2022 Keynote: How Dave Albert (AliveCor)
Innovates in Medical Devices and Wins

26 min reading time

How Dave Albert Innovates in Medical Devices and Wins

Presented by Dr. David Albert, AliveCor
at the 10x Medical Device Conference – San Diego, 2022

Reading Time: 26 minutes


Joe Hage: What I enjoy most about him and I know you’re all gonna say the bowtie, it’s not the bowtie, he is sartorially splendid, and he’s really smart and really rich.

[Laughter.]

Joe Hage: He has 72 patents.

David Albert: : 80

Joe Hage: Pardon me. I didn’t look this week.

10x London is on! Join us 15 September 2022.

Joe Hage: And I know of very few manufacturers who have gotten things off the ground and commercialized the way he has. Every moment I speak is a moment you’re not listening to him. Here’s Dave.

Note: The following was autotranscribed by otter.ai and got probably 80+ percent correct without edits. Interpret accordingly.

Dave Albert: It’s a big pleasure for me to be here. It’s a real surprise. Because back in 2001, a company called General Electric bought my second company, I started, named Data Critical.

And while I was there, which was for about three-and-a-half years, I had a boss – my best boss(!) – and he’s sitting right there, named Claude Benchimol, and I have not seen him in way over 10 years. So I would – he said, “Don’t you recognize me?” Yes, I recognized him, which was good! And I didn’t have to look at his nametag. But that’s, that’s an extra special pleasure. It’s a pleasure for me to be here. You know, I’ve had a number of you come up and ask questions. And that’s kind of why I’m here. Ask questions.

I’m old now. So, Claude, you know what that means about you. [Laughter]

I have a lot of experience in medical devices. Now my experience is really focused on cardiovascular medical devices. It’s not a small area, it’s actually a huge area. But it’s, it’s certainly not area, and many other types of medical devices.

But you will see the world from my perspective, and I’m gonna go through, you know, I’ve got slides, and I’ll go through them. If I was you, buckle your seatbelt, it’s gonna be a wild ride.

But what I’m going to do, is I’m gonna go through innovation, invention, the things you have to do that you’ve heard people talk about today – regulatory? Oh, my God! And protecting intellectual property, oh my goodness!

And for those of you who know, I’m just suing the world’s biggest company – three separate lawsuits. I’m going to win, by the way. So that’s scary.

It’s really scary to do things like that, to be deposed for eight hours, by a really mean attorney.

But it’s what you have to do if you’re wanting to protect the things you’ve developed. And, and in medical devices, you know, we develop intellectual property. So I’m gonna go into that, and then I’m gonna talk about – the last part of it is how you get your things accepted.

Because I can get patents and build devices. I can get them through the FDA, but I have to get customers to buy them. And how do you do that in medicine?

Now, why am I here? That’s that’s an interesting notion.

I started four companies that make life-saving devices, sold a couple of them – sold one to General Electric. I said Benchimol, I said Dr. Benchimol there was my boss for awhile. I raised over $500 million, both private and public equity. Anybody here ever heard of a guy named Vinod Khosla? He’s the Chairman of my Board. He’s only on two boards, Square and AliveCor, and he’s my chairman.

But we also have Qualcomm, little company here in San Diego, Mayo Clinic, fairly well-known healthcare enterprise, and a Japanese company named Omron, and if you go and buy a blood pressure cuff, you’ll buy theirs.

So those are some of our investors.

I have 80 patents – 30 international patents – taking at least 20 devices through the FDA. We’ve sold over 2 million devices. We have about 1.2 million active customers right now. How do I know that?

We get a million ECGs into our cloud. So one of the smart things – I’m not very smart – one of smart things I did when I started this company in 2011, when you sign up with us, you sign away your rights to anonymized data.

So I get every piece of data – it goes into AWS. And you’ll see I have a I get a million ECGs every week, there in my cloud.

You’ve heard of the saying “Big Data?” “Machine Learning?” Yeah, we got that.

And then we’ve raised many millions already.

Innovation, we still need it. Things are getting faster. There’s an organization, Exponential Medicine, if anybody’s ever been to the meeting, a friend of mine Daniel Kraft ran it – was always at the Hotel Del, and he talks about this notion of Singularity University and things are getting faster and faster. It’s absolutely true.

I mean, one of the greatest examples are the mRNA vaccines. The fact that they developed a vaccine using a technology that never been used before, in a year or less than a year?! Just unbelievable. So interconnectedness.

Anybody here not have a smartphone? You wouldn’t admit it if you didn’t.

Joe Hage: Any of you wish you DIDN’T have a smartphone? Yeah, exactly. [Laughter]

Dave Albert: But we’re always connected. And that can raise can raise its own problems, but it means the world is connected.

You know, we’re all connected, whether it’s social media, which is both positive and negative in terms of connecting us, or whether it’s these things in our pockets.

We seem to stay connected. I don’t know what we did 20 years ago, Claude, how did we, you know, email was relatively new. And today we have Slack, we… it’s just amazing… WhatsApp.

So the pace of a viral epidemic can be frightening. We saw it. If you are New York in March, in April of 2020, you saw what the pace of a viral epidemic can be.

And I was the beneficiary of a viral epidemic. I made a four-minute video, December 30, 2010. And I just happened to upload it to my 400 LinkedIn followers, I have 13,000 LinkedIn connections now, but I had 400 at the time, and I went home to have a date with my wife on New Year’s Eve. And by Saturday, and I had 400,000 views. That was in 2010, okay?

I got called by… so I went to the Consumer Electronics Show. And I got a call from everybody from Apple to CNN and Fox and Friends and Good Morning America. And I had to get up at three in the morning. So I could be there at four in the morning. So I could be on the air at seven in the morning. And it was my video went viral. Now I was in my mid-50s, I had no idea what was going on. But I was the beneficiary of a viral information spread.

We know as a medical doctor, viruses, this is the 1919 Spanish flu. And by the way, if this were 1919, this would have been just as bad. SARS COV-2 would have been just as bad as the Spanish flu. And, you know, we’re lucky that we have the science and the medicine we have today.

So exponential medicine, you know, the sigmoid curve, things don’t just move in straight lines. This is this is biology, this is real life, what they add on top of each other something we enter in engineering called superposition. And you can innovate anything. Anybody have a Nest thermostat, or an equivalent? Now we do. And that, you know, you can control your temperature and your air conditioning and heat from wherever you are with that smartphone thing that’s interconnected.

Everything is connected your cars, right, your Tesla, you can start it, you can stop it, you can tell it to park and come get you. So we’re all connected.

And so, is planning to invent an oxymoron? How do you plan to innovate?

Well, you can, there are things you can do. I’m not seeing a lot of people doing well. And I’ll go over some of them. These are these are a few.

One thing I talk about is thinking orthogonally. And for those of you who don’t remember your basic geometry, orthogonal means at a 90-degree angle, okay?

So, when conventional wisdom is, as an example, a vector in that direction, orthogonal would be pointing in this direction. It means taking a different view than everyone else, taking a different perspective than conventional wisdom.

And the other thing is intercepting the strategic vector, where are things going? You know, 20 years ago, we had a book called Megatrends by Naisbitt and talked about the trends that have taken off. Well, now we have social media. I mean, tik tok. You know, I can tell you that Mark Zuckerberg is scared of tik tok, you know, and he bought Instagram, and he bought WhatsApp, he bought the things that he thought were going to jeopardize his facebook business. And then here comes the Chinese, with tik tok. And I would tell you, it’s addictive. It’s amazing. And they, they scared him. So orthogonal thinking, I talked about that.

Ignore the conventional wisdom, you may fail, but don’t be afraid of failing. Okay, that’s one thing. Steve Jobs said over and over again. If you’re afraid of failing, then you shouldn’t try to be an entrepreneur, innovator.

Smartphone. It is the portal to healthcare. About eight years ago, I had a guy from Kenya – anybody here ever heard M-Pesa? M-Pesa is the cellphone-based money they use in Kenya, they really pioneered it. And the guy gave a talk and he said, you know what we’re gonna do? We buy sugar. Let’s do bread by the slice. We’re gonna buy healthcare the same way. And I think that’s the notion, we here, we’re buying insurance, we’re worried about co-pays and deductibles . By the way, insurance they’re going? Only one direction.

Big Data and AI? I just told you, I get a million ECGs my cloud. Do you think anybody can read those ECGs? You think it’s even remotely possible that I can recruit enough experts to even begin to think about reading those ECGs? No way. So if we aren’t able to use AI, sophisticated machine learning and deep neural networks, for those I don’t want to go into a treatise here, but they’re just pattern recognizers. They’re really, really good pattern recognizers and they’ve revolutionized image recognition and speech processing. But that’s what they are. They are not general AI.

Inventing is a team endeavor. We have a bunch of people here who are in complementary jobs, complementary companies. There’s no such thing. By the way, Thomas Edison was a team inventor. He had a team in Menlo Park with people. He didn’t do it all himself. Okay. Well, that certainly is true today, when people are very specialized. We have people who have front-end developers and back-end developers and cloud and AI and hardware people and RF people, and wireless people and analog guys. It takes a team of people to invent medical devices.

Build a prototype that works well. Congratu-damn-lations. Okay, it works. Now, what do you do? Well, I’m going to go into that.

Patents? Anybody here have patents? That… good? So you know, what it’s like, it’s not inexpensive. It’s not painless. It’s not fast. It’s none of those things. And oh, by the way, what does it do? Does it really protect you? No, it gives you a right to sue somebody. Talk about a process. It’s neither fast nor inexpensive. If you think in patents, is that, litigate? Oh, my goodness. Okay. So I would tell you, that while they are probably necessary, they are not painless. And I would say evaluate whether your business is moving so fast, that the value of patents is really relatively minimal.

You need a plan. How many people here have written a business plan? Okay, so you know, today, if you go to somebody on Sand Hill Road, one of venture capitals on Sand Hill Road, and I’ve had NEA, Coastal Ventures, I can tell you, I’ve been in front of Andreessen Horowitz and Sequoia, they just want a deck. Nobody wants 15 pages of Excel spreadsheet anymore. And what I thought you needed 30 years ago, but now because they are, this is not trite, they are investing in you. And whether or not they think your idea is big enough. TAM, total addressable market, and whether or not they think you, together with the people you can recruit, and they can help you, can realize the vision in that plan. So a plan today is a deck.

Like I said, I can’t speak for, you know, urological devices, or even, you know, advanced imaging… Dr. Benchimol can… whether it’s MR or CT, I can speak about ultrasound, which is advanced imaging – has come a long way from when I was building those devices, but really I’m focused on cardiovascular diagnostics. And that’s what I’m going to use as my examples to try to give you some lessons.

So, heart disease, despite everything we’ve done, and we’ve done amazing things, is still the world’s number one killer. In certain parts of the world, it dominates. South India, skinny on the outside, fat on the inside, genetics, lifestyle, all kinds of things.

In fact, about seven years ago at the American Heart Association, the head physician from Beijing’s major heart hospital came and gave a keynote at the AHA scientific sessions. And he said, you know, we manufacture all these things in some of the United States, but you’ve exported something to us: Your lifestyle, you’re smoking cigarettes, sitting at desks, typing into computers. And so our incidence of heart disease, we’re no longer a, you know, cultural revolution, agrarian economy, we’re now in the business of having heart attacks. And so they are very concerned about that, because it’s draining a lot of resources they’ve rather commit to taking over the world.

Digital health, everybody has adopted digital health, every healthcare organization, you know, you download apps, you have your MyChart portal it’s going into EPIC.

Everybody is using those tools, why? Connecting to patients.

The idea that patients are first was never the case. You know, when you were rolled out in your wheelchair and put in a car, you know what they hoped that you came back tomorrow, because that’s how they made money.

Today? If you come back tomorrow, they’re going to lose money on yet because they’re going to be penalized. And so they’re very concerned about patients. And digital health is a way of engaging, empowering and connecting them to patients.

So in cardiovascular we have tons of devices, digital health devices, digital health apps, implantable devices, non-invasive devices, we have a lot of devices, okay. And today, we have handheld ultrasound devices.

It’s a company butterfly that’s made of business on it as good as my business but they sold the business. The big ones Philips, GE – I have a Vscan Air, it’s a handheld ultrasound device, totally wireless. So that technology will ultimately supplant that old stethoscope that we use to hallmark we’re a doctor or nurse.

So what’s our journey? Well, you know, first of all, I had a smartphone-connected device – we still do – and it is evolved. We had a, this is going to be funny. We had a first smartwatch ECG called KardiaBand. So before Apple introduced ECG built into their device, we had that device.

We then partnered with Omron, if you’re going to CVS, you can buy something called an Omron Complete. That’s a blood pressure machine with our ECG technology integrated into it. We’ve developed a number of other services.

Recently, our most recent FDA clearance was for device that’s literally the world’s thinnest ECG, the size of a credit card.

I had people from Medtronic, when I was back here, this is a Medtronic LINQ, one-third the volume of a triple-A battery. And it has a three-to-five-year battery life, they implant it under the skin records ECG, it takes four of our devices to equal the width of that device.

I had Medtronic engineers come to the Heart Rhythm Society last week, and compliment me, I take that as a real compliment.

We right now have 1.8 million active users who have recorded 150 million ECGs, all of which residing my cloud, and I get a million every week. Again, human beings cannot annotate that, cannot over read that. We must have machine learning. But that is the raw material that feeds machine learning. That’s a real asset.

And you can see kind of you see the cyclical nature? Well, that’s because we sell a lot of our devices direct to consumer and by the Amazon. Anybody here ever seen any of our TV ads?

Joe Hage: Yeah.

Dave Albert: Okay, so we have TV ads, I saw it on “60 Minutes” the other night.

Joe Hage: And that was not an inexpensive buy.

Dave Albert: But we’ve, we have built a consumer brand.

It’s amazing.

And it’s cost us about $60 million to do that. But it’s something a lot of the- I don’t think there are many digital health companies that have a consumer brand. But we spent a lot of money we made, you know, we were supported by our investors to get us to the point where that is a very valuable asset, just like our intellectual property, just like our customers, just like the data.

So with 2 million lifetime users. 640,000 people take their ECG this week, 150,000 subscribers, that is, those people paying us 10 hours a month. That means we have $17 million of recurring revenue, very important to investors.

42 countries. See, this is out of date: 150 million ECGs, 110 patents filed globally, we have about 50.

And then 185 peer-reviewed papers, and I’m gonna get to that. That is we’ve had someone today. In fact, this was an article about a paper that was published in the Journal American College of Cardiology EP. We had no idea. Let’s just say Cupertino does not Dave Albert. I’ve gotten that reinforced several times. And they’re definitely don’t like this.

Joe Hage: It’s hard to see in the back. This is dated May 9.

Dave Albert: Yeah, it was it was today. It was today. It was yesterday, excuse me, yesterday. And we didn’t know this was coming out. But our lawyers like it a lot.

So a backbone is… AI is the backbone. And we have an extensive artificial intelligence data science team, we used to call them algorithms, and now we call it data science. It’s the same thing. We use different methodologies. And we use machine learning more than experts saying, well, it should be this, you know, divide by this, this millivolts or microseconds, we let the data tell us what it should be. But when you do that, you’re going to need accurately annotated data to do some called supervised learning.

Although one of the leaders in deep neural networks, Yann LeCun, who’s both the chief scientist at Facebook and also professor at NYU, says the future will be unsupervised. And we’re taking advantage of that.

Okay. Remember, I told you the most important thing is you got to get customers to buy the dogs must eat the dog food? How do you do that in medicine?

Well, you prove your device either can do the same thing they’re doing today only to a cheaper and faster, more efficiently, or really prove that it’s better than whatever exists today. Those 108 peer reviewed publications? That’s what that’s all about. So they’re in every major cardiovascular journal.

And here’s, here’s the today. Every two weeks, we have a new paper published every two weeks. So that’s a pretty good rhythm.

Biopharma. We have partnerships with Novartis with Bristol Myers Squibb with a number of pharma companies. Anybody here ever see an ad for a drug called Kasqali. For metastatic breast cancer, every Kisqali patient gets an AliveCor device to monitor their QT because Kisqali, while it’s helping to treat your breast cancer, could kill you with a prolonged QT.

So the FDA demanded that. We have FDA clearance.

We reduce healthcare utilization. So last year, had a paper published in July 2021 that said you can reduce ER visits. Does anyone know how much an ER visit costs?

About $6,000. So if I reduce one ER visit, I just want you to give me half, you can keep half, I’ll take half. We’ve also had people recently do loading of drugs that normally have to be loaded in the hospital. Ohio Heart just presented an abstract at the Heart Rhythm Society. They said they saved using our device as an outpatient loading it remotely $6,800 per patient were saved. Again, just give me a little bit of that.

Healthcare organizations. I think I mentioned these. all the leading health care organizations in this country in Canada, in the UK, around the world, use AliveCor and we’re in 42 countries are not in China yet. We’ll be in Japan at the beginning of 2023. But we’re, you know, in many parts of the world, and recently, we got something called NICE guidance. So the National Institute for Clinical Excellence, the part of NHS that evaluates new technology – it only took us eight years – it really moved fast in England – but that means that they will pay for our device.

The National Health Service will pay for our device, a general practitioner can provide our device, that’s a big deal. And we’re expanding that around the world.

It’s all about not – the patents – the patients. That’s what I said earlier.

That’s what digital health is. Digital health is engaging the patients in their own care. An engaged patient is compliant patient and compliant patients is complying with their own treatment is a better-outcome patient. And that’s what it’s all about.

I, you know, I went in this business to help patients. We have thousands of people we’ve helped. And these are just some of them. These are just examples of people who’ve reached out to us.

I mean, I’m proud to say we’ve had well over a thousand people say thank you for saving my life, my son’s life, my dad’s life. I’ve had two people at GE Healthcare telling me the same thing.

Two people came up to me and said, you know, it was amazing. I’m sitting there trying not to cry, by the way, when they tell me this.

Here’s my personal system. This is what I have done. So first of all, this was my first patent. This was a heart rate monitor. And you think something like that existed in 1981, that’s the thing I wanted to build for my dad. I actually built that. And I sold it to Timex, okay, at the time, and today I have a relationship. That will be used an array of sensors. And, again, I built a prototype that was on my wrist.

This was the next product I licensed – this was to Quinton Instruments. Somebody here worked at Quinton? This was Exerdop. I sold that to them in 83.

And what you see on the left is from the patent. What you see in the middle is a “Circulation” paper – Circulation is the major journal of the American Heart Association. And on the right, you see the 510(k) and then you see an app.

So notice something: Patent, clinical validation, FDA clearance, commercialization.

