Good morning. Happy to be with you here today. Robbie, thank you for the opportunity to speak. As you know, we'll be discussing some things that are forward-looking. We encourage any of you to go to our website on the investor section and review our disclosures and SEC filings. For those of you who haven't followed our company, our mission is pretty straightforward. We think that minimally invasive care and acute interventions, those that happen in professional healthcare environments, are important, that we can improve them using advanced technologies, and that there's a significant need to improve them. And we think that those improvements can be substantive, not a couple of percent here or there, but transformative. And we think that there's an urgency to it.
We think it can be profoundly better than it is, and we've been at it. The company was incorporated in December of 1995. We've been at it for some time, and I think we're still in the end of the beginning, not the beginning of the end, and we'll talk a little bit about that. This last year, our customers used our products in something over 2.2 million procedures in the year. Total experience on da Vinci platforms is now over 14 million. It continues to be an active subject of clinical research, the vast majority of which is not sponsored by us. We do sponsor research. The massive database is driven almost entirely independently of Intuitive, and I think both those things are really healthy.
I think it's healthy for us to invest, and I think it's healthy for people to, to assess independently. We had a good year in placements. We are now three different hardware platforms. Our MultiPort platform, over 1,300 placements; our flexible bronchoscopy platform, Ion, over 200 placements; and our Single-Port narrow access surgery system, SP, at over 50. Total install base of systems now over 9,100. MultiPort at over 8,000, Ion at over 530, and Single-Port over 170. So, starting to get exciting. 2023, I like to use this conference as a little bit of a look back and then a look forward. Every year has its strengths and its challenges. I think clarity on those things is really important for our organization, and I'd like to share it with you.
I won't read the objectives. For those of you who were with us, you know them. There were some challenges. There was a significant amount of environmental uncertainty in China. Some of it was regulatory, some of it was around pricing, regulation of the entire healthcare field. And that put some pressure on our business in China relative to our hopes and plans at the start of the year. We have those new platforms. They came with some more manufacturing challenges than I would hope. That's a little bit of par for the course with complex technologies. We had more scrap costs and some margin, product margin pressures in the year. We are working them down. They're complex. These are complex supply chains.
I actually think that there's excellence and competitive advantage in resolving them, but they take focus and effort, and we are focused and are exerting effort to resolve them. We started the year speaking to all of you about the impact of GLP-1s on bariatric surgery, and that has continued through the year. The near term, we still continue to see a deceleration of bariatric surgery with the rise of GLP-1s. What that means for future years will be resolved. We can talk. I'm sure we'll talk about it another time, but the deceleration hasn't stopped. We're still growing, but it's decelerating. And in our flexible bronchoscopy space, our installs have actually been limited by our availability of manufacturing volume for the parts that are used in every case, the consumables, that's the catheter.
We are the constraint. We are working incredibly hard to resolve those sets of constraints. I'm actually quite pleased with the progress we're making here in the Q4 , but we could have put in more systems had we had more catheters, but we did not want to install systems and then be inadequately supporting them with the volume of product they need to grow their programs at the pace they wanted. We didn't want to get in the situation where we had more systems out than we had catheters to supply, so that throttled us a little bit in the year. We're starting to work through that and come out the other side. We did have areas of strength. General surgery procedures in the United States grew very nicely. I'm sure we'll talk about it more.
The performance in Europe and in Japan was really heartening in the last year. For those of us, of you who have followed us, we invested a lot to get there. These are not single -year turnarounds. You, you, you invest to do it. These are multi-specialty teams that, that we have put in, and I'm just proud of, proud of them. I think they've done a, a great job. We're starting to move Ion and SP into regions outside the United States. We'll touch on that a little bit. System placements are strong, not just in the United States. We, we think that these things matter globally, and we, we prioritize which countries we think are in a good position to accept them, and that has worked out well for us, certainly in the year.
In procedure trends, we saw a rebound post-pandemic, 22% procedure growth in the year. You can see the splits between kind of the big categories, urology and gynecology, and you see now that general surgery is the biggest of the categories globally. Looking into 2024, we think we'll see between 13% and 16% growth. You will have a chance to talk to Jamie Samath and Brian King shortly, and they'll tell you the whats and the whys are behind that worldwide capital system placements annually. Y ou can see incremental or greenfield in the dark bar on the left, and in the light bar, those are trade-ins. That's in our multi-port product line, that da Vinci Xi, it's our fourth generation system, was launched in 2014. We followed with a value model called da Vinci X a couple of years later.
