed a revenue dip compared to last year. Considering the product stage and company capability, mass production is challenging.

From continued appraisals and positive feedback from surgeons, we can tell that the demand is increasing. As a result, the investment hesitation loosened, and more companies are trying to catch the wave. As Dr. Witham noticed, “There are companies hopping on the bandwagon. It’s a positive sign because that validates AR technology. It’s not universally adopted now, but it is gaining some attractions, no doubt.”  Meanwhile, for tech companies, spine surgery seems to be a less cool but really useful use for AR. Microsoft’s involvement represents a sea change for AR applications as more tech giants are placing their bets on the industry.

Continued investments could unlock the full potential of AR technology and bring a real revolution in spine surgery. But that revolution is just beginning, and it still needs time and patience.