This was my net first company, Corazonix. We built an EKG microscope: Patent, clinical validation, FDA 510(k), commercialization – used by every major company. Sold that company in 1991. This is AliveCor: Patent, clinical validation, that was a presentation to the Heart Rhythm Society – I told you I have 180 [peer-reviewed studies] – 510(k), we have a number, and then that’s a slide from my original 2010 video.

If you’ve seen our ads, you will know who we are, we sell a lot. We sell over 1,000 devices every day.

And this is device I told you about patent and 510(k), where’s the clinical validation?

Well, this, in essence, is the same device we’ve sold for 10 years. It’s just way, way, way smaller, way more convenient. I keep it in my wallet. And so while there will be clinical validation, by the way, that’s the thing that takes the most time. We did studies, which is how we got the 510(k).

Anybody seeing a theme here, I do the same thing. Again, and again, and again. I invent, I protect my invention. I get it clinically proven, so that people believe it. Then I get it regulatory – I jump the regulatory hurdles. And now I’m ready to commercialize.

And so that ladies and gentlemen, is my plan. And now I’m happy to take your questions. Thank you.

Joe Hage: I know there are questions. Steve, stand up and tell us who you are, what you do, and your question.

Steve Maylish: Steve Maylish, Fusion Biotech, we’re a contract engineering firm. A lot of people say commercialization is the toughest part of this business. Do you have any tricks of the trade on the commercialization side?

Dave Albert: Depends what you’re doing, you know, we sell both to health systems and directly to consumers. That’s part of the digital health nature. I mean ours is Class II medical devices, FDA cleared, they are ISO 13485’d, all of the medical things, yet we have FDA clearance to sell that directly to consumer, like a glucometer, like blood pressure cuff, like pulse oximeters today.

And so we skirt two ways, you know.

The problem with selling to consumers is, it’s really expensive, because you got to go build that thing called “a brand.” Selling the doctors and the hospitals, requires human beings, direct sales force, and that too, is expensive. And that’s what I’ve done previously, I had sales forces, that called on hospitals and called on doctors, just like Medtronic, Philips, GE, they have these large sales forces, Boston Scientific, Abbott, you know, that educate and sell their product or services.

And increasingly, everybody wants to sell you a service for that magic, recurring revenue. Okay. So they want to somehow turn, turn themselves into another Netflix, despite the fact they just had a bad quarter. Yeah, but despite that fact, that’s what they want to do. And so you’re gonna see more and more innovative ways, I think.

The healthcare system – because it’s so messed up in this country – so such a patchwork of, you know, uncoordinated was not designed, just happened. I think they’re gonna get smarter about why do I have these sales people that, by the way, sales people didn’t show up for the last two years, they couldn’t come into the hospital.

So they learned that, you know, they can do things, and the companies learned I can do with fewer sales people. And so I think you’re going to see some movement away from what I would call the classical direct sales model in medical devices, although you’re still gonna have major educational component, and relationships still matter.

But we do both. And I can tell you, that’s a challenge. To do both. Well, you need different people selling consumers, it’s completely different than selling to health care organizations.

Joe Hage: I have the next question. And that is, I know that success to some degree begets more success. You are proven, you did this, I trust you, I’m gonna give you money, etc. Tell us about – I know it was out of love and you made it for your dad? How much would it cost to make your first invention? And were you able to leverage that for your next invention to get investors and human resource.

Dave Albert: $500, it cost me 500 bucks.

Joe Hage: Back in the 30s that was a lot of money!

Dave Albert: It was a lot of money back in the Depression. [Laughter]

That patent my dad paid for that, that cost about $3,000. You couldn’t get a provisional patent for $3,000.

Today, forget about an issue utility US patent. And by the way, that patent has been cited so many times. I mean, who here has a wrist device that measures your heart rate? Will they all refer back to that same day, every patent refers back to that I again, I don’t know what I was drinking that night. But it was fairly, you know, prescient idea about the future.

So it thinks cost a lot of money, you know, a utility US patent today, $15,000. International coverage – not even global – $100,000. And that just gives you – if you get it – that just gives you the right to sue. And suing is a seven- to eight-figure endeavor.

And so it’s not for the faint of heart. And it’s certainly biased against small companies, individuals, it’s not set up for those.

So that’s what I wanted to ask you before leaving there and again, talking about the cases, or how they are fruit-like the competitor, may be. How do you how do you get your case together when you’re fighting a Goliath like that?

You remember what I said? I have Qualcomm, Mayo Clinic, Omron. Khosla Ventures.

Joe Hage: I’m trying to make this relevant for the people who aren’t you.

Dave Albert: We have we have deep pockets.

Joe Hage: YOU do.

Dave Albert: That’s, that’s the point. And you know, we wouldn’t take it on if we didn’t think (a) we had a very good chance, or (b) we didn’t have the wherewithal to do it.

And so, it’s unfortunate, but that’s the way the system is. And there are people who are trying to change it. I don’t know that they will.

Has anybody here ever heard of the American Invents Act? Yeah, so that changed everything. It used to be in the United States that, I kept notebooks – I have a shelf of notebooks – that would document my invention date. That doesn’t matter anymore, because the rest of the world went on ‘first to file’ not ‘first to invent.’ And so notebooks are irrelevant.

It’s when you file and the American Invents made us homogenize our system with the rest of the world. The problem is, it’s easy for a big company to file zillions of patents. And so it really bias to the system. Now there are people who fund litigation. And they are the bane of a lot of company’s existence, because they’re they’ve said they’re called ‘trolls.’ But, you know, some people would call them heroes if they’re defending their intellectual property honor. I don’t have a position on that. I’ve been on both sides, I’ve been an expert on both sides of those kinds of cases.

Well, what I will tell you is the patent system is not for the faint of heart. It is necessary yet not sufficient in order to protect your innovations. Some companies don’t ever get patents and do very well. Other companies protect their intellectual property, one down the street here called Qualcomm. You ever walked into their main building? You’ll see a wall, a huge wall of patents. And that’s because that’s they were based on intellectual property started by Viterbi, and Jacobs, to MIT professors who said, “We can do wireless better.” The Viterbi algorithm, there’s the Viterbi School of Engineering at USC by the way, and they basically said, “We can do it better.”

And the rest of world said, “Oh, that’s a joke, you can’t do it.”

And they did it. So that our all our cell phones are based essentially on an expansion of something called CDMA, code division multiplexing, as opposed to a time division, or frequency division, and theirs is better. And so they let companies become a very big company, and has litigated. They got a head start. And they were able to get, you know, get enough mass. But normally patents are are challenging to enforce against those companies.

Joe Hage: I have Andrea Davis here because she’s my “Patent Detective.” And I just wonder what your reaction or thoughts are with what David just shared.

Andrea Davis: I think it’s all very insightful. And and I’m impressed by your patent knowledge. And I think it’s something that is needed for an for an entrepreneur and a lot of people, you know, have a hard time it’s a challenging thing to to embrace, to learn to navigate. So I have all the respect.

Dave Albert: I sued and been sued. I’ve been a witness, as well as an expert. So I’ve been to the Court of Appeals, District Court, ITC. So yeah, I got – those are some of those scars I told you about?

Joe Hage: Have you ever been on the People’s Court or Judge Judy? [Laughter.]

Dave Albert: Judge Judy? I’ve not been on Judge Judy.

Joe Hage: But the People’s Court, yes?

Dave Albert: No.

Joe Hage: Amy has the next question.

Joe Hage: Hi, Amy Asbury, I’m a medical device recruiter for Finesse Partners. My question is simple. I want to know, you’ve done a lot. What is it that you’re most proud of that you’ve done?

Dave Albert: Besides marrying my wife, actually thirty-eight years ago, smartest thing I ever did. What am I most proud of?

I’m most proud of the fact that we sell a device for $79 that is available to anyone and that kit that is used in rural India, and basically can work for in Africa, all over the world, and brings real value to people.

You know, I set off to become a doctor to help people… some altruistic notion. And when I left medicine, practice of medicine to become an entrepreneur, I did it because I thought I might be able to help more people than I could with just my hands. And I think I’ve done that, which just makes me feel pretty good.

Joseph Anderson: [Joseph Anderson] I’m the President of the Institute for Process Excellence. I think you’ve done an excellent job of telling the audience, the first level, the first big step of getting to that commercial ‘let’s go?’ What are your scars afterwards?

Joseph Anderson: Because as we all know, and many in this room might like to hear from you. How do you keep that product relevant? How do you ensure quality? How do you get the right supply chain involved because that is where my scars are from. So I think that would be great for the audience to hear.

September 2018. I get a email from a woman named Chrissy Farr, who is the health reporter for CNBC. And she says Apple is going to introduce ECG on their watch, which they did.

And I’m sitting there saying, well, my company’s dead. My chairman of the board, Vinod Khosla, calls me and says, “Best thing that ever happened to AliveCor. We’ve only grown 700% since then.

They validate your tiny voice for seven years. Personal ECG, this is important, in the world’s biggest brand, most profitable company comes into direct competition with us and says, “Hey, yeah, this is really… you got to have this.” And it just accelerated our business because oh, by the way, it’s like, we’re the experts. They’re not. I forgotten more about ECGs than they’ll ever know. And ECG technology and I can tell you that the world’s leading ECG companies all believe that so and the Cleveland Clinic and Mayo Clinic all these guys believe that and so we were able to take advantage of the market momentum that they helped create, we were there, we didn’t get killed, we didn’t get wiped out. And that, that was an insight for me. Again, the Vinod had a lot of experience, he knew that this wasn’t going to kill us, we had a good position. And that, you know, it would help us – and it has – but that doesn’t mean that we can just sit back and put our feet up. Okay, so we had to keep innovating. So we had to bring out something like my credit card ECG.

Joe Hage: Which I’d really like to, Verna, I nominate you. Please stand and approach the podium. Would you kindly, if you don’t mind, HIPAA compliance and all that stuff, would you let Dave, check out your heart rhythm?

Dave Albert: Oh, sure. Yeah, this is easy. Unfortunately, don’t have a camera. Sit down right there again, young lady.

Verna Manty Rodriguez: I think we’re the same age.

Dave Albert: Okay. That’s good. So you’re so you’re really young? Exactly. No, no, no, no, you look much younger than me.

So I’m gonna just start this up, just so she can see it. It says initializing.

So, I’m gonna hold up, because people can see, it’s actually showing her ECG in real time, see if I can just wait and get a little bigger. And so it’s recording and then it’s going to finish. It’s counting down.

Do you want me to tell you the truth? You’re good to go, girl.

Joe Hage: Can she drink tonight or no?

Dave Albert: 67 beats a minute, two, one. And then it’s gonna say boom, normal sinus rhythm.

Joe Hage: You may have a drink.

Dave Albert: So, thank you. So that device, you know, I just pulled it out of my wallet right next to the credit cards. It’s, it’s more expensive.

Verna Manty Rodriguez
: My husband has one.

Dave Albert: Oh! Your husband has one! Thanks!

By the way, my youngest graduates from college in two weeks, so just keep buying them.

Joe Hage: The next question comes from the screen. We’re just gonna play a short video and have you comment on it, please.

[Clip from “All The President’s Men” plays.] Can you share with the folks here why I would have chosen this particular video?

Dave Albert: Okay. Well, closer than me it was my dad. My dad was the Speaker of the US House of Representatives at that time. And his name was Carl Albert. He was a Rhodes Scholar from rural Oklahoma – I told you I lived in Oklahoma, down in the boonies. But he was the Speaker of the House. And he, yeah, these are some… it’s interesting because some of the people just listed their Haldeman, Ehrlichman and went to school with their sons along with a guy named Bush, a guy named Percy. A guy named Al Gore. They’re all old classmates of mine. My other classmates ever heard of Bill Gates, Steve Ballmer, Jim Cramer, Harvard Class of 77.

Joe Hage: Name-dropper!

Dave Albert: Yeah, well, you asked!

So that was that was then, you know, in in October of 1973. I was a freshman in college. And I don’t know if anybody here ever listened to Rachel Maddow’s “The Bag Man?” What happened?

Spiro Agnew, the Vice President had to resign, and my dad became first in line for the presidency. That was about five, three. And he had all these big secret service guys. It’s hilarious. Actually. I was just worried it was gonna interfere with my dating…

Joe Hage: Just, when you told the story originally about – you were asked to deplane?

Dave Albert: Oh, yeah. Okay. I was a freshman at Harvard when… and I didn’t watch any news. And I had a girlfriend in Washington DC. And you could fly from Boston to Washington, DC for $35 on what they call the student ticket.

And so, at on seven o’clock in the morning, my father called every morning… my roommates hated me! But they couldn’t say anything because my dad was important.

So that morning, got a call seven. It wasn’t my dad! It was my mom, my mom’s from Columbia, South Carolina.

And she said, “Honey, are you coming home?” And I said, Yeah, I got a date, Mom!” She said, “Well, things have changed.”

I had no idea what she was talking aboutwhich was fine. I didn’t watch the news. I had no idea the vice president resigned. So I’m on the plane landing on what is today Reagan – was the National Airport. And the captain comes on and says would “David Albert, please stay in his seat?”

Okay, so everybody gets off. And I look out and I see my dad’s limousine and I see a black SUV. And so what happened is they lowered the… this was a 727… they lowered the DB Cooper doors – remember that? In the back, 727?

And this guy comes up, this big guy. And I’m looking at him and he goes, Dave, how you doing? I’m Gil Perosko, head of your dad’s Secret Service detail. Secret Service detail? What?

Come on, we’ve got your back. And I get in my dad’s limousine and Gil gets in the front seat on his big huge backseat. I go to my dad’s driver, “What’s going on?” He says you’re going to talk to your mom.

And Gil’s just talking to me, “How’s wrestling practice?” I was a wrestler… I was a high school All-American wrestler and I was a college wrestler and went the Olympic Trials and I was like, “What is going on?!”

So get to the apartment. We walk in, this guy opens the door, there are all these people around, walk in. There’s somebody sitting in the lobby, he nods to get… on the elevator go to the top floor. We walk around the hallway and there’s a guy in a folding chair with the briefcase opened up with a cover open up towards me.

We walked by, look down. There’s an Uzi submachine gun in the in the briefcase.

We get to the door. Gil knocks on the door. Gil escorted me the whole way, “Well, we got him here.”

“Oh, thank you, Gil.”

I go in. “Mom! What’s going on?” “You don’t know.” I said no.

“The Vice President resigned and your dad’s first in line for presidency.”

I go, “Really?!”

“Yeah, they’ve got an apartment here and they’ve got a SUV. I mean, a mobile home out back and they’re on every floor,” and I went, “This is nuts! Is it going to impact my day tonight?” [Laughter.]

“No, you can drive again,” they didn’t think I was important. But that was that was crazy… happened again!

Remember? Because Richard Nixon resigned that summer in July of 1974. And once again, my dad was first in line for the presidency. His friend Gerald Ford had become the president of United States. So it was nuts. That life was nuts.

Joe Hage: I cannot remember who was Ford’s vice president.

Dave Albert: Rockefeller, Nelson Rockefeller.

Joe Hage: Okay. And how long did after he?

Dave Albert: Well, Nelson Rockefeller, later died having an event of an affair. That’s the long story. But remember, Jimmy Carter was, uh, beat Ford.

Joe Hage: I do know that but I’m wondering how long between Ford taking office…

Dave Albert: Oh, it was months.

Joe Hage: So your dad was…

Dave Albert: Oh, it was months, oh, months!

Joe Hage: Did you have, like…

Dave Albert: I didn’t have it. He did. Again, you know, today’s things are much crazier than they were then. Okay. Nobody expected that anybody would go after kids. I mean, today, I think we live in a different world. I’m not going to say a better world….

Joe Hage: He was a champion wrestler too! It’s, like, name dropping, and… he’s done it all. And he mentioned that he went to Harvard – surely, to study medicine. No, he was studying government!

Dave Albert: Well I always wanted to be a doctor. I just did that because that was the last time I was not going to study science. So I figured why not do something I’m never going to do again. And I was still pre-med. So that was a ridiculous pre-med-government-major-varsity-wrestler. That was a bad combination. That’s why I like to that’s why I wanted to go on dates.

Joe Hage: If you agree that David was an amazing keynote, would you please stand and applaud him?

[Applause]

Dave Albert: Thank you.

Net Zero Healthcare with Michelle Sullivan (Boston Scientific)

22 min reading time

Net Zero Healthcare

Presented by Michelle Sullivan
at the 10x Medical Device Conference – London, 2022

Reading Time: 22 minutes


Michelle Sullivan: Here are the ways they are moving towards Net Zero, with their own direct and indirect emissions, which are not the bulk of emissions, these are the things that you’re in control of in your company. And then there’s the indirect emissions. And that’s all of us. And anyone who makes medical devices, anyone who makes medicines, anyone who serves the NHS or its food or building things, all of their emissions, and then there is that pesky travel group there for us to think about.

So here’s where they’re going to get their emission savings from in the plan that’s going to be in 56 countries near you soon. And here is the bit that’s us as – medical devices, it’s a big part of the expectation.

Note: The following was autotranscribed by otter.ai and got probably 80+ percent correct without edits. Interpret accordingly.

So morning, everyone, my name is Michelle Sullivan. I work as a head of Public Affairs for Boston Scientific. But I’m here this morning because accidentally, I’ve become an expert on environmental sustainability. And the move to Net Zero. Joseph Septic, allegedly. But he’s Americans. But a year and a half ago, if you decide I’ll be still on stage, but I do this quite a bit now talking to people about environmental sustainability, how medical devices are going to become Net Zero, how are we going to reduce our carbon footprint what this all means, I would not have believed you. I didn’t know anything about it. Other than my son was really into it. And then each one’s and supply chain and supply chain came to us and said what’s often scientific thing about environmental sustainability, I said “I have no clue,” then you find out, I went away.

And I just got a whole team of engineers and people that were working on scope, one, two and three emissions and I joined a few calls are excited to pick up some information. And in the end, I was the only commercial person that was there. And I said I need to understand this terminology because I don’t know what you’re talking about. So, I did a small eight-week course with Cambridge University is called state of art. They have a whole sort of department, which is an institute of sustainability leadership. And people go there from all walks of life, all different companies to learn for eight weeks how to be a leader in sustainability. It takes 10 hours a week, allegedly a bit more than that. But at the end of it, I know miners, I know people from oil and gas industry. I know people from Abel and Cole, I met people from Aberdeen Council, the loads of finance people, loads of banks, the banks are all over this. And it became obvious this is not going anywhere. And this is only gonna get bigger and how they describe it is.