So trade-ins, those are well penetrated. I'll show you in the next slide what that looks like. Install base grew 14%. So 22% procedure growth, 14% install base growth. Just do the quick math, and you're seeing utilization growth go up. That is a fantastic thing. So procedures per system per year, that's an estimate of value and return on investment for our hospital customers. We like to see that advance, and that's, that's been good. As you play through, that's what revenue has done. So good procedures, good system placements, that, that translates to growth in revenue. Revenue growth rate is not as fast as procedure growth rate and capital install rate, in part because we're doing a higher mix of risk-sharing arrangements and leasing in our capital portfolio.
I'm sure it's something we can talk to you about later. That means that the mix of recurring revenue, that revenue that we're paid on when people use our products, has increased over the years. That's been intentional on our part. We think that that aligns us well with our customer. It removes capital acquisition barriers when they want to build their programs, and so we're pleased with this number. It is not without trade-offs. When you do move to leasing versus sales, it's not a uniformly great thing, but we think those trade-offs are well -managed and understood. If you kind of zoom out and say: What are the growth drivers? 22% growth on a reasonably large base, that's pretty good performance. Where is it coming from?
Year-over-year growth outside the United States in the segments outside of urology, which is starting to become penetrated, are now 35%, so really healthy growth, 25% U.S. general surgery growth. So you're, you're both the largest category and amongst the fastest growing, so that's a rare event, and, and we're pleased. And everything else that isn't in those categories are growing pretty nicely, too. So it's a multi-segment growth opportunity for us. Sizing the market, we tend to be more conservative in this than some of our peers. Let me tell you what it is and how we think.
So the first thing is, for products on the market today, as we stand here in January of 2024, with the clearances we have and the countries in which we operate, we are, we think there are, give or take, seven million patients annually who, for whom these would be a good solution. The economics work, the healthcare system can absorb it. So we were at 2.2. That, that's i f you say, "Well, what are you working on?" We, we are believers in innovation. We have a robust innovation pathway, either things in development already or things in our research labs. We think we can grow that opportunity annually to be about 21 million, but that's on some things that we haven't brought to market yet.
For those of you who are modeling, I would not model everything the same at the 21 as you do at the seven, but those are the things we work on. So we think there's future opportunity, and we're excited to pursue it. Again, I think we're looking at upside. We'll speak a little bit to one of the things we've been doing. It's been on a very nice growth curve, and that's flexible bronchoscopy. We all know lung cancer is a serious global issue. Lung cancer detection remains a significant unmet need. This is just, roughly speaking, estimated incidence of lung cancer by region. We have our Ion system, flexible bronchoscopy. First, indication is biopsy for distal lesions in the lung. So we're cleared and making nice progress in the United States.
We're cleared in Europe, just starting our phase I launch. We're in the U.K. now. We're cleared now in Korea, just a recent clearance, and we're on the pathway. We're submitted in China and, and getting excited about what that might offer us over time. So this is what Ion has done. As I said before, on multi-port, that's the standard or the da Vinci system you're used to. Ion now is growing nicely and, and continues to get nice uptake. Placements on top, utilization on bottom, leading robotic, bronchoscopic system in the market. SP, single access procedures. SP has been in the market a little bit longer.
Because of our interactions with our global regulators, the way they view it has been a little different than they have with da Vinci MultiPort, and so we've needed additional indications. But you're seeing an acceleration in placements. We're actually seeing some nice uptick in growth in procedures. Again, 48% procedure growth in 2023. So studies and submissions, we completed our accrual and are working on the submission for the Colorectal IDE. We completed that in 2023. For a Thoracic IDE, we completed that accrual. We have a breast oncology, Nipple-Sparing Mastectomy IDE in flight that is still accruing, and we have recent clearances. BPH clearance in Q1 of 2023 in the United States. We have broad clearances in Korea and now Japan, and we expect a broad European clearance in this Q1 of 2024.