It’s the next industrial revolution. And we’re about to, we’re about to feel what that means. We’re about to see how that changes our society and how we go about business. And so today, I’m just gonna talk you through a little bit about why we care about this. And then try to stimulate our thoughts as to how we can make this happen in a world of medical devices where we care about people’s health, where things made plastic and precious metals, where things are disposable, where we don’t know how to stop this. So, I’m gonna try and get us in the right way and make it possible in your brains. So don’t get this thing.

Joe Hage: Impressive start, ladies and gentlemen, don’t you think?

Michelle Sullivan: Thanks. So right, I start with this picture. And I chose this picture, because you can see a little sort of blue fires around it. And that is our atmosphere. And if you set off from the surface of the planet in your car, as if you’re driving on a normal 60 mile an hour road, you would set off from the surface of the planet in your car, and you would break out of the Earth’s atmosphere in five minutes. That’s how smaller is. What Al Gore says is, we’re using this as an open sewer. And it’s got a finite space and a finite thing, and it protects us. Now, this is interesting. No one knows who said this, but it’s brilliant. Anyone who thinks you can have infinite growth in a finite environment is either a madman or an economist. The minute you start to think about that, it’s like bonkers, right? We’ve got this finite thing, but our whole society is built on growth, growth, growth. So, what do you think these two things have in common? We have an oil rig. And we have some tomatoes. Got any idea? Greenhouses very good. So…

Joe Hage: They both require energy.

Michelle Sullivan: They do exactly that, now, I read this brilliant book, it’s called how the world really works, I’d super recommend it, because it helps us to think about this in a sensible way. We are all addicted to fossil fuels. And if you were sitting in Stockholm, in April, and you had on your plate, a tomato for your lunch, it was a medium sized tomato. And it had come from southern Spain, because it likely would do at that time of year, that Easter, that tomato would have taken between six and eight tablespoons of oil to get to your plate. That’s how addicted we are…

Joe Hage: Human equivalent producing that.

Michelle Sullivan: Literally, you would have used that in energy to get that to you to grow it, to transport it to further transport it, right. So, you know, this isn’t something where we can go and let’s not use fossil fuels, you know, you’re wearing stuff that’s built on fossil fuels, half the world’s food couldn’t exist, if we didn’t use fertilizers. You know, we’re totally addicted to this. So, we’re going to have to think what we’re doing. Now, the other thing that happens is sometimes people say, I don’t believe this has got anything to do with it. Somebody said to me the other day, someone I really respect someone I’ve worked with for years. The IPCC report, which I’ll come on to in a minute, says, the temperature hasn’t gone up in 30 years. And I’m like, okay, all right, this isn’t actually true. You’re cherry-picking things that aren’t true. But the IPCC, these are all scientists that volunteer constantly to update the world, about what’s going on. And 1200 observe them all agree that this is what’s going on. And its sort of getting impossible to refute it now. But we still managed to.

So here on the left, these are carbon dioxide emissions from fossil fuels. And you can see how fast our society which is built on the energy of fossil fuels, has sucked them up and use them and emitted into the atmosphere. That’s five kilometers high carbon dioxide, and carbon dioxide and other greenhouse gases. Things like methane, nitrous oxide used in health services got some interesting stories about that. They create a problem, that means that our earth can’t get rid of the heat and quickly. So as the carbon dioxide levels go up, the temperature goes up. There’s an observatory in Hawaii called Mount Allah and they have been measuring the carbon dioxide every year, all the time since 1960. And so, you’ll see that, and you’ll see the temperature.

And on my LinkedIn, I spoke to someone earlier, Tim, about why on my LinkedIn, it says, “How many parts per million CO2 when I was born,” which was 319. And now it’s 100 more, it’s 25% more in the atmosphere than when I was born. So, you know, this is the beast we have to tame. So other things people say is, well, half a degree, one and a half degrees. This doesn’t sound very much, right. That’s just like a better day in the garden, isn’t it? But these are average global temperatures. We are, you know, we’ve had a Paddington Bear theme this morning. We are the Goldilocks of all of nature, we have a teeny tiny variability that we that we can survive in and grow our food and have clean water and be able to survive. And this little rise in temperature, which by the way, you know, we’re working to Paris, you know, one and a half degrees rise. I think we’ve blown it already. Guys, I don’t think most of the scientists agree. Now we won’t be we will go beyond one and a half degrees, we’re at 1.1 1.2. Now greater rise, and you can see the effects that are starting to happen. But these things make a difference. You know, we’re not going to have an Arctic. Once a decade, it does, there will be no sea ice, whereas it used to be once a century is like a freak event.

Half as many people will experience water shortage. If we’d have just kept one and a half, there’ll be twice as many with water shortage. Permafrost will start really paying releasing more CO2. And there’s lots of these tipping points that they all talk about. And we don’t know what they’re going to mean. We don’t know what they’re going to mean. But they mean there’s going to be big releases of CO2 into the atmosphere, there’s going to be lots more flooding from sea level rising. And we’ve seen this summer lots of examples of this, all of us have had an experience that shows us that something’s different, whether it’s our two days in Surrey with 42 degrees where we couldn’t leave the house. And I had someone come around that later that week talking about pensions. And I said to him, “so what was that like for you?” And he said, “Oh, it was hot.” Wasn’t it was like, yes. I said, “what did you do?” And he said, “Oh, it didn’t change much.” Really? I said, “really?” I said, “how interesting, what did you do those two days?” He said, “I just sat in the house.” I said, “did you shut the curtains?” “Yes.” They do normally sit in the house where the curtains shut them. He said, “nothing much changed?” Well, no. I said, “how do you do your business?” Because you’re sat in my living room right now. Anyway, “Oh, yeah. Go out the house and travel around? Would you have done it that day? No. Well, so if that was a month, what would happen that month? And he was like, Oh, I hadn’t really thought about that.” So, this is what is sort of the reason why we need to get our act together. How is it going to affect me? Why do I care? That there are, it wasn’t a third of the land in Pakistan, it was actually about a sixth of the land was underwater. 30 million people were homeless, still. But these things will affect us.

We’ve just experienced what happens when Russia invaded Ukraine, and how the massive ricochet effect of that, so something happening in other parts of the world in a global economy affects everybody. And all of us will need to get real about that, whether it’s with wildfires, where we saw people in London lost their homes this summer, because they had a compost heat in their back garden, or drought. Where actually, again, I experienced that I had to fill up my birdbath three times a day, right? Because there were constant creatures, little insects sitting around it the whole day, because otherwise they were going to die. You know, and the birds were, you know, wasting it by washing it. But drought will change how we can grow food, where we can grow food, what type of food we can grow, the coffee beans, that you will drink coffee from Arabica, they’re going to have to change that because they’re not drought resistant, they’re already changing it. Because it doesn’t grow in this stuff.

So, all of these things will have economic impacts on all of us. And we work in health care. And health care, and health is inextricably linked to climate change, which I think is why things like the NHS really do pay attention and want to do this. So, these factors that you can see here are all affected by climate change and will become worse through it. I always place don’t look up on my LinkedIn post, because after I watched that film, which I thought was about COVID, I’ve decided it was actually about climate change. And some of the big scientists of the world like Peter Camus, they constantly refer to it, and they quote from it, and they quote, the last line of the film, which is why we tried, we by God we tried, right, as the meteorite hits the planet. And this guy 600 years ago, gently this is by the way, anybody know, I mean, it’s bit incognito, as in Machiavelli. So, 600 years ago, he says, you know, the incredulity of mankind, who will never admit the merit of anything new, until they’ve seen it proved by the event. This is why we’re in this tricky time right now, because we don’t really want to believe it. I mean, everything is going to be that bad. And maybe someone else will solve the problem. And maybe it’ll go away. But it’s not going away. And your children, and my children and their children will have to deal with this big, big time. So, here’s what the IPCC, the scientists that all agree on everything who knows, never normally agree on anything. They have said, we’ve literally got three years, you know, that big graph where it was all rising up, we’ve got three years to stop that rise from this year. And then we’ve got to get it down half again, by 2030. And I don’t think based on the fact that our tomato is six to eight tablespoons of oil, we quite graphs, how we can do this and what this is going to look like and what that’s going to be about, and we’re all basing our society on GDP growth.

You know, I’m constantly seeing people in every company I’ve ever worked on, what is our strategy, and they put up growth, growth, growth, and I’m like, well, that’s imaginative. But they’re the VP saying, this is what we’re doing growth. But growth doesn’t take into account the price you’ve paid for this the growth of the oil companies doesn’t take into account the price we’re all going to pay for it. So, we’re going to have to think about how do we do that with GDP? And how do we mix in the price you pay for it through the resources that you’re using in your finite world that you want infinite growth from?

So, here’s another problem, we’ve all got carbon literacy. You know, the reason I went back to university because I didn’t know what anyone was talking about, what is Net Zero? You know, it’s a stupid thing to say, in a way, because it doesn’t make any sense. It’s not something your average man is going to go, yeah, Net Zero. I ask people to have what is Net Zero mean? Well, sort of means like, you don’t emit as much as you put out or something. But all it means is we can’t keep adding CO2 to the atmosphere, we have to take it out as fast as we add it in some shape, or form and all around the world. Why you see people compensating with forests, and mangrove swamps and peat bogs that are being developed is because those are the things that suck the CO2 out of the atmosphere. And our carbon footprint was a BP construct.

As you mentioned, in our conversations on LinkedIn, you know, they decided, let’s make it everyone else’s problem, the individual’s problem, you’re the problem, because you eat a tomato from Spain, right? But it’s the price we’re paying for carbon footprint is the price we’re paying for our activities using energy, that this was something that was quite a revelation for me. So, fossil fuels are 100 million years of energy captured, that we just burn in a moment. And as soon as I understood that I was like, Okay, this is why we can’t do this. In the way we’re doing it. Because we’re cheating. But we need to cheat because we’re all used to this world. Now, we so how are we going to do something?

Joe Hage: I’m curious show of hands, how many of you have heard or internalize the phrase carbon footprint? Have you ever thought, what’s my carbon footprint? I want to reduce my carbon footprint, anyone? Yeah, you’re just raising your hand because everyone else was. Anyhow? Yeah, this was this was a PR campaign.

Michelle Sullivan: Yeah.

Joe Hage: By the big oil, saying, hey, you know, just don’t look behind me just you guys have better recycle, which is a pittance relative to well, in two major infrastructure.

Michelle Sullivan: Absolutely. So, you know, but we work with big companies that can do things and they are doing things. And you know, by the way, the single biggest contribution you can make to reducing your own carbon footprint, is you have one less child. It’s too late. It’s too late. It’s too late. So why healthcare why is there this big focus on health care? Well, health care is a big emitter, right healthcare, 4.4% of global emissions are from health care. In the UK, 5.4% of emissions are from healthcare. And that’s twice as much as air travel, by the way. So, the NHS with its Net Zero plan cares about travel and transport. It’s outside, you saw that term greenhouse gas code protocols. The greenhouse gas protocol is those scope one, two, and three things I’ve talked a bit about in a minute, but travel to and from their sites, three and a half percent of all the traffic on the rise in the UK is because of the NHS. So…

Joe Hage: You’re saying part of their plan is hey, everybody be more ecological when you come to our office?

Michelle Sullivan: Yes.

Joe Hage: And I’ll walk or take bicycles.

Michelle Sullivan: Yes, they’re electrifying. They’re electrifying all of their, all of their own fleet. But also, they’re going to start measuring into and out of sites, right. So, if our reps are driving diesel cars, pretty soon, that’s going to be not allowed. Right.

Joe Hage: You know, you talked about my skepticism before you came up. Electricity still is energy has…

Michelle Sullivan: Absolutely, absolutely, absolutely been.

Joe Hage: Our electric cars and being an ecological how much…

Michelle Sullivan: So? Yeah, so well, the thing about electric cars is they can be powered with renewable energy, but you’ve got a problem with building them and throwing them away. And that whole ethos, you know, the real thing we should be doing is just having a car on our street that we all share and stuff like that. And eventually, weirdly, especially if you live in cities, it happens in Brighton where I used to live, you know, there’s a big carpool. The loads of people don’t have cars, they travel on public transport, and then when they want to do a particular journey, they use one other classroom or carpool. It sounds like crazy to us now, but this is the way it will go. But we both saw the talk the TED talk on electric vehicles right now. If you’re thinking about being the best you can be, you should have a hybrid vehicle because it uses a little tiny battery. But you actually save your emissions in those short-term journeys. And also buying electric vehicles that are big. There is a point to that for society, because all of that stuff will come down in cost and come down in impact, the more and more. So, if you can’t afford it, maybe you should be doing it.

Joe Hage: You mentioned growth. Well, electric vehicle companies talk about their growth, but I’m given to understand that if we were to make the projected number of vehicles that they each say they will do, they will not be enough lithium on the planet to make those batteries, right. It’s simply not going to happen.

Michelle Sullivan: Right, so we’re in this place I was talking earlier about. I like in this moment to when you’re I have never been in one, but I do know someone who has in a tsunami while you’re stood on the shore, and the water is going out. And everyone’s stood there going, what’s going on? What do you think we should do? Right? And we’re about to be hit with the big tsunami and the things you’re describing are the reality of what we going to have to do. But in our short term, now, what are we gonna do, we’re gonna get in the right headspace. And we’re going to start thinking about how we can do this better. And there’s simple principles to do that. So, people aren’t ready to hear only one of you on the street and have a car, or none of you need to street living in a car or living in the city. You know, they’re not ready to hear that.

Joe Hage: I’m going to steal myself from saying anymore. I’m very interested in the slide where you say how Boston Scientific is going?

Michelle Sullivan: Yeah.

Joe Hage: That’s zero.

Michelle Sullivan: Yeah, well, I’m not going to exactly say, because they’d have to, you know, I can say it, but then they’ve had to kill me. So, here’s what the NHS has said, right? Deloitte did this with them. I know the guys at Deloitte because they talked on my course. And I sent a LinkedIn invite. And I said, let me talk to you afterwards. And the guys at Deloitte there said 56, other health systems are currently working with them to do this. So, this isn’t just the NHS. So here are the ways that they are moving towards Net Zero. With their own direct and indirect emissions, which are not the bulk of emissions, these are the things that you’re in control of in your company. And in your NHS or in your health system. We’ve talked about some of those already. And I’ll talk about some more of them in a bit. And then there’s the indirect emissions. And that’s all of us. And anyone who makes medical devices, anyone who makes medicines, anyone who serves the NHS through its food or building things, all of their emissions, and then there is that pesky travel group there for us to think about. So, here’s where they’re going to get their emission savings from in the plan that’s going to be in 56 countries near you soon. And here is the bit that’s us as medical devices. It’s a big part of the expectation. It’s written into procurement law, they are mandated to have at least 10% of their tenders from now on, which must have a fighting climate change aspect to it. And one tender came out recently, which I haven’t gels, but it was 90% on this.

Joe Hage: Susan, the x-axis on the previous slide was impossible to read. Could you tell us what we were looking at there?

Michelle Sullivan: I don’t know. Because I’m now going the wrong way. How do I hit the left side of the window, but it’s going the wrong way? Could you come and help me?

Joe Hage: Yes. We can always edit out this part of the presentation.

Joe Hage: I didn’t mind. It’s just pressed the left and went right. We’re sorry, let’s get back up to what you were talking about this one way.

Joe Hage: Yes, but now I can answer my own question. I could just look. Oh, I can’t even this is too small.

Michelle Sullivan: What does it say? It says non pharmaceutical suppliers. On the next one is pharmaceutical suppliers. So these two big bars, med devices

Joe Hage: what does that mean practically?

Michelle Sullivan: That means without us reducing our emissions as suppliers, proving that they’re doing so, and changing how we go about our business in the NHS, they will not hit their target. So the more we get through the years from now, the more extreme that will get and there’s a plan, you know, so apparently by 2027, we’ll need to know about the carbon footprint of our devices and there’ll be making decisions as to whether well you can On the framework, we’ve got a bit of extra time today, we can go on the framework if, if your carbon footprint is less than what you’re replacing, this is where we’re going. So, you know, this is us, Company X. These are the things you have to think about your fleet, your fossil fuels, your generators, chemicals and refrigerants, you’re using the purchase electricity for your real estate. That’s the easy bit. So we’re all changing our key distribution and manufacturing site, Boston Scientific are to renewable energy. We’ve reduced our emissions by 50% in these categories in the last five years, we’ve got a load of our manufacturing and distribution plants all totally powered by renewable electricity. We manufacture in Ireland, we manufacture in Costa Rica, these are all places where you can do this, Costa Rica is amazing. They’ve been on to this for years, environment, carbon footprints becoming they are going to Costa Rica as a country are aiming for carbon neutrality by 2030, full stop, there won’t be an emitter anymore. Denmark’s another one. And the way that you do it is through some principles that we’re going to talk about. But this bit on the left is the easy, but the majority of your emissions are going to be on the right, at least 60%, I would say 80%.

And these are the things that you’re going to have to deal with field force travel, employee commuting, everything you purchase in the companies you purchase them from, and they are actual emissions in creating what you’re using operational waste, device disposal, using devices, healthcare professionals, shipping of your devices. So now you can start to think okay, well, this isn’t all about plastic and precious metals. But interestingly, we did a lifecycle analysis on one of our products, it’s quite expensive to do a full lifecycle analysis, what we discovered was that 25% of the carbon footprint of that product was in the platinum tip 25% of it was in the gold, that was embedded in the circuit boards. So half the carbon footprint of your devices, the precious metals are in it, and the other half of the plasticky stuff, some of which are mixed polymers that you cannot recycle. And all of it is built not with breaking it down in mind. So, you could snip the tip off, and they do so managers, hospitals, snip that platinum tip off, and they recycle it and they get the money back for it. This is quite groundbreaking and there are companies out there that will do this.

But they won’t do it for 10 devices, or 30 devices or 100 devices. We’re looking at recycling some of our products. And they’re doing things as loss leaders at the moment, and only one company in Germany would touch it rather than the thousands that exist because it wasn’t big enough volumes for them. So, we’re all going to have to clump in it together to do that. But this is how you move in that direction. Joe, right. You take what your stuffs made from, and you don’t do that. That is our linear economy. That is what we do right now. And going back to my first slide of only a madman or an economist thinks you can get infinite growth for a finite environment. And your point about lithium, it’s all the same thing. You can’t just dig stuff up forever and chuck it away. There is no landfill left in Europe. Xero only found that out last week, I couldn’t believe it. So, we either burn it, or ship it somewhere else. And they’re stopping that now. Because they you know, it’s just a mess in third world with the world rubbish going around there. So, this is what we’ve got to do. Gotta get our heads around a circular economy. And this is not difficult to understand. It’s just not what we do now, but we can do it, we can do anything, right? We can make amazing single use devices from platinum and gold and plastic. So, we can easily do this, we make things you use them; you might reuse them. You might use them for longer than you did before. You might remake them. You definitely recycle them, and you reduce how many of them you need to have. When you talk to the healthcare leaders in the UK, we will have to move to prevention, we will have to move in that way. But that doesn’t mean we’re not going to need medical devices. That doesn’t mean they don’t have to be sterile, that doesn’t mean that They don’t have to be safe.

Joe Hage: I’d like to see the rest of your slides if you could.

Michelle Sullivan: So here’s our challenges, packaging. Already in the Nordics, we’re being asked to be responsible for our packaging. Take it away, we don’t want it your problem, we’re buying your goods, not your packaging, single use and composition of them. So, we’re gonna have to use precious metals, we’re gonna have to use plastics. This is how we do things. They’re good in terms of the patient outcome. So what plastic are we’re using? Does it have to be a mix polymer? Could it be a single polymer, which can then go to recycling and aesthetics? Big, big focus on that now? Does your thing mean you use less anesthetic? Could it be local sedation? Because that’s one eight hundred of an anesthetic gas a big part of the carbon footprint, travel? How are we getting to and from? Do we need to travel? Could we do stuff remotely? Could we count how much of the non-travel incidents there were when you’re training your clinicians or getting your sales force to support

Joe Hage: In the interest of time, so we have time for interaction with the group. It also says distribution and supply chain waste and disposal, quality and safety. If you could the next slide.

Michelle Sullivan: Yep. So these are things we have to do become carbon literate, know what you’re talking about, take a bit of time, it doesn’t take forever, I’ve managed it. And I’m not a genius, right? Get your culture to get into the headspace of it, start talking about it, start getting people to come and talk to you about it. People from other industries, people who’ve had success, join with other companies, you want to achieve the same as you who maybe aren’t competitors. Follow a framework to set your targets follow a framework to disclose on progress. And just remember, and we’ll finish on this slide, right? Every hour of a procedure is 30 kilograms of carbon of greenhouse gases. So, if you’re doing something that shortens that, that’s a good thing. Every night a patient isn’t staying in hospital, because of what you do is between three and 13 kilograms of waste. Every time you remotely monitor or follow up a patient that’s on average 18 kilograms, you can count this, you can show it, you can demonstrate it. So, think wise and think patient pathway and you’ve got a route to improve things as we go along.

Joe Hage: I appreciate the conversation; I think yours is in an enviable position because it’s so easy to attack the premise. Because your presentation largely said we really need to we should soon we will have to. And like you said, we keep putting it off and putting it off and putting it off. I’m reminded of and I don’t remember the specifics of it. But have you ever heard of the prisoner’s dilemma? I know you did. Because we learned at school. Were basically like, if you both agree to tell the truth, there’s a good outcome, if you lie, and you tell the truth, and you’re going to really make out okay? If you do the same, then you’re going to make out. And if you both choose to make out really well, it’s going to be catastrophic for you both. So do you both like honestly? Or one of you lie and put the other one in jail forever? That type of thing? And who among you? Just show hands? How many of you own a car? Everyone? You don’t own a car? Are you? Okay, how many have more than one car? Yep, say your motorcycle council. How many of you here just for this initiative, which is very important, are willing to just stop using it or sell it or get rid of it? Thank you, Luke. And so, in this prisoner’s dilemma, we’re all gonna keep driving, but thank you. That’ll help, help definitely help the environment. And so yeah, I mean, it’s just so even what you’ve explained, we have to have Boston Scientific materially done it yet.

Michelle Sullivan: Well, it materially done scope one or two, and they’ve got their plan for scope three. So, here’s a way of thinking about it. I think about this, you know, like dominos that knock each other over in a line, right? For Boston, we’ve committed publicly as a publicly owned company, with shareholders to hit Net Zero by a particular time. And we have published how we’re going to do that and have those targets validated by a third party. That’s nothing to do with that, right. That’s cool. So that’s base target. That’s the Race to Zero. Lots of big companies have signed up to do this. For us to do this. Everyone who supplies us has to be doing the same thing. It’s like a domino thing. It will fall bump, bump, bump, bump bump, because without committing to do things in this better way. No one will manage to achieve it. And so, they won’t be using Williamstown. Company B, we won’t use Company A.

And what we’re all going to have to do is think, okay, well, when we’re recycling our stuff, we’re all going to have to come together for that, but because we can’t do it, and this is how it will go. And you know, think back 30 years ago, what was going on there? We were talking about it earlier, you know, I was driving around in a car, I had to stop at a phonebook box, to ring my boss once a week, right and tell him what was going on or if something crazy could happen another day, I filled out all my call sheets on bits of paper, and I posted them off. So that was 30 years ago. So how much difference is going to be 30 years ago, you always underestimate the change in 10 years and overestimate the change in two years. So, this is sort of going to happen.

Joe Hage: Anyone want the microphone? Introduce yourself.

Ed Cappabianca: Hi, I’m Ed Cappabianca, CEO of a small med device company. I’m going to be talking later. So, two quick questions. Number one, how much in your view and your because you’ve been talking to the NHS? How much of the NHS is decision making? When purchasing devices, particularly new devices? Does any of this feature?

Michelle Sullivan: Yeah, so that’s, that’s in all tenders 10% of the weighting has to be from 10%. So at least 1/10 of what you’re being sort of measured on will be something along the lines of this, at this moment in time. And then in five years from now, it will get much more stringent. So you’ve got five years to sort of get your act together. You’ve got to show willing at the moment, I would say you’ve got to show that you’re thinking about it. And you’ve got to come up with ways where you’re reducing things in some shape or form.

Ed Cappabianca: My second question is because we are in a new device, is it right, fair and proper for us to say, you know, the old. Well, I don’t have to run faster than the bear. I just need to run faster than you. Yes. If I compare what our device does relative to what they’re using today, yes. Is that good enough?

Michelle Sullivan: Yes, it is. And the more you can articulate that, the better, because we’re at that moment where the seas going out and no one knows what’s going on. Right? So if you can start to articulate it, well, you’ll be doing better than everyone else.

Joe Hage: Anyone else?

Michelle Sullivan: I’ll give you an example. Very quickly,

Joe Hage: Please.

Michelle Sullivan:One of my I sit on the ABH. I’m the head of the chair of our sustainability group. I also am the vice chair of the commercial policy group. I’m very commercial, I’m not, you know, you know, a sandal I’m wearing sandals. But you know, I, I am commercial. I spoke to my colleague who’s the chair about this. And the next day, he came back to me and said, Michelle, you’d be really proud of me. I got rid of a million plastic bags overnight. We sent our tubing around that isn’t sterile, in a plastic bag that wasn’t necessary. We just put a little clip on it now and send it off 1 million every week. So, you can start to articulate this, then that’s what the HS wants to see. And the Nordics and the Nordics are getting more into substances as well. So, it’s gonna be tricky. It’s the wild west, but articulate it, pay attention to it, measure it, think about it. So, all you have to do right now.

Joe Hage: Michelle Sullivan, ladies and gentlemen.

FDA Recalls: Fewer But How Many Near Misses?

14 min reading time

FDA Recalls: Fewer But How Many Near Misses?

Presented by Joseph Anderson at the 10x Medical Device Conference – San Diego, 2022

Reading Time: 14 minutes


Joseph Anderson: We are witnessing, and we’re experiencing what I like to call a “powder keg of issues”, that have decimated and can decimate your organization or your partner.

Doesn’t matter if you’re a joint manufacturer, contract manufacturer, contract design, venture capitalist, these types of issues, and the blink of an eye can change your organization.

Note: The following was autotranscribed by otter.ai and got probably 80+ percent correct without edits. Interpret accordingly.

Joseph Anderson: Thanks for having me, Joe. I think this is my fourth, fourth event to speak and…

Joe Hage: What it says in your nametag?

Joseph Anderson: Four.

Joe Hage: Then it’s your fourth!

Joseph Anderson: Four. But for me, it’s an honor to be here. And I’m going to talk about that at the end. And Joe and I, since we’ve met, we always kind of have this back and forth, what are you going to speak about? What’s the title gonna be, and he doesn’t like my titles, I don’t like his. I don’t say it, he tells me he doesn’t like my titles. So he just picks one and then I just choose what I’m going to use. So we’re still gonna get to the point.

But for me, you know, there’s just been a lot of great presentations, a lot of great discussions, I hope that bookend some of that, and tie it together to what we’re doing IPX. Because the world’s changing, if you’ve heard me speak anywhere at a prior event, I’m even before the pandemic, we’ve been forecasting this for a while, you know, companies are going to struggle, you know, innovators are going to struggle, if you don’t look at your processes across the board, if you don’t look at your operations across the board, if you don’t have the right supply chain partners, and we’ve seen that, right.

And then in the medical device industry, really in any industry, I don’t care, I know why we’re here. But if you make a product manufacture product, you design a product, these outliers can really cause failure to your business to your dream. And that’s what I want to talk about a little bit today. So IPX, we work with everyone from small companies to Fortune 500, fortune 10. And we are professional services and education provider and owner the industry standard for operational excellence.

So if you think about quality management platform, if you think about configuration management from that as needed idea to as service as decommissioned, that’s kind of the standard, the CMT standard, but I won’t bore you with that. For us, it’s anywhere from we say new nutrition and nuclear to automotive outer spaces who we work with. I want to skip through all these do the name drops. These are great companies we work with, we have a quarterly leadership panel where we just get together and see what the trends are going and what’s happening. And we were able to forecast because of some things going on in Asia Pacific in 2018, there was an issue, there was something going on it was going to impact us all I’m going to talk about that.

We all know now there was a pandemic brewing. We have a cross industry congress that we meet with once a month they submit changes to us they submit this request to us for curriculum and or services. Anything from you know buzzwords, digital transformation, industry forro, we’ve heard people mention digital or other digital twin in here over the last couple of days, and all those those have been come heavily marketed. There’s a lot of value to understanding what those terms mean. And that’s what this group does that we work with, we’re really trying to identify what the future is going to be for industry. But why I’m here today. And this is important.

We are witnessing, and we’re experiencing what I like to call a powder keg of issues that have decimated and can decimate your organization or your partner. Doesn’t matter if you’re a joint manufacturer, contract manufacturer, contract design, venture capitalist. These types of issues, and that blink of an eye could change your organization and that’s really what I want to talk about because we all know who this company is typically, I don’t mention names but really don’t care today it was peloton. Peloton what happened that made them go from $108 a share on June 1. Two as of yesterday, it was 1290. Part of it was supply chain absolutely. Part of it was poor design. There’s a lot of other ones we can aim off, gyms are opening back up, gyms are opening back up. We’re missing one arrogance.

Air gets leadership arrogance because the leadership knew about their supply chain issues. The leadership knew about the design issues, but they thought they had a lifestyle brand. CEO admits it was a mistake not to recall the product earlier in the process. This burns me that statement burns me should burn all of you as a consumer. All of you as manufacturers service providers, service professionals, design engineers, manufacturing engineers, this kind of statement should burn you. If you find an issue, bring it to the table, don’t hurt somebody, don’t be somebody at risk because
your company, unfortunately, and they claim some over software, and some of it was, but they knew about it. Right there. They knew about these issues, they knew about the design flaws, they didn’t know they chose not to do anything about it. They knew about supply chain issues, they knew the market was changing. They didn’t adapt. They weren’t flexible. There were a lot of companies over the last two and a half years. And guess what, they weren’t ready to be flexible, they weren’t ready to adapt. I’ve seen a lot of peers with a title founder, President, CEO, in the last two and a half
years become manager, right, or they’re now part of a workforce because their organization was spread so thin, they weren’t able to maneuver around the pandemic.

I cut my teeth, teeth in the automotive world. 20 years is brutal. This is a very brutal industry to work in from a manufacturing perspective. And the one thing that I really, really hope you take home today, as we have a lot of people here that are experts in quality and lean manufacturing. And we heard just in time the other day, and that one always baffled me because there was never just in time because there was never enough. All these initiatives can be great. But if you apply them wrong, if you bring in the wrong resource, you’re in trouble. And you’ve got to be able to adjust, you
have to take some of that pride away as a leader, as a contributor. And go, you know what this isn’t working for us. We hear this continuous improvement mantra all the time.

Another one that annoys me, it should be continual improvement. Look at the difference. In a word, I say this, pretty much every time I speak somewhere, continual means we’re going to monitor how we’re doing, we’re going to measure that, then we’re going to improve again, continuous means you never stop. So you have all these initiatives, and you’re just burning through money, Six Sigma, lean, I’ve been there burning through money, if you’re not monitoring why you deploy what you implemented, that’s actually causing you more headaches. So as you’re doing these initiatives as a company, you got to think about all these and this is a big one that’s gonna happen to anyone. We saw it with Boeing. We see in med device, we see it with Abbott, you know, these are ones that actually made the public.

But what about the near misses? If you really want to check in and assess your supply chain, you got to look at everyone. You got to look at everyone. And that’s not easy to do. These challenges, right? A company’s reputation and its financial, financial success, you got organizations must assess their entire ecosystem. What’s that mean? You hear a lot of companies talk about operational excellence, but they’re just focused on manufacturing, operational excellence, it’s end to end. So don’t forget that write that down. Operational Excellence is end to end. It doesn’t matter if you fix manufacturing, if all the inputs in the manufacturing are poor. If you really want to assess your suppliers or assess yourself, look at your deviation and waiver data.

That’s the first thing I asked for when a CEO or their board asked me to come in and evaluate them. They tell me what they think their problems are. They identify their objectives. And then I shocked them and I say, well, show me your data. Show me your change records. Show me all your change data, your corrective action changes, show me your deviation data. How many manufacturing waivers are you running on? How many of them have been incorporated back into product development? These are things you need to assess. So as you’re thinking about partnering with a supply chain, or a manufacturing contract, or a defense contractor or design contractor, regardless of where you’re at, in the med device world, and on the defense side, it’s just another level of complexity. You’ve got to assess these things, you got to understand all of that. Proactive organizations that invest time and resources to assess and adjust will avoid product crisis. That’s just the truth. You got to be ahead of the game.

We’ve heard a lot of great things Dr. Dave talked about innovation and all the steps he has undertook and is undertaking to get to commercialization, a lot, a lot of steps. That’s a first big step to being a real company. And that’s one thing that we don’t really work with our start-ups on, which is, so you got a great idea. You’ve validated it, you know, people are going to buy it, but how are you going to sustain it? How are
you going to scale that? Alright, sustainability and scalability, it’s a big thing. For a startup, you got to think about all of those, because otherwise you’re gonna, your mind is gonna be taken by the VCs, your equity is gone, your control is gone. And all you see is a little bit of your dream. And it just hanging on. You’ve got to think about this whole supply chain, the whole ecosystem of I have an idea. I got to validate it, I got to make sure I could sell it marketed, and then how do I ensure that I sustain and grow? I’m not going to talk about ABA. It’s all on the news, we all know
product cost, is what it is.

And we see it as it’s it outweighs the risk, right, the benefit outweighs the risk, the risk is death. For injury, that’s what they don’t want to say that, right? They don’t want to say, that, for the greater good. We’re gonna do this, or we’re gonna take that educated risk and hope no one gets hurt. But that’s, that’s what it means that risk is injury or death. So we have a, a duty, and what we do to make sure once we release a product, it’s good goods, we have to take the time. And that’s the big mantra of mine quality needs to come back. And I think it is coming back. There used to be a day where a company stood on its quality. And now we’re standing on where innovative or innovative, Yeah, but here, you’re releasing stuff that’s making people sick, or it’s or it’s enduring young children, or it’s killing adults. That’s not quality. And that’s not innovation. That’s just laziness. So for me from an IPX perspective, we work with organizations and make sure these types of things don’t happen. And they shouldn’t happen.

So for us, it’s all about traceability. It’s all about sustainability, scalability and quality. And for us, again, as I mentioned earlier, there’s a lot to accompany, it doesn’t matter if your startup doesn’t matter. If you’re a large fortune 500 organization, you have to know everything about your organization. The data is interoperable across all your systems, or processes based off a legacy mindsets guarantee a lot of fortune 500 companies, you’d be shocked if you actually went in and read some of their policies and procedures, their administrative processes. It’s baffling that they’re
able operate, but because they have their cash rich, they’re able to survive. But as we know, that catches up to you. Right? Anybody remember a company called Sears? My grandfather rolled probably rolling over in his grave every day. Thank not know, you know, knowing Sears is gone. You know, that was the company. You know, Sears was everything, just mismanage.

So it’s very important for startups, it’s very important for your large global corporations to be able to understand everything from as needed to as service to as decommission. I know, we’re going to talk about returns your RMA process a little bit later this afternoon. How do we manage that customer satisfaction? How do we get that included back into product development? That’s where a lot of companies struggle, believe it
or not, they have this amazing RMA process on how they get the return. And then they don’t feed that back into product development. That’s one area we work with. What are you doing with that data? What are you doing with all that data?

You have your data rich, and we talk about earlier? Artificial intelligence. And that’s, that’s what RCM two baselines are and I’m not gonna go into a sermon about this, but artificial intelligence, and we kind of dance upon it earlier, you have action based, right, which is robotic. We’ve been doing that for a long time, then you have autonomous which we all we’ve been inundated with autonomous capability. But what what we’re not saying is that cognitive the adaptive intelligence, so we’re gonna give it a bunch of rules, we’re gonna give a machine a bunch of rules that’s in the field, whether it be a drone, a boat, a car, a robot, healthcare system, that’s a robot that’s coming soon, we’re gonna give it a bunch of data. This is where companies
struggle, it’s how they manage data, we could build the best robot with the greatest software and sensors that know how to handle a newborn baby to an elderly patient, we could do that.

But where we need to get better as all of this data, especially when we start talking about the cognitive side, when we talk about adaptive intelligence, that’s where we that’s where you’re going to see more and more companies really start to struggle. And one thing I didn’t bring up earlier, when we were talking about, sorry, I don’t know your name, you brought up the artificial intelligence on a conference here. It’s also about liability. You want to know why they don’t want to answer your question. Because as soon as they make that choice, as soon as they program their software to take a life, guess who’s liable for that death now, the manufacturer? That’s why no one’s answering that question. So this is all about how you manage your data, how you manage your changes to that data in the field.

So this is a very, very complex thing. If you’re dancing in the world of artificial intelligence, make sure you have control of your data. And for me, it’s about ecosystem. Understand your entire entity, your entire operations from cells, all the way into service and support. And the last thing for me, and this is the important one, this is my fourth time here, and this is the challenge to myself as well. I want you to identify and I want you to write it down. This is a challenge. I want you to write it down. All of you somewhere in this room have to make money. I don’t know what you all do. You have to survive, right? You’re in business. A business, I want you identify three or four people that you meet today that you can figure out how to work with in some way that’s mutually beneficial.