So, we're starting to be able to get the regulatory space, the regulatory clearances required to drive this as a multi-specialty platform. We're quite pleased with system performance. Unmet needs, so let's just talk. When we go out and talk to our customers, and this is from the American College of Healthcare Executives, and ask them what's on their mind, this is what they come back with. This top four is roughly what you hear all over the world when talking to healthcare systems. They reorder a little bit by which country you're in. Workforce challenges remain a serious concern, both availability of staffing, turnover, and costs. Financial challenges as pandemic financial support for healthcare systems has been drawn down, financial challenges have gone up. In the United States, behavioral health and addiction issues are on the rise.
And of course, always on the list, patient safety and quality of outcome, something we care a lot about. We focus our organization by looking at how we can actually do this. How can we help in this way? I think we have demonstrated that we can help in all of them, and we continue to drive it. So when we sit down with hospital C-suites, we start here. "We know you're working on this, how can we help you?" And then we go from there. Looking at adoption, you think about our platforms, and we have everything from pretty well-established platforms like our da Vinci platform to newer ones like Ion. The progression that goes on for our hospital customer is first, they look at what we're saying, and they say, "I'm willing to adopt.
I'm going to put it into a pilot program. Let's see what you can do." That's how they start. And as it starts to look good, and if we deliver on our claims, then they start to see evidence that we can impact those things that I just showed you, then they'll buy another one, and they'll start to operationalize it. So this kind of idea of going from one to two is a big step. One, they buy on, on belief, and two, they buy on evidence. It's pretty exciting. So how are we doing? Well, if you look at integrated delivery networks that own 20 or more, these are sophisticated organizations. They're corporate. They have analytics capabilities that we partner with them on. How are their programs going?
This is the growth rate of IDNs who own 20 or more da Vinci systems in their portfolio. It's growing at 22% as of Q4 of 2023. Single buildings, a single hospital building with multiple ORs, how many have seven or more? I'm not sure that when I started, I started in April of 1996. I'm not sure that seven was a magic number. I wouldn't have thought that. But you walk by OR 1, OR 2, OR 3, and they all have a da Vinci, all the way up to seven. How many? That's growing at 48%. So there's a point at which they standardize. It isn't unknown, it isn't a risk for them, it's the way they want to do their business.
To do that, you have to show clinical value, you have to show operating value and operating excellence, and you have to show ROI so that it's economically feasible. We look to this because it's evidence of what they do, not what they say. One of the things that we've been working on we've been in the Internet of Things for surgical robots for about 13 years now. We started our AI efforts maybe seven years ago. How will surgical data science, that's why, how we like to think about AI, rather than using the buzzword, let's talk about what we think it means to us. How is surgical data science gonna help?
I think it's gonna be interesting, I think it's powerful, I think it will be messy, it will be an interesting decade, and I think it will be exceptionally powerful by the end. But let's talk about what the need is, and let's talk about where Intuitive is focused in this space. So the needs are pretty straightforward, plain words, right? First of all, AI, ML, big learning, big data, these are all tools. They're not aims. They're a tool in support of a need. Improve patient care through better outcomes. There's huge variability in patient outcome. Not every surgeon can get the same outcome as the very best, and the very best have opportunities as well. You look at the availability of well-trained care teams in most economies, and they're short.
They're short, and it's getting worse because the demographics of most of our societies are aging. So you're aging out your trained care teams, and your patient population, which includes all of us, is getting ready to need more care. So you need better care teams faster. We sit with our teams and go, "Look, the goal is better care teams, care teams faster. How are we gonna do that? What can we do?" And the last one is financial pressure. Same thing. Demographic issues are gonna put pressure on consumption of care. Fewer workers, more people consuming care, we got a problem. So if we don't start getting a way toward lower consumption of resources on a per-episode basis, you're gonna be stressed. So that's what the need is. That's what we ought to be targeting these investments towards.
Everybody has something to say about AI these days 'cause you all are excited about it, and therefore, everybody has to put it in their talk. Let's talk about what we think we can do. Why, why are we in a position to do something? We do analytic investments where we look at combined data sets of what we bring and what our hospital customers bring. We did more than a thousand of those in 2023. Our products are high -tech, interconnected, cloud-connected ecosystems with 99.9% uptime. I'd like that to be better, but it is not trivial to get to 99.9. It's fantastic. I think our customers trust us. We do workflow consulting. We get in there to understand efficiency, how we can help them. We work with their teams.