And come back next year, and have that testimonial, because that’s why we’re here, we always use the word networking, and I haven’t been great at it, it’s more about collaborating. So I want you to figure out how you can use somebody utilize a relationship here for the good of both of your entities. And I think if we all do that, we’ll have some great testimonies next year. And my last challenge is we got to make sure this advance stays around. I’m putting that on my shoulders, too. That’s a good event. I’ve been at events where there’s 1000 people and guess what ability to really collaborate
small, a small event like this, that boutique where you can network and collaborate, it’s very important. So my challenge to all of you is let’s figure out how we can scale this and grow it a little bit and make sure it’s around for another 10 years, or 15 years. So, Joe, thank you.

Joe Hage: So first, did I tell you, and second, who here can work with him and leverage his network to ensure more quality in your systems and processes because I regret people say, Joe, do you know someone who can give me a job, I can raise some money will help me some more product. And no one has ever in a decade asked me hey, Joe, do you know anyone who could help me have better quality? It never even comes up? And so my question for you is, do people reach you when they really screw up? Is that your entire business model wait for people to screw up? Or of course, spread the word and events like this so that they proactively find you. But is it really just a? Yeah, I’ll indulge the expense of engaging your team. When I really have a problem. Is it bad?

Joseph Anderson: I’d say it’s 50/50. So we’re definitely professional firefighters, we get called in. When there’s a major issue when there’s a spill the other side of the house and I authorize say for example, Apple, we’ve helped them with quality. Now they want to get innovation out the door faster. So they’ve brought us in because when you look at who we are in our framework, we get things out the door faster.

Paul D’Souza: Everything is said and done and locate the budget from which people pay you when you when they ask you to come in and help is it from the innovation budget is it from the budget they typically use for Lean Six Sigma project because they’re thinking of constant improvement, things like that. And I’ve been involved with Lean Six Sigma Institute as an example. The CEO is actually here in San Diego lives here. But it matters where the budget comes from. Because I’d love to bring you in we’ve you know, we’ve got a lot of people in our database in the sense of not just on my
personal Rolodex dating myself, but it matters when they call you and how they pay you. So could you shed some light on that?

Joseph Anderson: Yeah, that’s a great question. There’s a lot of variants to that. So I can’t give you a you know, straight one, I give you some case studies, we get a lot from engineering, engineering improvement, a big part from operations improvement, and then the continuing education. And then the fourth one, the fourth one actually is at the board level, or the C suite level, which is we need to bring someone in. That’s not just here to give us philosophy, philosophy. But here’s all our objectives. And they set aside a dedicated when you do it that way, when you have that top,
very top line support, then these initiatives, everyone knows it’s important. When you start kind of out that education, your work your way up that, that bottom side up, it’s a little more difficult. But we’ve tried to get at least at the VP level. So either it’s from engineering and manufacturing, it could be from service, but I like to get straight from the C Suite.

Joe Hage: That’d be awesome. You mentioned earlier that you haven’t been great at networking. ironic, given your role. Would you share ever so little bit just enough to give color about? Why are you
so hard to get a hold of?

Joseph Anderson: I work a lot. I think it’s I you know, I spoke at a university two weeks ago, we young young students, great students in Houston, they all they all have a dream, they all want to be entrepreneurs. And I told him, you’re being lied to. Because everyone says they want to be a leader, you can buy a class for 229. But if you really want to be a leader of an organization, a global organization, you’re going to work a lot. You’re going to work a lot, and the people that work for you guess what? They depend on you. So the reason I have a hard time networking at these events is
because as soon as I’m done speaking, I have to work because I have customers I have clients I’ve employee that supply chain. And on my level, this is something that was never told to me.

Once you assume a true leadership role. That’s your job. Your job is to lead. Your job is not to sit back and push everybody else to do it. But to set an example on a lead so for me it’s I’m doing my role.

Joe Hage: And if you would, for those who are joining us for the first time and may not have seen your content ever quickly, what did you cover last time about quality and what inspired you to be in
the business you are in.

Joseph Anderson: So for me, it was my son, my son was born spent a lot of time in NICU unit has a rare genetic disorder. And during his time in a NIC unit, he was injured from some some issues with poor process and poor medical device and poor quality control. And all those things, you know, seem like they’re trivial when they you know, you now he’s 13, you know, so when you look back, you go, “Oh, it’s no big deal.” But those things matter, you know, had he not live which happens every day, and then NIC unit because of the processes have gone on better, but quality control, grab control, foreign federal function, all these things a lot of companies take lightly, I don’t take lightly form fit or function and new port numbers and rent control are very, very, very important.

And you, you can’t just say we’re not going to because cost because as soon as you start getting in that gray work grey world, you lose control. So for me it was it’s personal. And I’m I just don’t I don’t accept someone releasing a product to enter someone. Accidents happen. But when you’re dropping planes out of the sky because of software and sensors, that’s a bunch of BS when you’re releasing food into the market that’s contaminated because you don’t have proper quality controls or processes. That’s a bunch of BS. I mean, it goes on and on.

Joe Hage: In your case, as I recall, the packaging difference between the adult size two, and the NICU tube to stick down your infant’s throat was not delineated clearly enough. So the wrong one was playing.

Joseph Anderson: Correct. They are controlling it by revision, not part number.

Joe Hage: And that did what?

Joseph Anderson: Caused them to have a permanent speech impediment.

Joe Hage: Could have been avoided.

Joseph Anderson: Yep, absolutely.

Joe Hage: So any final thoughts? That’s my friend Joe. Thank you.

An MDR Update That Might Actually Cheer You Up!

21 min reading time

An MDR Update That Might Actually Cheer You Up!

Presented by Dr. Bassil Akra, AKRA Team at the 10x Medical Device Conference – San Diego, 2022

Reading Time: 21 minutes


Bassil Akra: The cost of regulatory compliance is actually a very important cost that you should not delay because if you delay, your revenue will disappear suddenly – and your whole company as well.

And I had that situation with a lot of manufacturers reaching out to me and said to me, “Bassil! What happened?!”

– It’s, like, why?

“The Notified Body pulled our certificate away!”

I said, “Are you surprised?”

“Yes! They were auditing us and they were very strict!”

I said, “This is their job. The same as FDA or other country regulators. This is their job to make sure that the products that are getting on the market are compliant. And then they pulled back your certification – it has the reason – they didn’t do it just for fun. And the reason was that you forgot regulatory compliance.”

And they said, “Can you tell us what we did wrong?”

And as I started talking to the company, and they were working, that’s where I went and audited them by myself. I said that when you started the company, like we heard today about innovators creating companies, starting a company, I said when you started the company, you had a big investment and regulatory and quality. It was a small company but after one year, you had 12 people working on regulatory and quality.

When I got to audit you, how many people were there? One person and 12 marketing.

I said, “Well, where are the regulatory and compliance people?”

“Oh, this is, like, an unnecessary cost, we tried to reduce the cost.”

They cut costs in the wrong place. And they got actually in that problem. And this is important. We spoke about innovation today.

It’s important to recognize the regulatory obligations you have to meet. And this is important also for innovative performance of the company because if you are not looking to continuously improve your devices, this is one of the obligations.

You will kill your company by yourself.

Note: The following was autotranscribed by otter.ai and got probably 80+ percent correct without edits. Interpret accordingly.

Joe Hage: Bassil, please tell us about MDR.

Bassil Akra: Thank you, Joe, for inviting me to speak here about MDR. So regulatory is always boring, I was listening to everyone talking about innovation investments or getting a company established. And looking to that from a regulatory point of view, everyone talk about investment money, getting the money back, getting big revenue, growing as a company and they forget always market access. And this is a big point, which is also related to European legislation. I deal every day since many years with manufacturer.

In the past, I was working for notified bodies, the biggest notified body in Europe, I established for them, the MDR got it implemented. And then at the end, I said to them, guys, no, I built everything, every single is ready to run, I will go and help the other side. And that will help the manufacturers understanding how they have to fulfill the requirements.

When I get to the other side, people getting to me, manufacturers told me, “You know, now we’re going to tell you the right story. All the time, we’re telling you how good we are, how big we are, how strong we are. And honestly, we don’t have any single bats. And therefore, we need you to get us to help us to get out there to get the MDR implementation.”

A lot of you who are not dealing with regulatory are not perhaps knowledgeable about what is MDR. MDR is the medical device regulation in Europe, which was published in 2017. And it was under discussion since 2012. Why I’m telling you the history because…

We heard about innovation. Every company is like looking, “How can I get my market to the market?”

“How can I make sure that I keep my product on the market.”

But everyone with regard to regulatory aspect, wait till the last minute to react. Because a change means cost. Cost means something I push back. But the cost of regulatory compliance is actually a very important concept. You should not delay because if you delay, your revenue will disappear suddenly, and your whole company as well.

And I had that situation with a lot of manufacturers reaching out to me and said to me, “Bassil! What happened?!”

– It’s, like, why?

“The Notified Body pulled our certificate away!”

I said, “Are you surprised?”

“Yes! They were auditing us and they were very strict!”

I said, “This is their job. The same as FDA or other country regulators. This is their job to make sure that the products that are getting on the market are compliant. And then they pulled back your certification – it has the reason – they didn’t do it just for fun. And the reason was that you forgot regulatory compliance.”

And they said, “Can you tell us what we did wrong?”

And as I started talking to the company, and they were working, that’s where I went and audited them by myself. I said that when you started the company, like we heard today about innovators creating companies, starting a company, I said when you started the company, you had a big investment and regulatory and quality. It was a small company but after one year, you had 12 people working on regulatory and quality.

When I got to audit you, how many people were there? One person and 12 marketing.

I said, “Well, where are the regulatory and compliance people?”

“Oh, this is, like, an unnecessary cost, we tried to reduce the cost.”

They cut costs in the wrong place. And they got actually in that problem. And this is important. We spoke about innovation today.

It’s important to recognize the regulatory obligations you have to meet. And this is important also for innovative performance of the company because if you are not looking to continuously improve your devices, this is one of the obligations.

You will kill your company by yourself.

And this is what happened. Historically, you know that a lot of us, we carry, Samsung, iPhone in hands, who was actually the market leader?

NOKIA, and Ericsson, they forgot actually improvement and continuous improvement. They are still there, but you don’t hear about them anymore in the cellphone technology, because they don’t deal with that anymore, same way like Apple and Samsung. So, talking about regulation and talking about European legislation, just to give you an update, I will try to keep it simple for everyone that everyone who’s not regulatory background, understand what’s happening here.

European system is changing. And it is already changed. We have in the past directives and that those directive change to new regulation. We had in the past in 2012, 82, notified bodies 83 notified bodies who are notified bodies today. In the US, you have FDA, this is how you get your product approved. In Europe, European systems said we don’t want to do it as centralized authority. We did centralize with give it to independent parties conformity assessment bodies, and we allow them through designation that they are allowed to act on our behalf. So, they are like the FDA, but they are in private hands.

Now we have 83 notified bodies, now with the the MDR, we just have 28. Why?

Because the process of getting a notified body is not anymore that simple like in the past 56 applied, 28 are there.

How did they take to get that? Two years, every notified bodies taking two years from application to designation, every notified body and last one of I was working for one of the biggest players there. And I got this second designation in Europe at that time.

Everyone was increasing resources, but you do the calculation very easily, you have 83 notified bodies serving the markets globally, you get reduction to 28. Even if you increase resources over a period of five years, you will not be able to digest everything immediately. Because capacity, competent people are limited. You can’t find them all around, you can’t get all these people running and able to deliver services. The second point which is important in the service provider part is that actually you need to train the people. It’s not like a machine, you develop it, you verify and validate it, you bring it to the market. You need to get people trained, educated, and FDA is dealing with such a limitation. Also, European system is dealing in such a limitation.

Years ago, I told every one of us, “If you don’t have capacity, start training your kids, because their future is in regulatory, is in quality, we gonna more and more of them.”

A lot of people didn’t listen, they waited, now the kids have to go to university, you have to pay as well. So you don’t have actually the trained qualified people. So we have 28 notified bodies, they have to deal with all of this problem with the MDR. They have to implement MDR, they have to support everything.

The problem that we have in Europe, we are not getting, let’s say a possibility to get all devices still ongoing under the old system. Every device even if it has been since 50 years on the market in Europe has to undergo a recertification. So, there is no possibility to deviate from this. Every manufacturer, if it’s Medtronic, or Stryker, or it’s a no name company, everyone has to start from scratch.

The European market is rebuilding everything. If we look into system in Europe, we have nearly 10,000 certification of medical devices getting from all of Europe, as well as from European market as European market. So, they need to get the CE mark and all of these companies need to get certified again, so notified bodies.

In the past you could see them and conference like that, so Joe invited me at that time with my notified body responsibility to speak on 10x. Nowadays, if you look to conferences, you’ll see some notified bodies presenting those are the big players, the other one, they are hiding because they don’t have time to be there. They can’t spend, send resources to spend time on conferences. They can’t do that. Because they need every single capacity to digest the work and also they don’t care anymore. Their sales strategy wasn’t the best thing, they were fighting to get customers. We were doing road shows as notified bodies to get more customers now, so you sit there and customers are waiting, and they can say we have enough, go away, go away.

And this is what is happening and what is also happening, the process is getting very lengthy. So if you’ve got the certification application now for the European system in the past, you could do it like, you could do expedite it three months, six months, get your certificate. Now you can apply for expedite and if you get it, it’s really a success story, if there is one notified body who would offer it for you, but they will not deliver it in three months or six months, you will need long time, typical time to get the product recertified is between 18 months and two years. And even a product which was approved in the European market, and what matters, how much clinical evidence do you have? What matters? Did you do your job accordingly in the past, and this is what’s leading to a lot of trouble. You see, I told you 10,000 certificates, how many of those do you believe are already, MDR now ready? Guess, give me number.

Delegates: ZERO,,,400..

Bassil Akra: Actually, less than 10% of these 10,000 are even big manufacturers. So, which were telling me at the beginning, we already we got to submit we got to get everything on time.

They call me and say Bassil, “What’s happening, we don’t hold even one certificate from the European market.”

Now, this point is interesting, because it is an additional burden, the time the countdown is going down and down and down because we are ending was that transitional provision period in May 2024. So we still have two year’s time, and if you consider that a lot of manufacturers are not certified yet, and 28 notified bodies are not even allowed to start the process. So you recognize that the European system is still in its implementation phase, and a lot of manufacturers will not be able to make that market. So we spoke before about which kind of influence there was an example of Russia, leading to an influence on your business, did you consider also the influence of not being able to sell in Europe or not to sell in other countries, which depend on the European CE marking because a lot of manufacturers, they rely on CE marking for a lot of Asian market or Middle East. And if you don’t have it, you lost your business as well. And this is where a lot of people do not recognize that and do not care about that as well.

So what is the reason for all of this, the reason for all of this not readiness, no preparation of manufacturer, a lot of people didn’t start, we had the COVID situation, which led to additional burden because people couldn’t travel to do all the thing, to do, let’s say the initial steps. But the biggest burden also is related to manufacturers who didn’t prepare themselves who didn’t take it seriously.

In 2012, when the regulation was under preparation, I went out I was telling people, “Guys, you need to start collecting clinical data.”

I was at RAPS, big conferences all over the globe, telling everyone trying to educate on MDR. And I think I trained thousands of people on MDR.

And then everyone was telling me, “Bassil, come on, this will never happen. The European legislator will never implement such high requirements for Europe this will be higher than US FDA, they would never do it.”

What happened, in reality? It’s implemented. What happened? Nobody prepared himself. So a lot of manufacturers did not take it seriously. And now, surprise, surprise, manufacturer get their product rejected.

Then these comes to me like, “Oh! We invested about 500,000 to get our product certified on the end, our end result was reject, we have to pay for as reject.”

“It’s like yes, this is reality. Because you didn’t comply to this new legislation. It’s not fun. It’s actually a requirement which you have to fulfill in Europe. This is what is actually currently happening with European medical device regulation here.”

“What is the problem?”

I don’t know if people cannot read what is written, or they don’t want to read. I know it’s boring, but I kept saying, you can read the MDR with a glass of wine, and it will end with multiple bottles. And as soon as you start feeling the pain, then you got it because when you’re feeling the pain, you are getting the message and the wine will help you because you will get a bit of relief out of it. So read, what you have to comply to. Don’t just read your numbers because your numbers will be having a minus in front of them. If you didn’t actually read the obligation that you need to fulfill to be able to place device on the market.

Joe Hage: You make regulatory pain, very entertaining. I have to ask with, so few companies compared. what the reality it’s not as though you’re just going to say sorry, 90% of medical devices are no longer available. So…

Bassil Akra: it’s a good point. Joe, I think the legislator today they tell you, we told you about that years ago. So they will not give advantages potentially for all manufacturers, the manufacturer who are perhaps in the application process and they want to actually influence by the fact they try but they are not able because of delays and so on that they will get the benefit, but the manufacturer was still, probably like 8% of the industry is still saying, let’s wait, perhaps next year we gonna apply.

Joe Hage: Okay, let’s take that example that let’s say 30%, say, I don’t believe you, I’m not doing it, you don’t really think that half the products are going off the market,

Bassil Akra: They gonna look to medical need, they gonna look to source device manufacturer, and they’re gonna create different routes. So will that not get rid of every device and kill the healthcare system? They will not do it. But they will apply the rules of authorities where they say, Okay, we’re gonna prioritize, we’re gonna decide, do we need 10 cultivators, or we take the one who was actually prepared to get this devices market.

Joe Hage: I know collusion is not really legal. And I didn’t suggest it, but everyone and say what competing said we’re not gonna do it, I’m not gonna do it.

Bassil Akra: And then yeah, I mean, we will see what will happen was such a situation that could come, we could come to such a situation that everyone would say, I will not do it.

But then you could have also regulators of saying, “Okay, we don’t approve device by device, or we give you a big penalty, that you have to do it and you have a short time to deliver, if you would not do it, then we create our own solutions or whatever.”

Because you know, regulators are, sometimes they create, like deviation from the old rules, but they don’t want actually to blame themselves. They create rules, if you blame them, they will say, “Hey, guys, this is not the way that you want to have it.”

Joe Hage: So, you’re saying don’t call their bluff, Joe?

Bassil Akra: Yeah.

Larry Stevens: I think I’m going to contact the European regulators and have a great suggestion; it’s called an emergency use authorization.

Bassil Akra: I mean, they have that. And in Europe, we have 27 Member States, you can do that. But then you need to go with your device for every single member state and get approval, and you need to justify why you didn’t do your job accordingly. And then you can get into I mean, there’s always someone who did it. But as someone who prepared themselves.

Mike Belongie: And I’m talking about what I just talked about, it’s called people not getting therapy and dying, because devices are not available, the government cannot ignore that.

Bassil Akra: Agree, agree, and they will, will take care of that they will take care of such a situation. But they will not allow manufacturers to play the role of saying we would not do it. Because this, this will mean that the rules are not followed for that country, which they would not enable doing.

Duane Mancini: Just to comment on that like the strategics, they will comply with the MDR, they are all doing it. They’re all hiring heads of, of MDR transition plans, we did a lot of their CERCP, work and they’re going to do this, the only thing that this is really changing is where start what startups do in Europe, instead of commercializing in their own country, they come to the US first.

Bassil Akra: This is a major change. So a shift in the way how manufacturers are planning that product introduction. They are designed with different market now. But we need to consider also that the fact that nobody is taking that that seriously what is happening in the EU, and this is what’s going to punish a lot of manufacturing. And like you said the big ones they are doing that they are planning they are doing they are not succeeding yet. Because they believe based on their power, they can succeed faster, they are not. So they are recognizing we have to do the job in the right way.

Now, the small players, some of them are perfect, because they said we can’t afford it. We need to get compliance. Some others they say, oh, let’s give it a try. So I have one manufacturer, he said to me, you know, I just sent them the same documentation, which I was sending in the past the same evidence. I said, “Let’s give it a try.”

And they I replied from them that they do that in an expedited way. So I had to pay like four time the price, and that they got back to me, I said,”File is rejected, why?”

I just changed the name, because the rules are different. And you need to read the rules, what they are telling you, you have to do, and this is this is wrong, and those manufacturers will disappear. Because such an investment, we’re worried about like 1 million revenue, 2 million revenue, 10 million revenue, if you invest like 500,000, just for an approval, and you got to reject, when do you get this money back. So you need to get that to recover as well.

Joe Hage: I asked Maurizio, I asked Daniel, you must have more companies coming at you than you could possibly support.

Bassil Akra: I agree this and this is…

Joe Hage: How do you choose who you will help?

Bassil Akra: I mean, what we do is like we have the selection of companies who we gonna help, or we will not help. I do not help companies that are not willing to be compliant, they are not willing to listen. Companies that say, “I want you to help us to get into compliant strategy,” I help them.

But I get a lot of requests from companies saying to me, “Tell me how I can avoid the compliance and they say no, I can’t do that because you can’t avoid it. I can build for you a strategy which is lean, I can get you like a prioritization to get your submission done. But I can’t get you non-compliant product on the market because I can’t sleep at night when I know that that product is not compliance.”

This is what we need to keep in mind as well.

Karandeep Singh Badwal: So currently, as a quality regulatory consultant, which areas should I be focusing on? auditing a client? What are the common mistakes that you see in terms of companies losing bases.

Bassil Akra: I will show you that in some minutes. So this is what I’m planning to share with you as well. The MDR, there’s nothing actually, which is I was surprised that people are telling me like the MDR is not a complex, a lot of things are like overdoing. There’s a lot of exceptional documentation, which you should have as the manufacturer.

And every time when you do something in a regulated field, you should document why you’re putting that decision. I think, Rob, Michelle, told you a bit about that when we were speaking about FDA, so nothing unrealistic, unrealistic expectations. The biggest problem, sorry, it’s like jumping.

The big problem is like people start with the first point was saying the European legislation is saying you need to know how you are getting a board like this market, your supply chain, you need to know how they communicate with you. People forget, for example, to have contractual agreement to them. They don’t know who are the distributors.

Today. in the morning, before coming to the conference, a manufacturer was telling me, “You always sell millions of devices like, how do you sell them to the European market?”

Or we all know, “Is like, you have to have a first point of selling, how does it work, where who is distributing your product?”

Yeah, we have someone who’s one distributor, but he’s not distributing instead of giving that to further distributors like you need to build like clarity about your supply chain, because you need to make sure that you mitigate risk, there is something going wrong, the need to know what is happening. They don’t know that, so that the first important thing is like economic operators, who is part of my supply chain, as a non-European manufacturer, you will need an authorized representative, you will need an importer, you need distributors as well, you need to build contractual agreement with them, you need to understand what they are doing. You need to set obligation, duties and responsibilities. And guess what it is also a new ask the same thing. It’s the same thing that you need to do an ethic quality management system, but people do not recognize it. And suddenly they say oh, we have to have that you will not even order something without the contractual agreement.

Whatever it is consumer, you do contract as well. But they forgot that, the other point, which is important, and I just get on a high level to share with you some important information, which are not new, a quality management system, which includes every single question I was mentioning during her presentation, and Rob, is minimal. Guess what?

A lot of companies suddenly now they are like saying, “Oh, we didn’t have the data? What? Why, you didn’t have it? Yeah. nobody asked us for this.”

It’s like, do you have documentation for your device design? No, we lost some because we move multiple places, and we don’t know where they are now. And those are, US companies, Asian companies, European companies, and sometimes with a big name.

You know, it’s like, how could it be that you lose documentation?

“Yeah, we did a lot of acquisition and suddenly, we just forgot that we need to have us do computation with our acquisition.”

So we do actually the partial financial part of the product, but we forgot actually the remaining point, which is critical. The other importance is saying which is actually critical. What do you see a lot of gaps mis-managed, how was responsible done from the beginning and never stop it. This is where actually you shouldn’t be with MDR. But this is what they are identifying gaps. The biggest gap, which you can see clinical, everyone was comparing apples with oranges, and saying the apple is an orange. But the orange doesn’t have enough evidence.

And they were like trying to get those products on the market. Now, the mentality of equivalency in the US differ from the European equivalency approach, they are not the same, you can’t apply the same mentality. And especially for US manufacturer, this was actually the strategies that we were pushing for, like 510k process, it doesn’t work for you, you need to do it in a different way. And this is where a lot of people are getting now into trouble, because they recognized we need to do something in a different way.

The other big part, which I want to share with you is actually the post market, post market surveillance obligation or actually obligation which you have to do throughout the entire lifetime of advice. And this is where most of the manufacturers are not doing that. And they see this as a big investment. And they see this as just an investment. They don’t see the add value of post market surveillance. I said regulatory as not actually a burden for a company regulatory is actually an add value for a company for continuous improvement.

And why should you sell it stand when you have just one year data?

Why don’t you think about how can I make clinical studies to collect more data or establish urgency to collect more data to use them for my marketing strategy as well, not just for my regulatory compliance?

How can I use them to impress to show add value to show why you should buy my device. And this is where people forget it. They see it always we are just doing this.

I remember in the past, some CEOs came to me when I was at the notified body. They said, “Dr. Akra, we are doing all of this just for you.”

“Oh, thank you, I say this is big. I am so impressed.”

So thanks for that. They don’t get the point that actually, this is actually for their own risk mitigation, business risk mitigation as well design continuous improvement and sales strategy. So you do that not just for making the regulator happy. You do that to show compliance and to make sure that are protecting yourself in case something happen.

Also the issue, which is leading to a lot of trouble is actually the fact that manufacturer were doing private labeling of other devices. So there was an original equipment manufacturer. And they were like using that device and putting that label on it and say they aren’t the leading manufacturer. And they had no access to any information. And this kind of devices, they will disappear. And I was hoping legislation because the legislation is saying, if you want to do that, you need to have full access to the full documentation of your predecessor device. And if you don’t do that, then you will not be able to get as much this is what is becoming now burdensome for a lot of money.

Now, the important part, which is critical, you asked me what will happen and all that you have got to get to a manufacturer, you got to see you got to ask them, “what is your regulatory strategy?”

So I think some of you spoke about pathway or pathway, the strategy of manufacturing that device in the market, no manufacturer has it, no, MDR requires every manufacturer to have a revenue strategy for the device. They expect them to develop a clinical strategy as well to document that. Everyone say we wanna have something for the future, but they don’t document they don’t have evidence, qualification of personnel involved and regulatory.

Not everyone can be ready to professional, most of the companies, they are hiring from university, which is great. I’m supportive for junior newcomers, but you need to handle some senior leadership in your company, you can’t just get someone from the university would never have any idea about regulatory and give them the data. So you don’t know the full qualified person. You need to select the right persons. You can’t have an automatic surgeon, evaluating the clinical data of hardcourt even if he’s a physician. He’s not qualified. He can’t do that. It’s not like by definition, because I’m a physician, I can do everything.

Other things which are leading to another problem is actually capacity resources, hiring, we’re hiring people, where are those people? How much time are they spending for that work? And a lot of people forget all that they, they also involve supplier, and they say we don’t want to do the task internally, we got the BRC personal responsibility compliance, we’ll take an external one. But that external one is serving 20 manufacturer, and this is one single person doesn’t make sense. No, it doesn’t.

So they aren’t getting nonconformity, it doesn’t work, you can’t get one person serving hundreds of manufacturers for getting a notification of the regulation. So there’s a lot of things I don’t want to go into the details. But I just want to tell you, if you want to succeed, and it is doable. So to get your point balance, that’s something which is like, I know, FDA does the same thing, the requirement or a new ask, they are named differently, perhaps they are referring to different legislations, but you have the same requirement. And I’m surprised that everyone has seen that as a big burden. Because if you could prepare early, you could avoid a lot of costs. No manufacturer comes to me as like our certificate is ending in six months, can you rescue us?

It’s like, what did you do? Nothing yet? Then you got MSA? How many devices? Do you have? Oh, we have like 25 devices? And we have five manufacturing facilities? Okay, can you do something on the quality management system? We have in some facilities, a good quality management system.

So we have certification, but we then look to gap so and you’re so you start with this. And then you recognize actually, you need a lot of people to start doing the 25 technical documentations to get that all of them ready, and up to date.

Some of that they will ask me, “Would it be possible just to send them and say like, let’s get a waiver and say it’s fine?”

No, you will not do it because the cost of correction is higher than the cost of actually doing this in the right way. If you do it from the beginning, right, you will cost you $1. But if you correct afterwards, it costs you millions because you need to go back and back and back and you got to lose time. And time is long and a lot of people don’t get that point.

Standards. We would like talking about a lot of standards and how US has standards and other regions have standards and guidance. And I was smiling when Michelle and Rob were presenting saying people to try to negotiate with them about user choice standards and guidance and whether those are like binding.

Now the European legislature, I remember when we got the regulation published, I was invited to the European Commission meeting in Brussels, the Commission presented about the MDR. And they were like presenting and impressed by the new legislation to say this is a good new document finally published which was a good step finally, and they had to present from my side and it’s like I presented the legislation I said those are 175 pages which are meant in effect small, tiny size. If you read some information one time, you will understand nothing. If you read it multiple time you will recognize it’s actually unclear at all, and you will need a lot of guidance. The commission was saying at the beginning, we wrote the relation in a very lengthy way because we wanted to avoid guidance. We want to be clear and be very specific. How many times do we have to now for the European medical device regulation? The regulation itself if you printed at a normal pace, and was a normal size or font size you will get 500 pages.

Since its publication, we got nearly 80 Guidance document and every guidance is between 10 and 30 pages, explaining what is written and five sentence in the revisions, every five sentence are leading now to 20 pages of explanation. Now the good sentence of guidance has actually gotten a bit more clarity but the bad thing is like you know, every legislator when they are trying to explain to you what they meant was three surfaces. They include the new requirements, which makes your life not easy industry, we want to have more clients more products, we can start because we don’t have eyes because the eyes and everyone is crying as “Oh God! the guidance are expecting from us to do more at the moment. So this is problematic.”

Joe Hage : Often, then I am asked or give unsolicited advice to speakers, you know, some come up and they say, let me tell you about my company and this and that I say no, just go up. Show them that you know what you’re talking about. They’re like, Oh! I know a guy. You haven’t done that in spades and very entertaining had solo press.

From Germany, for which I’m very grateful. I would close by asking you to tell the camera for those watching later. If you’ve not gotten started question I’d say get started right away. But is there something specific like where do I start because calling you is a nice choice, but it’s impractical for 80% of the companies to call you What do we need to do now?

Bassil Akra: Start with your gap assessment. This is what you have to start and don’t do your capacity resources if you have enough resources, if you don’t have, hire them or involve consultants to support you on that.

Joe Hage: Bassil Akra is my friend, ladies and gentlemen, Bassil Akra.

How 3D Printing Can Change Your Approach to Medical Device Development

12 min reading time

How 3D Printing Can Change Your Approach to Medical Device Development

Presented by Rick Gillespie, Fisher Unitech, at the 10x Medical Device Conference – Secaucus 2018

Reading Time: 12 minutes


Rick Gillespie: Good morning. As Joe said, my name is Rick Gillespie. I represent a company called Fisher Unitech. I’ll talk a little bit about them this morning.

Just to give you a little bit of my background, I’m excited to be here for this inaugural event. I worked for Stryker Orthopedics for 12 years in their sales and marketing department. And I have a real interest in medical device, so I’m very happy to talk to you today about 3D printing and how that can impact your company and the types of products you’re developing.

This morning we’ll talk a little bit about 3D printing mostly in medical and, at the end of the presentation, we’ll have a couple of case studies that we’ll share with actual companies that are 3D printing.

A little bit about who we are — Fisher Unitech partners with a company called Stratasys. Stratasys, for the last 25 years, has been the foremost company in the 3D printing world. Over half of all printers in existence in America in companies today were manufactured by Stratasys. They lead the market.

And Fisher Unitech is the largest Stratasys reseller in North America. We have over 50,000 customers who are in 22 states. We have the largest technical support staff of any company in the 3D printing industry. So, that’s a little bit about who we are.

Let’s talk a little bit about how important is 3D printing. I thought it was appropriate to actually put up a quote from one of our customers. This is an Israeli startup. That’s a Stratasys customer, and this is a very bold statement that this particular engineer made — “we don’t think, we print.” Well, when you think about that, that tells you how important 3D printing is in their development process.

So let’s talk about that a little bit. First of all, who in here has had any experience with 3D printing in any way shape or form? Raise your hand. Okay, a few people. For those of you that aren’t familiar with exactly what 3D printing is, it’s also called additive manufacturing and it’s the process where we can actually create a physical model from a 3D computer file.

And there are many different ways to 3D print using different materials. We promote several different types of 3D printing. One is called a fused deposition modeling or FDM where we utilize a high-performance thermoplastic, heat that, and apply layer by layer from the bottom up to create a 3D object.

We also promote a technology called PolyJet. PolyJet uses photopolymer resins and, in something very much like an inkjet printer, lays down a very thin layer of this resin and then passes it with an ultraviolet light to cure that.

We have an example of a 3D printer right in our booth right behind the audience in the orange Fisher Unitech booth, and we also offer a product that prints actual metal parts. Okay?

So why 3D printing in medical? Every other industry in the world is utilizing 3D printing, including medical. It’s been a little bit of a slower start in a medical field. There are some regulations and things that have to be adhered to in the medical field that makes it a little bit more difficult to rapidly grow into this field, but it’s very viable and we are doing 3D printing in medical to try to keep pace with some of the challenges in that field, as you well know.

And there really are three that are major challenges right now that 3D printing is able to address and help.

One of those is the rising cost of healthcare. In most countries around the world, the healthcare costs are outpacing inflation. So it’s very expensive. You know, companies like yours are forced to find ways to be able to deliver their products in a more efficient fashion and a cost-effective fashion in order to be profitable.

The aging population — people are living longer these days. They’re requiring more of our resources for healthcare. So it’s incumbent upon companies again to find efficiencies and find different ways to do things.

The third one is in relating to insurance companies. Insurance companies are now paying hospitals differently than they have in the past. Instead of the traditional fee-for-service model where surgeons would perform or doctors would perform an operation and the hospital would get paid by the insurance company, hospitals are now requiring and reimbursing based on outcomes, patient outcomes.

And that takes into consideration many different factors including patient satisfaction after the fact. Did they get readmitted after the procedure? Many things enter into this. In some cases, hospitals that can’t meet those guidelines are actually being penalized or having reimbursement monies being held back until they’re able to basically improve those processes to be able to meet all the guidelines.

So, it’s a whole different landscape out there, and 3D printing in the medical field is very important because we address each and every one of these.

Let’s talk a little bit about 3D printing in your world. If we look at the product development lifecycle, which are the arrows across the top in the white. These are the major buckets that you deal in when you’re developing products. And the arrows in the blue are some of the solutions that 3D printing offers to help improve upon some of those areas.

Let’s take a look at those one at a time. We will go through them quickly. In terms of research and development, this is where ideas come to life. 3D printing is giving companies the ability to rapidly develop prototypes of the ideas and the products that they are trying to bring to market, and they’re able to do so much quicker and it’s such a less expense than they have in the past.

And that’s important because in many cases, as you well know if you’re in the product development area, there are a lot of changes that are made along the path, along that continuum. And the ability of companies to be able to print actual models that they can deliver to a physician or a surgeon and actually give them the ability to hold on to that thing and spin it around in your hand and try it out, here’s nothing like that. I came from Stryker, and I can tell you that the implants that we would design and develop went through stringent testing and iterations with our surgeon consultants.

Prototype tooling — Not only are you able to develop aesthetic prototypes that look good, but with 3D printing and some of the materials that are available, we’re actually able to put those prototypes through a testing process. And actually, we can make injection mold production parts rather quickly and very inexpensively.

Injection molding and tooling is very costly, takes a lot of time, but more importantly, it takes a lot of money. Being able to print these molds out in hours or days versus weeks or months is invaluable to companies, reducing the costs by over 60% and reducing time by over 90%, being able to bring products to market much quicker than they have in the past.

Let’s talk about some about testing of these products.

With 3D printing, we are able to produce realistic anatomical models, and these models are made of various materials. They can mimic bone. They can mimic soft tissue. As you see the picture here, this is a vascular model that is used at the Jacobs Institute in Buffalo, New York. They literally are able to hook these models up to devices to test fluid pressures, heat. They put them under realistic human environments to be able to test medical devices in these models.

Being able to test the device prior to taking it into the operating room is so important to our surgeons. So we’re able to help eliminate the trial and error that used to be by developing these models. And the beauty of this is these models can be printed out with specific pathologies. They’re not generic models off the shelf. These are patient-specific models, in some cases, that they’re able to do these real-life testing on. And then the beauty is they can store them digitally and use them down the road again to train other surgeons and other residents.

3D printed medical devices and componentsThe manufacturing process — the benefits of that. With 3D printing, as you can see in this picture, we’re able to actually produce production quality parts off the 3D printer to be able to share designs of the model of the products that your companies are developing, and we’re able to put these in the hands of the clinicians to be able to test these devices.