We don't send them white papers from California and hope they get it. We deploy our teams into their environments to help them get what they need. We did that over 3,300 times in the year. The install base now is wonderful for gathering insight, data, and the ability for us to generate action from that insight. And we've built some trust with our customer that we'll be there if anything goes wrong, and we'll get out and fix it. What does that mean in terms of products and things we bring to market? We bring to market things that help with preoperative planning. We talk about 3D models. The internal name for that has been Iris. That's augmented reality for the OR. We are in kind of gen 2 of our product, just coming out gen 2 now.
We're pretty excited about it. Every surgeon that goes through our learning channels uses Intuitive Learning, which is a mixed medium online and in their hands opportunity. SimNow is virtual reality training. It is fully embedded in our learning pathway, and it has been for a decade. People are excited about VR. VR has been fully embedded for us. And these things are linked on the back end and becoming increasingly, so we have opportunities to link them even better. That allows you access to your data, the ability to manage your own digital life through our app. That app is now nicely penetrated, continues to grow up, looks really good. That turns into intraoperative guidance, things you can use in the OR to help the case in the moment. That includes Intuitive Telepresence.
Think of that as- is a HIPAA-compliant FaceTime for the Operating Room, and that runs through our, Edge Compute, our computing system that sits in the room that's called Intuitive Hub. And that's nice. Okay, you got pre-op, you got interop, you got post-op. What happens post-op? You get a chance to gather that data to see what happens. Our AI suite, our analytics engine is called Case Insights. That goes back, looks at the data over many procedures, looks at what you just did, and assesses how you're doing. This is early, but extremely exciting. So this will be early and messy and exciting. The prototypes are spectacular, and validation is hard. So it's easy to show you something that'll blow you away. What's interesting is to validate it clinically. Is it determinant as to better outcome or not? And I think we gotta prove that.
If you are in the audience, I would ask that anybody say it, "Prove it." That feeds into the customer portal, that gives you analytics about how your program is running, either you personally or the institution. That feeds into our custom hospital analytics. That's just shorthand for how we integrate with the hospital electronic medical record, and people can navigate in role-based ways from their portable devices. So that's what we bring. This is an example. Don't assess too much importance to this, just to give you a sense of what these kinds of things look like for people. Virtually every cancer operation has before it a 3D model that's built through CT imaging or MRI. Those things are built for radiologists. They're not built for surgeons.
So that radiology image is sitting there, you bought it, you paid for it, and it's almost never used. It's nuts, actually. It's a nuts thing. So we're kinda, simple thing, why don't we just get into the PACS system? You order up an image, we will do machine learning to create an anatomical model, put it into 3D, drop it, have a radiologist look at the end, do a confirmatory step, drop it into your iPad, and you get to look at it, decide what you think it is, that identifies where the tumor boundaries are, where the arterial structures are. You can review it with the patient before the case. One of the highest values is that. And then you can drop it into your surgical console and use it as a reference guide while you're doing the case.
And over time, as we get better, those will be applied as augmented reality. Pokémon Go for surgery. Intuitive Hub, you'll hear this from us. What is it, actually? It's a computer with a touch screen that is integrated and cloud -connected to our da Vinci system and synchronized. So it's not incredibly weird technology, but synchronization and data handling is really important. So what do we do? We allow that synchronization that allows both the surgeon and the care team and the machine learning algorithms to know what happened in a synchronized way. It turns out, really, it's important. We have some pretty nice tools that are getting stronger to allow you to do case assessments and to allow the machine to help you with those case assessments, and then rotate them quickly into your My Intuitive app.
We're just in the beginning of it, but it's starting to speed up and looks really good, and it allows for integrated teleproctoring over time. So the beginnings of telemedicine or teleproctoring make it easy. If you need an expert to tap in and help you in a case, imagine it's just as close as built into your da Vinci system and sitting on your phone. It's not a third-party thing. You don't have to run around and do it. These things are already cyber secure and HIPAA -compliant, and so off you go. We have talked about, with you in the past, something that we talk about as a computational observer. That's kind of my view of it.