Situations like this where it might be a rather low-volume production run of, let’s say, the housing on this particular device right here, being able to do those directly from a 3D printer in a high quality enough that it looks like a finished product is a great thing and can help move the process along rather quickly.

Also in the manufacturing area, with a 3D printer in-house, companies are able to produce jigs and fixtures and tools in a manufacturing process to speed up the design, to speed up the actual putting together of the materials into parts. These things can be built onsite in a short amount of time, literally hours or days versus weeks or months.

I can’t tell you how valuable that is, to be able to cut the time from concept to finished product. Using 3D printing is a big value. Also, the materials that we have developed through Stratasys probably has the largest library of 3D-printable materials in the world, and these materials that you know have electrostatic capabilities biodegradable capabilities, they have properties where they are chemical resistant. So, you name it, there are materials either existing or in development right now to accommodate your needs.

We looked at a device, a few seconds ago from Acist. Let’s take a moment to hear from some of the folks at Acist exactly how they’re using 3D printing.

Acist Medical SystemsAcist is a medical device company. We primarily design and develop injection systems for delivering contrast. Acist has revenues of approximately 100 million dollars. We have 220 employees worldwide. We have automated the process of injecting die into the vascular system that allows physicians to visualize anatomies in order to do therapeutic solutions.

Ed Miller: Since 1998, we’ve performed over 10 million procedures.

Clint Viliks: Our key customers are the physicians and clinical technicians that use our product on a day-in, day-out basis.

Dave Scott: Where our efficiency really comes from is ‘how do you get that solution in front of the next physician?’. How do you get it quickly? The FDM process allows us to develop machines and design that overall solution very quickly.

It’s a world of difference between machining versus something that you can print in a day.

When we bought into the FDM technology. We never pigeonholed ourselves into a particular arena. We like to use it for everything. We do it for functional testing, we use it for making fixtures. We’re also looking at using it for parts of some products.

We use this technology for production of parts.

The CTA is a lower-pressure injector. We’re going through a product update, but we’re really looking at reducing the first production run using the FDM process.

It makes a great substrate for the process and for the parts, but also it allows us to really do some design-to-manufacturing and eliminate a lot of pieces. You can reduce part count by putting complexity into one part. What also allowed us to develop the products and get a new updated version to our customers is pushing out our decision on the moldings. You don’t want to invest in a new mold or a new technology until you make quite sure that’s what they want.

This is a truly just-in-time, on-demand inventory. If three years from now, the customer that bought the machine may say, “Hey. We dropped it,” and they want the replacement part. With this process, all I have to do is go back to my file and I can reprint that part and only one part that day, but I’ve never carried the inventory. When you look at all the lean technologies and the opportunities out there, this is probably the leanest, best example of managing inventories and then keeping only what you need and parts you can handle. And if you can design with that end in mind, you should see the benefits that you can have, but it has to become a mindset

Dave Scott: What the technology allows you to do is it really allows you to put a plastics manufacturing center inside of a lab, and it allows you to make any geometry out of any file and you’re never stuck with one design.

Kevin Phillips: I think it facilitates the creative process.

Ed Miller: It really has changed the whole industry significantly as far as how long it takes to get products to market.

It kind of changes the dynamic. It really upsets the traditional manufacturing world. And if you’ve got the right volume, the right product, FDM can solve a lot of problems.

Joe Hage: Are you doing fine? I’m just going to take a moment of your time. Hey, who in the audience is using 3D printing right now [raises hand]? Wow, that’s a lot.

How many of you are thinking that you may use 3D printing in the next year at your company? Wow.

How many of you would like to use 3D printing, think you should use 3D printing but ‘yes, my management isn’t going to go for that just yet’. Not a lot of hands on that.

There you go, your audience.

Rick Gillespie: Thank you, Joe. That’s great. I’m glad to see that there is a wide use of this.

Feel free to stop over. We’re in booth 25. Our booth did not show up yesterday. I wish I could have 3D printed that yesterday afternoon, but unfortunately we weren’t able to do that.

Marketing and educationAnother thing that some of our customers are doing is they’re utilizing their 3D printers to create realistic sales models that the sales team and the marketing teams can take out to visit hospitals and physicians to demonstrate their medical devices and some of the features and benefits of their device with these 3D models.

Once you have a 3D printer, understand there’s so many things that you can do and how important it can impact many other departments within your company.

And from a clinical standpoint, companies now are actually creating patient-specific implants, patient-specific cutting guides, things that can aid in the operation like the operating room.

Folks, I can tell you, I’ve been working with Stryker and working with physicians in the operating room.

Nothing is worse than having these physicians get into a situation where something comes up that they didn’t anticipate.

3D printing gives the physicians the ability to practice ahead of time and do that. And these types of models here save time in the operating room like you can’t believe. And with the operating room time costs at anywhere from 60 to 120 dollars a minute, that’s important. And that’s important to a hospital and that’s important to your physicians to be able to save time.

Surgical preparationWe just touched on that. Again, think about the aerospace industry. How many of you would fly with a pilot that never once got into a plane and practiced or never spent time in a simulator? We just wouldn’t do it.

But in the medical industry unfortunately, up until now with 3D printing, they’ve really had no way to have that simulator and here, through 3D printing, surgeons are actually able to print out a specific model of a patient’s pathology, practice with their device first and feel comfortable going in there that they’re going to do the right thing for the patient.

Take a short video here to talk about one other aspect and how surgeons use this technology —

Redmond Burke: –with an abnormal aortic arch. It’s a rare problem, but we see it a lot.

Katherine Gonzalez: Because it mimics asthma so much. I think that it’s often goes misdiagnosed.

Redmond Burke: So Mia lucked out. She had a really good doctor who said, “I don’t think this is right.”

Juan Carlos Muniz: So when we were able to make the diagnosis of a double aortic arch, it was very satisfying.

Redmond Burke: So then the challenge as a surgeon is how you divide this double aortic arch and save her life without hurting her. One of these babies’ hearts are like Rubik’s cubes, and you can’t give somebody a piece of paper with a picture of a Rubik’s Cube on it and say, “How do you solve this?” You have to hold that three-dimensional object in your hands and then come up with a solution.

Juan Apolinar: At Nicklaus Children’s Hospital, we are actually using 3D printing to assist the surgeons with their surgical planning and teaching of new medical students.

So having the ability to make these 3D models, to look at them on the screen, but also to print them out and hold them in our hands has really made a fundamental change in how we view a lot of these diseases.

Redmond Burke: Make a 3D model of her very complex aortic arch vessels, we were able to figure out which part of her arch should be divided to achieve the best physiologic result. I showed the family their daughter’s heart.

I hate opening up a textbook and saying, “This isn’t really your baby’s heart, but kind of looks like it. Here’s how we’re going to do the operation.” That doesn’t resonate with them.

I showed it to them. I said, “This is what’s choking your baby. This is why she’s taking all those medications and why they won’t work.” It’s very powerful when you show a family, ‘this is your baby’s heart, and this is how I’m going to repair it.’

We’ve gone through planning an operation on a patient who was told, “Hey, you’re an inoperable.” We made a 3D model. I literally carried it around in my gym bag for a couple of weeks. So I would reach in, take it out and look at it until it finally dawned on me that there was a relationship that we could exploit.

Why experiment? Why go into the operating room and hope, when we’ve got a model and we can actually test the device in the model and know with certainty — this is going to work.

They could feel confident that we’re going to do our thing. And we did the operation, we took intraoperative images and they looked exactly like that model.

Katherine Gonzalez: From having four and a half years of not knowing to all of a sudden in less than a two-month time frame, she’s back out of her surgery. Yes, so it has been a great experience for us.

She’s very active. She loves dancing. She loves baseball. She likes doing everything. So now she’s just going back to normal life and not being worried.

Redmond Burke: Show them the level of sophistication that you have. Show them what you’re capable of. The 3D-printed heart, accurate to the most minute detail, has been the difference maker for me. It’s helped me take somebody from being inoperable to operable, and we’ve saved their life.

Rick Gillespie: Folks, I’ll close with this — 13 years ago, I had my hip replaced. And as amazing as that operation was, and it took the pain away and I feel better and a better quality of life, that did not save my life. 3D printing saves lives.

If you have a company or if you’re part of a company that would like to 3D print, but don’t have a 3D printer, we are able to offer those services to you as an outsourced basis to get started to see if it’s something that would be viable for your company. So there’s ways to do it if you want to do it. Okay?

So I want to leave you with that. 3D printing is an exciting technology and I’m excited to be part of this industry, and actually, Joe, I wanted to thank you so much for this event. This has been fantastic.

Joe Hage: Thank you.

IP Portfolio Development: How to Protect your IP

14 min reading time

IP Portfolio Development: How to Protect your IP

Presented by Greg Grissett, Managing Director, Offit Kurman at the 10x Medical Device Conference – San Diego 2019

Reading Time: 14 minutes


Greg Grissett: I’m Greg Grissett. I’m with the Offit Kurman law firm.
I chair the IP practice at the firm. My expertise is in medical devices. It comprises about 70% to 80% of my practice. A lot of it is patent counseling, patent strategy, just helping companies navigate patent issues in a lot of different contexts. We’re going to talk about two of those contexts today.
So part one, just to give everybody an overview of IP and a little bit of a deep dive into patents, what they are, and what they protect specifically.
Part two, is your revenue model protected by your patent strategy? Maybe it’s not question you’d think about from a patent standpoint, but it’s one I like to ask clients.
Part three, what is your risk position with respect to competitor patents? We’re talking about protecting our revenue model, but also mitigating and minimizing risk. And businesses want to know this. Certainly, investors want to know this. Two important issues that you wrestle with as we go through with this.

Part 1: Overview of IP

IP classically is really four different rights.

We got:

  • Trademarks: This is a source of goods or services. This is really your brands. It’s your brand protection; it’s a word, a logo, or what have you.
  • Copyrights: I put here creative works, but the legal definition is a work of authorship fixed in a tangible medium of expression. That sounds very fancy, but it’s art, songs, words, software, software code, user interfaces, your websites, your marketing materials, the things that you express to the world. Either in software form or other mechanisms.
  • Trade secrets: Valuable secrets, their value is derived by their not being generally known and you actually taking steps to keep them secret. That’s an important piece. It’s generally the definition that holds across the country but, more or less, it’s got to be valuable because it’s not known and you want to protect it. If you distribute information publicly through social media outlets, you’re not maintaining that as a secret. If you have a manufacturing plant and you’re not limiting access to important parts or not requiring a non-disclosure agreement before your visitors see your manufacturing plant, that’s not taking reasonable steps to protect your secrets, so trade secrets.
  • Patents: I put products, processes, devices. This is really the protecting structure and function of what inventors are developing. It could be, of course, pharma products, compositions, medical devices. It ranges to the diagnostic space, to implants and what have you. 20 years from filing is how long patent’s last.

Patents

So let’s dig a little bit more into patents.

Really important concept to understand for patents – they’re exclusionary rights.
When you get granted a US patent, it gives the owner the right to prevent others from doing all these things in the United States – important here – “as claimed in the patent.”
I like to use the one-acre example. Let’s say I have one acre in Chester County, Pennsylvania, which is where I came from. I have the right to charge you for coming onto my one acre. Same thing, what a patent does.
What a patent doesn’t give me is the right to go into Joe Hage’s one acre in San Diego, all right. So owning a patent doesn’t necessarily give you the right to infringe on other people’s patents. Important distinction, we’ll explore that a little bit more in a bit.
Then again, important here, the right, the patent, is given in exchange for information. Who here has the pleasure of reading patents and patent documents? Okay. So they’re long, they’re dense, and some of them could be vaguely written. But part of the disclosure is the result of having to tell the world about your invention – how to make it, how to use it, and how it might work in a certain setting.

U.S. Patent Claims

The most important thing you’ve ever read in a patent are the claims at the end. It’s the numbered sentences. This is an example of one at the end of the patent.

The name of the game is the claim. If there’s anything else you read, please read the claims at the end of the patents. That is where the rights are. That defines the scope of the rights.
Important here is valid claims. That’s an important concept. Valid claims are novel and nonobvious over the prior art.
Joe mentioned a good point – what is prior art? Really, it means everything that has come before the time that you filed for your patent. Typically, publications, prior US patents, US patent applications, journal articles, articles that perhaps professors write and publish, that’s all prior art.
Could it be disseminating your product on a Kickstarter campaign? Well, yes, one type of prior art is prior sales. So, if you sell your invention before you file for a patent, you’re foregoing those patent rights. Not such an issue in the medical device context when you have an implantable because you have to go through some more market approval, but it’s important to know.
You can offer your product for sale and that will start the time period.
But the key thing here in the patent is the claim. They define the scope of the rights. This will be important later.

So, in the medical device context, my position and outlook is your patents should cover. And what I mean there, when you hear something or somebody say patents cover, what they really mean is claim different aspects of the value chain in your particular setting.
The other thing that we should think about as we go through this talk is, medical device companies should utilize the US patents system to address competitive threats. I put here “continuation applications” because it’s one area that I see other companies miss the boat sometimes and some companies do it right. We’ll talk about continuation applications a bit more.

Part 2: Is your revenue model protected?

Why am I asking about your revenue model? Well, inventors invent things. They invent technology, and they may develop a new market.
We’ve learned today that, sometimes, you have a problem you solve and you have to create a market around it. The business you’re developing there isn’t direct tied totally to technology. It’s tied to you being able to invoice a company for something and them to pay you on that invoice.
So, when I’m speaking of “are we protecting our revenue model?” your patent strategy should account for what you’re going to generate in terms of revenue in exchange for what you’re invoicing your customers for. An important concept that we’ll dig into more.

Patents in the Medical Device Value Chain

So this is just a generalized version of a value chain. You may have:

  • vendors,
  • assembly,
  • product designer, our medical device company, let’s just call it Med. Co.,
  • surgical use.

This is more in the implantable space, but the value chain you can apply the principles to other contexts.
Let’s say, in this situation, patents are owned and cover the product here as it’s delivered to the hospital system or to the physician. This is a pretty classic scenario. This is, at a minimum, what a company should be doing in the medical device system.
In this example, what you’re shipping to the hospital, you’re going to send the invoice for and what you’re going to get money for, is that which we’re claiming. And the red box in this and the subsequent slides, these are my clients. We want to cover this particular area.
Now, can your customer buy from a third party? Well, practically, not without permission from Med. Co. Now are there other factors in play in the business setting? Of course, but this is just one part of it.

Let’s change the value chain a little bit. We talked earlier today about some ancillary services.
Let’s say Med. Co. device company says, “You know what, I want a little bit more robust protection. Let’s extend our patent coverage into surgical methods, or use of the implant, or use of the product.”
And also, maybe there’s an app or software as a service that we’re offering to the hospital system as an adjunct to the implant and the instruments that we want to sell. We may not be getting revenue for this, but it may help close the deal.
Now what if you had patent protection for that ancillary service as well as surgical use? Now, remember, we’re having claims that, of course, still have to be new and non-obvious over the prior art, But, now, you’re in a position where you’re covering different parts of your value chain in a bit more robust way.
Is this going to cause money to fall from the sky by itself? No. Will it change how a hospital system or your competitors approach the market? I think so. It typically does.
This is a message, really, to the competitors that to really match the value proposition, I’ve got to then design around this ancillary service patent; I’ve got to design around the surgical use patent; I’ve got to design around a product the designer had created. That’s a pretty significant task to do. You’re just making life difficult for competitors.

Now let’s go one step further and let’s go backwards into the supply chain. Maybe we can cover some method of assembly in putting the patent together. Maybe we can even go further and down to component vendors.
Now, in this situation, three to five years down the road where you’re offering, you’re generating your revenue, you’re engaging with hospital systems and physicians or what have you, but you’re also protecting your supply chain.
So just think about what type of negotiating position your company may have in this environment. Will it be thing be-all end-all? No, you still have to have good products. You still have to have good clinical outcome. You still have to execute. You still have to have good distribution plans.
But is there anybody in the room that wouldn’t like to have a little bit more leverage when you go to the negotiating table with customers or suppliers? Having source protection this far back in the supply chain can give you some comfort. It will make your supply chain professionals probably rest a little bit more easy at night.
Another thing I’ll ask here, could your component vendor sell their product to a third party if you cover their technology? Not without permission.
So, in this context you can see how patents can be used a little bit further back in the supply chain just to help with your business.

Using the Patent System to React to the Market: Continuations

Okay, switching gears to continuations.
How can we use the patent system to address competitive threats and just the dynamics of the marketplace? You introduce a product, somebody’s going to copy you or copy the essentials of what you’re doing or copy a competing product. How do we address that?

Well, in the US, thankfully, you can file this first application, and before it actually matures into a US patent, you can file what we call a continuation. And that’s if you file January 1, 2018. Two years later, while this is still pending, you can file another continuation.
This strategy can be used for as long as there is patent term available. Large medical device companies do it. I think smart companies that have the resources and the ability to invest in IP in a robust way do this. And we’ll go through some examples of why this is important.

All right, you file patent application A, January 1, 2015. The application issues as a patent, January 2, 2018. Your patent covers your product, great. Maybe you even have some patents back in the supply chain or use patents, but you elect not to file a continuation to save money. And we’re talking 4-6000 dollars to file a continuation application.
Two years later, this one happened, introduces a competing product that copies almost all of your essential features. Not quite everything, but just enough to get a similar clinical outcome at a price that’s competitive. The competing product somehow avoids the patent claims.
Well, there’s two conversations you’ve got to have. One is, what do we do? And, then, how did we miss it?
Sometimes you can’t anticipate what your competitors will do and how they modify or change your product. Sometimes, technology changes and shifts the underlying groundwork you’ve been working with. Well, in this case, from a patent standpoint, I can’t really do much to help. You’ve got patents that don’t cover anything.

Let’s fast forward a bit. Same scenario – you file continuations, you’ve got a patent that covers your product, but now you’ve got some continuations pending. Competitor comes, copies the essential features of what it is issued. What do you do?
Well, now my client can come to me and say, “Look, we’ve got a competitor that’s entered the market, what can we do?” I go check, I look at our continuation, I draft patent claims. Now that competitor has patent infringement risk that they didn’t have before.

So continuations are business tools to use to help you protect what you’re investing in.
Protect as much of the value chain as you can, and make use of continuations to react to the market. That’s what you need to learn from part two.

Part 3: Avoiding IP Infringement.

This is about risk mitigation and reducing the expense of dealing with patent infringement risk.
Often, I get a question like this – You develop a product and you’re close to market. You haven’t done a patent search. You don’t know what’s out there. What do you do?