The brand name for it is Case Insights, and it's this question of, now with machines and machine learning and real-time assessment, can the machine know what's going on and provide an overview or insight into a couple of things? Offline, better surgeons faster. Remember that quote? Can we determine, watching surgeons in the wild, who needs help and where they need help? And the answer to that appears to be yes. Now, that's back to you need to show validation of a large group of people to make that claim, and we haven't done that validation yet, but we're doing it. That's what we're up to.
And then the other thing is, can you, if you know that, can you identify things that are going on in the case in real time and deliver those insights to the surgeon so that they don't make a mistake or that they have additional information to make a good decision? We think that's absolutely true. So this will be slow in the beginning and fast at the end. We're in the slow in the beginning phase. What that means is that you take some of the data that we have, and this is representative, it's not all of it, and you start asking questions. This is where your machine learning capabilities and algorithms can help. What's meaningful in a case?
There's an enormous amount of data, from what they're doing with their hands, to where they're looking with their eyes, to what kind of instruments they're using, to how they're applying energy, to what the case characteristics were prior to the case for the patient. As you look at that set of data, what's predictive of better outcome? That's the question you're asking these data sets. And we're starting to see a settling as to what involves performance or high performance. I'll give you a true example. It's kind of a weird one. I've been around these systems for a long time. I'm a reasonably, reasonably dexterous person. I can sit down and use it the way it was intended to be used in a lab, but I'm not a trained surgeon, and I don't operate on anything other than the lab.
It can determine that I both know how to use the system and that I'm not a trained surgeon, that these computational observers are good enough to know that I know what the buttons do, but I have not been trained in technique. So, maybe not shocking, but I think powerful and interesting. Up to this moment, up to this point, why are we excited? All this data existed. It was just pouring out of these pipes onto the floor. We're just dumping it into nowhere. And so another question is, okay, well, let's not dump it into nowhere. Let's start to gather it, curate it, make sure it's right, and then see if we can determine what's actionable from it. That's what we're up to. Just to move to close, what we say doesn't matter nearly as much as what we do.
One way to do it is just go ask our customer, how are we doing? So we measure Net Promoter Score carefully. We do it year-over-year. It is done in a blinded way. It's done, referencing other companies in the market to see where we stand, and we, and we continue to do well. What I'm told is that world class is 70 or above, and, and our figures here, I think this is a U.S. figure. Our figure in the U.S. is 80. We're doing okay, and, and we're coming up nicely in the rest of the world. Why? If you ask: Why do you, why do you do this? Why do you think this is working? I think that the products meet the need that they're after. I think they're dependable.
We have focused our commercial teams to be aligned with our customer's mission. It's about them, it isn't about us. We have a serious focus on the data. You've probably got a little bit of a feeling of that now. And when we have a challenge, we address it head-on. We get in, we're quite transparent, and we deal with it. What are we doing in 2024? 2024, we are focused on innovation, expansion of indications, and launches of our platforms by region. There are several, they are interesting, and we want to execute them well. Our leading indicator of customer satisfaction and performance is how often they use our products. It's not capital placements. That's a means to an end. It's a necessary evil.
What's most interesting is, did they use it for the things that they want to get done, and are they feeling good about it? We have a need to focus on the quality of our products, our manufacturing, pipelines, and driving margin, especially on the manufacturing side. We have outstanding manufacturing teams. We give them extremely hard challenges. This is not to diminish their contributions in any way. And we have the opportunity to optimize our SG&A, so we're working on that, and, that's the last part. So with that, delighted to be here. Let's go ahead and take your questions. Thank you for your attention.
Well, thanks a lot. There's so much to talk about in that presentation, but I want to start with the great Q4 you just presented. 21% growth worldwide, an amazing net new placement number that I was telling my team I had to do a double -take in how good it was in the press release yesterday. So maybe we could start there, and walk us through what you saw at U.S. versus OUS, urology versus general surgery, and any other trends in the Q4 you think are relevant.
Just, just to jump in, I know most of you know these gentlemen, but just so we do it formally-
Appreciate it.
Jamie Samath, CFO. Brian King, Head of Investor Relations and our Treasurer.
Yes, so maybe I'll take capital. Am I on, Robbie?
I'll take this. Okay, there we go. So if you look at capital placements in Q4 2015, you're right, Robbie, on a net new basis, that was up significantly. We saw strength in the U.S., in Japan, and in our distributor markets. And within that 2015, what you have is actually a decline in trade-ins, so that's why the net new placements look strong. Couple of drivers, the procedure growth is the key driver. You see 22% procedure growth for the year. That drives the need for incremental capacity. We see that particularly in the U.S. In Q4, we also saw strong greenfield placements, so placements at hospitals where they're buying their first da Vinci.
We saw that in the U.S., we saw that in Japan, and we also saw that in distributor markets. U.S. is really driven by existing IDNs actually investing in smaller hospitals, rural hospitals, where they're putting in place their first da Vinci. And that's the confidence they have in their programs overall, and then investing in those hospitals. Japan is really more about the fact that they're at an earlier stage. There are more greenfield accounts that are open to us, just given where relative penetration is. On the procedure front, we saw a strong OUS performance, so 29% growth in Q4 OUS. That, in part, reflects what is a strong print for China, but on a soft comp.
So if you look at Q4 2022 in China, actually, the procedures were negative as a function of what was happening with COVID at the time. But we've had some good OUS performance in markets like the UK, Germany, Japan, and China. If you look at the 22% for the year, last comment I'd just make is, on a four-year CAGR basis, our procedure growth is 17%. A large portion of the difference between 17 and 22 is likely the effect of this patient backlog phenomena that we've described.
13%-16% procedure volume growth for next year, coming off a great 2023. I was previewing 12%-16%. A lot of my peers were closer to 11%-15%. This came in above that. Maybe speak to what's included at the bottom end of the guide, and what's included at the top end of the guide.
Yeah. So our procedure guidance is 13%-16% for 2024. I guess one thing before I get into the low end and the high end of the range, really want to emphasize that in 2023, we had 22% procedure growth for the year. You saw just elevated level of patients in the healthcare system are essentially backlog throughout 2023. So as you're thinking about 2024, it's really hard to predict what's going to happen with backlogs. So not sure, don't know what's really going to happen with that, if that actually even carries over into 2024. But at the low end of the range, we're assuming that bariatrics growth, I'd say, continues to decline modestly.
One of the things that we didn't probably talk about and as part of our procedure detail is that bariatric growth rate actually had declined from last quarter to this quarter into around mid-single-digit growth rates.
I'd say we, you know, are still continuing to take market share there. But as we look ahead to our 2024 procedure growth, we're assuming that it continues to decline at the low end of the range. We also assume that in China, anti-corruption efforts or activities that are going on there could continue to delay the tender process, which could delay install base or growth in the install base, which therefore would have an impact on procedures, and then also, backlog, not really carrying over into 2024.
At the high end of the range, 16%, we assume that bariatrics continues to, a t the current growth rates that we recently experienced, there's not a significant impact in China or from the activities in China, and that maybe there's a slight benefit or sort of a continued moderation of backlog into 2024.
Great. Gary, you know, the business is a very different position than the last time you launched a new multi-port robot. Leases are a big part of the business. So when you guys launch a new robot, probably this year, maybe this year, if you wanna comment, how should we expect the global healthcare organization to react when so many are in lease programs? And also, quite frankly, you're doing so well with the old robot, maybe there's less of a need to upgrade to a newer robot.
Yeah, let's talk about, you know, generational changeover in general terms. So first, we are always working on things that we think are powerful, and customer comes in and sits down with us and says: "Are you working on something new?" And the answer is: "Yes! Of course we're." That's like asking Mercedes, are they working on the next E-Class? I think the answer is yes. We're gonna do that. In fact, these development timelines are extremely long. So we're not only working on the next one, we're working on the next one behind that, too. We're now a larger and more capable organization that way, so we do that. When do you bring it to market? When would you bring such a thing? So three things are a requirement .
One of them is, it's important enough to matter in a meaningful way. So does it or does it not take the Quadruple Aim and make a difference that we think we can prove? So we certainly don't wanna rush something out there just because we feel like it's time to do it, and we didn't make a change. That's nuts. We're not gonna do it. The second thing is, you need to get your supply chains right. These are sophisticated. If you're gonna do something meaningful, it is not trivial to get the supply chains right.
And last thing, the global regulators have to come along with you and understand it, review it, challenge you, and accept it. When those conditions are met, then we come do it, and when we do that, we talk to our customers first, and then we come talk to you, not the other way around.
So last year, you expressly told us, no new multi-port robot coming this year. Any comment for 2024?
No comment.
All right. Jamie, maybe a question for you. Where I look, and I listened to your commentary on gross margin for 2024, and you've talked multiple times about increasing depreciation flowing through the P&L. My model has year-over-year declines in gross margin in 2024. The Street has year-over-year improvements. Any color now that 2023 is pre-announced, that you could give us on 2024 gross margins, and how to think either the up or down in the magnitude?
Yeah, I'm not gonna give the direction specifically, 'cause we'll provide the guidance, obviously, on the earnings call on the 23rd. What I would say is, obviously, gross margin so far in 2023 has been below maybe where we've been in the past, pre-COVID. There's really three areas of focus for us.
One is the product costs for particularly our newer platforms, and Gary described that. And as Gary said, our teams are working hard. They're making progress. That is a multi-year effort. Second, you've seen us have elevated capital expenditure, mostly for manufacturing facilities. That sets us up for the medium term in terms of the capacity that we'll need, but also we think gives us advantages in the virtuous cycle and what we can deliver to customers. And so you have a period there where you have incremental depreciation expense, and so you have to work through over time, how do you absorb and then leverage that incremental depreciation expense? And we do expect incremental depreciation expense coming in in 2024, and that will be both in cost of sales and in operating expenses.
Then over time, obviously, we have the opportunity to continue to drive growth through both our soft tissue business and our Ion platform, and over time, that gives us opportunities in gross margin. We'll give the actual guidance for 2024 on the 23rd.
Great. Gary, the magic number of 7+ robots at 48% of hospitals-
Actually, it was a growth rate, not an absolute number, just so we're on the same page.
Sorry. It's still staggering how many hospital IDNs have 20+ robots, how many have 7+. And really, what it shows, as you mentioned, is the quality of the systems and the willingness for systems to invest both in the infrastructure, the training, and the entire ecosystem. And I'm thinking about this, one, how this creates a huge competitive moat for Intuitive Surgical and the just massive amount that a competitor would have to come in, not only to break into those systems, but then to what they would need to add on top of it to make it more worthwhile, given your utilization per system continues to go up, as you talked about in the session. So how do you think about this, one, as a strategic benefit for Intuitive Surgical, and B, as a competitive moat for versus competitors?
Let's talk about competition. I think the most important competition, and honestly, I think the hardest for the company to react to is competition at the disease state level. And GLP-1s are a perfect example of that, which is what's the new thing going on here? Somebody has a disease, they need to address it, and many of the fantastic companies that are at this conference are working on different things. And so that's why we're so driven, less about technical features. Is it an open console or is it a thing on a little card? These are all means to an end. Are you gonna drive a different outcome, and can you show it? So that's number one.
That's where we focus the organization. I think number two is, you have to deliver on the Quadruple Aim: better outcomes, better experiences for care teams, better patient outcomes, better patient experiences, and lower total cost to treat, lower total cost to treat at the end. And so that whole ecosystem that we put together is to demonstrate and then back it with data that we can do that. And I think what's behind that, seven systems and the IDNs adopting, is that we show in their hands with their data that the Quadruple Aim works. And if another competitor, another company comes out and shows that they can do that better in our format or a different format, people will be willing, willing to move. But I think what we've asked of everybody is: show us the data.
Hold us to it, and hold anybody else to it. And, and I think that's our conversation. There will be companies that do it well, and, there are companies who will have, different approaches to mechanism of action with disease. Fair enough, and there'll be different companies with different technical architectures to try to do it. The bar that we've tried to set is that we, we hit all of the Quadruple Aim and that we can prove that we do.
I'm giving you an unfair question because we have less than a minute left here, so I'll, I'll make it a short answer for you. AI and big data, you talked about it a lot i n the presentation here. Small, moderate, major impact to Intuitive Surgical and surgical robotics overall in the next five years.
Economic impact, as you see it in the P&L in the next few years, will be small. Impact to the field in the next decade will be significant. Economic impact for people who do it well as organizations will be significant over the long term. So a little patience up front, focus on efficacy, and it will have an economic return at the end.
I have pages of questions left, but unfortunately, we're out of time here. Thank you so much.
Thanks, Robbie.
Thank you, everybody, for joining.