Freedom to Operate (FTO) study

We’re talking about freedom to operate studies here – what they are and when you should do them.

Importantly, this is a search and analysis of patents to determine the risk of patent infringement for marketing a product or service in the US.
Important here that FTO and patent infringement is about the commercial product. It has nothing to do in essence with your own patents. It’s all about what you’re selling in the US.
Why do you do this? Well, you want to know if you infringe a third party’s patents. Some of this is just practical information. That’s the business reason you would do a FTO.
There’s a legal reason. If you get sued for patent infringement and you’re found to infringe and you can’t prove the patents are invalid, the judge can say, “You know what, you wilfully infringed that patent. We’re going to triple damages.” Well, your freedom to operate opinion can be introduced as evidence to minimize that by a third.
So that’s the legal reason we would have a freedom to operate opinion. That is reducing damages awarded that could be significant.
Then again, investors want freedom to operate. Investors don’t want to buy a lawsuit. Freedom to operate gives you an idea of how to assess that.
This chart is available, I won’t go through it, but the idea here is, you only have risk of patent infringement when you infringe a patent that is actually valid.
So the freedom to operate study is about investigating those two things – infringement and validity – separately.

Now, phase one of the FTO. Let’s say the patent claim has a device comprising a brown widget, a gray gizmo, an actuator, and a controller.
You come to me with product A – it has a brown widget, a gray gizmo, a first actuator. And you’re like, “Look, we added a second actuator – I don’t want to infringe the patent – and a controller.”
Well, actually you do. Product A infringes Claim 1 because product A has everything that Claim 1 requires. I’m talking about product A. I’m not looking at your patent applications that cover product A. I’m looking at what you’re going to make and sell.
Well, let’s think about what we could to change it. We’re doing a design-around analysis here. What can we change? The engineer comes back and says, “You know what? Our gizmo doesn’t need to be gray, it can be black,” so you change it.
Right now, product B doesn’t infringe. I don’t have literal patent infringement there, and I’ve avoided that patent risk. You wouldn’t know that if you hadn’t done the FTO study. You wouldn’t know that unless you had your counsel look at this issue in some detail.
Incidentally, maybe this black gizmo is patentable in and of itself. So, you’ve done a design-around of the competitor’s patents, and you’ve identified subject matter that can increase your patent asset. Maybe changing from gray to black is not that special, but it’s worth at least looking at it.
The other thing to keep in mind here is, this design-around you may patent – if you do get a patent for it – is also preventing third parties from adopting that design around. So you are staking out claims to the design arounds you’re doing when you’re avoiding patents.

Patent litigation

Just a big summary – why FTOs are important is really at the bottom here.
25 million dollars at stake. Patent infringement through trial costs you two and half million dollars. That’s both sides. That’s a lot to stomach when you’re applying if ever you want to go after somebody, but you also have to know the defendant has the same pressure that you will. And this is a tool you can use.
These are recent statistics from 2017.

Conduct FTO Study at the Right Time

When do you do a FTO study? This is a hard question, I’ll be honest.

It should be after something that’s very basic and conceptual, but it should before you’re about to order millions of dollars’ worth of components to assemble products, or you have a large capital outlay, or somewhere near your submitting your products for clinical trial, because you want to know.
If I get a product approved that still infringes a patent, that doesn’t necessarily help your risk position. So you want to do that some time ahead.
Usually, I’ll tell people, if you don’t have solid models and you don’t a bill of material, a real bill of material, then a freedom to operate is a little premature. You need to be that commercially detailed because you want to have some sense that this is what you’re going to make and sell.
The other part is, what are substantial product changes? It can be different for different companies. But if there’s a significant product change, your risk position could change, and you want to assess that.
The important thing is to build this into your pipeline, build this into the way that you’re innovating your products, so that you’re addressing these points from time to time.

Summary

Patentability, obtaining patents – this is about protecting your revenue model, and part one is an assessment of prior art and the publications.
Freedom to operate is about avoiding patents, focused solely on what you will sell and receive money for.

Q&A

Joe Hage: What do you do if somebody just doesn’t play by the rules?
You put a patent but, perhaps, – just because they’re so easily maligned – China sees it and they knock off. What’s your real recourse here?
Greg Grissett: Well, you’ve got to have the tools in place to have recourse, number one.
Even if you’re worried about actors in China, typically they still have to import into the US. And under US patent law, if you can prove infringement, you can stop goods at a port. That is pretty significant.
No business manager, whether they’re in China or in the US, wants to deal with their goods being held up at Long Beach.
Man: Really great talk, thanks for that.
I just have a question about patenting up the food chain, so components and assembly methods and that sort of thing.
I definitely agree with it, but how practically enforceable are those patents? I can see your finished medical device or your molecule, but I can’t necessarily see how you got there, unless I happen to be in your factory.
Greg Grissett: So there are some generalizations here, but I’ll give you maybe an example about a spinal implant that’s made of three special polymer blends and you blend them together and you put them together in an interesting way.
I have, probably, patent protection for the implant, regardless of what it’s made of. But maybe I can still seek patent protection for these specific polymer blends as a composition.
Now how do you detect and enforcement? That’s a challenge for every industry. Often, we get information that trickles up from the sales people and the sales group and just generally information that comes around.
If you get your hands on a sample, you can test it. Part of my job when we’re drafting these patent claims is to make sure we can assess a device. If I have an implant right here or I have a sample of a polymer blend, that we can send it to a lab and that report will validate that it infringes the claim.
So some of that is just being crafty and thoughtful when you’re drafting your patents.
Joe Hage: Greg, I want to thank you again for being a sponsor because, as I’ve shared, there are some folks here in the audience who otherwise might not have been here had it not been for your support.
So thank you very much, Greg Grissett.
(audience clapping)

How to Outsmart Your Competitors with Claims Data and Analytics

15 min reading time

How to Outsmart Your Competitors with Claims Data and Analytics

Presented by Emily Mortimer and Anja Maciagiewicz, LexisNexis at the 10x Medical Device Conference – San Diego 2019

Reading Time: 15 minutes


Anja Maciagiewicz: I’m Anja Maciagiewicz. I’m a Vertical Solutions consultant working with MarketView. That’s all of our claims base products, and we’ll go into that a little bit in our presentation today.

Emily Mortimer: I’m Emily Mortimer. I’m the Director of Product Delivery and Analytics.
I also focus on all of our medical claims base solutions, having responsibility over the team that works on building those products and supporting our customers as they use the data solutions that we offer.

LexisNexis is really much more commonly known for being a really large legal database. There are a lot of spaces in which LexisNexis has a very large footprint, and healthcare is a more recent venue for them. So we wanted to just focus our presentation today on how LexisNexis makes a difference in healthcare.

Agenda

Specifically, we’ll talk about:

  • our claims-oriented solutions.
  • claims adjudication,
  • and how remitted claims or the claims remittance information can be impactful in your businesses today.

So the main focus we want to talk to you about today is all of our solutions oriented around reimbursement information.

The important thing here is to note that, in addition to a lot of the more commonly known medical claims oriented solutions that let you focus on provider volumes, understand where patients are being seen, things of that nature, what we’re also offering is a suite of solutions oriented to understanding payment.

So, that includes knowing things like what the variation of payment is across payers or across regions of the country. You can get at a lot of important information that helps you to market your products and helps you to understand the space in which you play and what providers are seeing when they go to use your products and eventually get reimbursed for that use.

Overview of LexisNexis

Anja Maciagiewicz: We work with insurance; with health care. We work with different government agencies. And we collect data. That is our bread-and-butter.

We collect data on everyone. Everyone in this room has what we call a Lex ID, and we get information from insurance records, bankruptcy records.

But drilling down into healthcare specifically, we are able to work with the top payers and health systems, the top 10 retail pharmacies, the top 20 life science companies, and we work with different federal and state agencies.

MarketView for Healthcare links to many LexisNexis vast datasets

So what is MarketView? That’s our claims-based products.

Within the med device space specifically, we have a “three-legged stool.” We have three different products that really help companies like med device companies, pharmaceutical companies, target and find the right people to talk to:

  1. Our volumetrics can tell you what a doctor does, what patients they see, and how many patients they see.
  2. Our referral networks can tell you where do these patients go, which doctors have a relationship with each other, and where do those patients go and get treated.
  3. Lastly is the remit data. So how much does a claim cost? How much did a payer pay out to a physician or facility for a certain procedure?

Looking at the broad level of the medical claims database we have, we have over 1.6 billion claims that we get annually. That equates to over a million practitioners that we have data about, over 400,000 organizations. And we’re able to update our data as frequently as daily, so we can give you near real-time information.

Claims Adjudication Cycle Overview

Emily Mortimer: I’m sure there are plenty in the audience who know a lot more about this process than I do, but we find that when we’re speaking with anyone about our solutions, it’s important to start with a few basics about medical claims, claims processing, and adjudication.

There are a lot of steps to the process. Most importantly, you start with the actual visit to the physician’s office and the adjudication cycle really summarizes how physicians go about getting paid for the services that have been rendered.

After the visit, typically, coding has entered. These days in the EMR system that’s a lot more real-time and helpful, but you often have coding review, things like that that happen in large facilities, like hospital systems will have nosologists who take a lot of responsibility for this work.

There will generally be verification and review of the claims done prior to submission. And at this point, a claim submitted to the company for payment is considered an 837 claim form. This is really just getting out the differences between the submitted and, eventually, the paid or remitted claim that you’ll be seeing.

Unfortunately, there is often a denial/change process that you will go through as a provider. So it might be that some elements on the claim just simply don’t line up and need to be resubmitted. If the patient’s gender is marked as male but some procedure like a mammography was done, you’re likely going to be asked more questions about that.

So, going through that process, potentially resubmitting the form, the insurance company finalizing and signing off on the validation, and payment being issued from that insurance company, at this point a new form is created and that’s really where we’re getting the insights for our Provider Reimbursement Insight solutions.

Another key part of what we do at LexisNexis has to do with the ways in which we acquire the data. So because we have this adjudication system, a lot of third-party companies exist – clearinghouses, switches, they’re typically called in the market – to help facilitate this process for providers so that you are not putting out a lot of your money from a provider perspective in this process. And it is through those clearinghouses and switches that much of the data we are going to talk about today is acquired.

Lastly, I just wanted to highlight a couple of key things.

MarketView medical claims data 101: Anatomy of a submitted claim

Understanding what is present on a submitted claim is pretty important to the backbone of what solutions we can provide and, of course, also understanding what’s not present.

So a lot of the interesting things we’ve talked about around capturing data for medical devices or clinical notes from an EMR system, things of that nature are not going to be present on a medical claim because, in this case, it’s really dependent on what a provider needs to identify in order to be paid.

So pretty limited but you do access information about your ICD-10 diagnosis and procedure codes, CPT procedures if that’s relevant, a specific drug code or HCPCS code – in those cases you’ll have information about patient demographics to help to further differentiate your population if that’s of interest – and then information about payers, practitioners, and locations of care.

MarketView medical claims data 101: Remittance advice

On the remittance claim, which happens after the process of adjudication, you have access to a subset of those pieces of information in addition to additional information.

So you are still seeing what would be considered procedure line information, so CPT codes, because that’s really what you were getting paid out for. You’re not seeing diagnosis information. And now you also have access to the payer information that was provided. That includes the payer or insurance company. It also will include the amount that was covered for the claim.

MarketView Provider Reimbursement Insights

Anja Maciagiewicz: What kind of information do you get if you were to get our remitted product?

So high level we’re telling you the payer, if you paid out the claim, the average amount that was reimbursed and who got paid, whether it’s the facility or the physician. And this dataset, this product, has over 2,500 payers and over 550 million unique claims that make up all of this information we can pull for you.

Provider Reimbursement Insights use cases

So why would this be valuable for a company, specifically a medical device company?

The most common use case is actually being able to figure out the return on investment. So if you had a piece of equipment you’re looking to rent or buy in an office, looking at how much you get remitted or how much you get paid every time you submit a claim can help you figure out how many times do you have to submit that claim to start seeing a return on your investment, when do you start making a profit.

We can also help with competitor pricing, so being able to create pricing models to stay competitive, monitor and respond to market changes, and providers can figure out how to get the maximum reimbursement. They can do this by using the modifiers or place of service on a claim form.

Lastly, it can help with contract negotiations. So, being able to look at what different payers and facilities are paid and figuring out how to use that for your pricing and contracting strategies.

Emily Mortimer: For anyone who has previously or goes on to work with us, one thing that you will learn is that we really like to tell the story of what our data can help you do, but we find that it’s most impactful if we can really demonstrate it by showing you the numbers themselves.

We pulled together, in support of some of those use cases Anja mentioned, actual samples of the data solution that you would see in order to help really clarify what you can see.

So, in this case, we are looking at the remitted claims solution data points. Specifically, for an oxygen concentrator code. And in this case, it is a product that is generally supplied through HME or DME companies to the patient in their home.

It’s a known product in the market. This isn’t something where I would necessarily go in anticipating significant differences in how things are paid because it’s been around for quite some time.

But you can see here that, when we look at this across payers, you do see variation. Specifically, I would call your attention to the median payment amount where we’ve done the work to control for outliers on the both high and low ends. And you can see we are still seeing, even between United Health and Aetna where you have two private payers, a jump of $7 in terms of the median remitted payment likely back to the HME supplier.

On a single case that might not seem that significant, but you can imagine how that scales up and has a pretty significant impact on what’s being reimbursed.

Again, you can see a number of other data points here that Anja mentioned. I’ll just call out for clarity. So we do report out things like the modifiers so you can ensure you’re holding consistent for how the product is used – whether it’s rental of a piece of equipment versus purchase of equipment, in which case, obviously, the price would be significantly different – to really give you the insight into how those various factors impact reimbursement.

Moving forward, we wanted to talk a little bit more at a high-level. So, in this case, we’re looking at the ways in which the median payment varies in its very broad regions.

So this is across the entire state of California. And we’re looking at the same product here, looking at not just where does the median shift but what is the range of payment accepted across these different payers.

So let’s go straight forward to Medicare where you can see there’s almost no range. Medicare, we all know. They’ve defined their payment plan and, in this case, they stick to it. Good to see they’re consistent but not really a surprise.

But you look at something like Blue Cross Blue Shield and you see the variation in payment is really significant. So you’re looking at payment amounts that can be as low as about probably $20 and, even ignoring the outliers for a moment, if you look at that third quartile, we’re talking about payments nearing $100.

So this information alone isn’t going to tell you why you see that variation, but it is an interesting thing as you think about your contract negotiations because you want to understand what’s going to be an acceptable range for those different payers.

Another piece of information that can really impact the payment reimbursement information is setting of care.

So, in this case, we’re looking at a set of codes that are all pretty specific and similar to each other. You might consider them biosimilars. These are for blood products in the IG space, and all of them have use cases that vary in different settings of care.

What’s interesting is, even where two products can be used in the same setting of care for normal purposes that are approved, the payment can vary. So, in this case, you see that for one product. J1561, its median payment in the home setting or HME is only around $8, whereas a competitive product has a medium payment of $13.

Again, these are not hundreds of dollars different but scaling them up makes a pretty significant impact on how they’ve been used.

The office setting, you don’t see quite as big of a jump between two single products. But, from the low end to high end, you similarly see a jump of about $5. It’s really interesting to see that play out.

And the other thing to note here because these are infused products is, these median rates do hold units consistent. So this is not being skewed by the fact that one product might require more units to be infused than another product.

Using that same set of codes again, here we’re looking at the ways in which the payer differs by product.
So you can see that, for a single product, payment variation happens between payers. And you can even see across the payers.

So looking at the fact that – UnitedHealth Group is red for all of these products – the lowest payment for them is a code that is a higher payment for Blue Cross Blue Shield.

So it’s interesting to see that the same pattern doesn’t even hold true – so it’s not that United always pays the most – and it differs by the products.

Summary

So we wanted to make sure we left some time for questions. I think the most important thing here is to think about how this could be used for you guys and your market.

So we talked about being able to use this for an ROI calculator. That’s certainly something that providers can do themselves as they think about capital expenditures.

It can also be a part of a medical device company’s marketing effort to say, “We know that your return on an investment will become clear after X utilization of this product.” I think it’s a powerful way to be able to bring that message to bear in addition to what medical device companies will do to negotiate with payers and be a part of marketing their product more broadly.

Q&A

Joe Hage: I have a question. How does the typical account respond when you come in and say, “I know all this detail about you”?

I know if somebody gave me that level of detail about me before I met them it’d be a little creepy.

(laughter)

Emily Mortimer: Really, in this case, it varies a lot by vertical.

We play with med device companies, with pharma companies, and also a lot in the provider space. When you go to a hospital system and you tell them what you know about them, they mostly just want to tell you you’re wrong. They know everything about themselves.

What we know about them is complete, it is comprehensive, it allows for competitive intelligence. But we said, “There are 19 procedures done with this J code,” and they actually have 20, so they’re going to point that out.

When it comes to speaking with pharmaceutical and med device companies in general, it’s more around having a strategy conversation. So we’re not saying what we know about you as a medical device company or what we know about you as a pharmaceutical company. We’re saying what do we know about the landscape in which your devices and your products play; how can we help you to focus your efforts and energies in the right place, make sure you’re using your resources, and make sure that you’re telling a really good story to all of the providers and the facilities that you’re working with.

Joe Hage: Tell me how you actually help people integrate this data into their processes.

I can imagine one group made the decision to bring you in. It might be the marketing side; it might be the sales side. Getting them in the same room, talking off the same playbook, I imagine that’s challenging. How do you go about it? How successful has it been?

Anja Maciagiewicz: A lot of times it’s the people going out to find the doctors, who are they targeting. But also a lot of the pricing groups. So how do we know what to price this device at or how do we price this drug? How can we compare that to our competitors that might be on the market?

I think people see this product and know it can be helpful, but people are scared to dig into the pricing a little bit. They wonder, “How do you have this information? Are you allowed to share it?” We are, and for our clients who have used it, they definitely have gotten a lot of value out of it.

Emily Mortimer: One other thing I would just say about that is bringing the people together.

Depending on the scope of the engagement, it can vary a lot. So we may or may not need to bring IT resources to bear to really load and process data.

It might be that the data set someone’s interested in is small enough to put into an Excel file and it can be worked by a single analyst and it’s not a really large enterprise-wide solution, but there are certainly engagements we do where we do have an entire implementation team and we want to ensure we’re focused on ways to build up a relationship that’ll be sustainable, that will make utilizing data over time easy and consistent and not too resource-intensive for our customers.

Joe Hage: Thank you.

Sarah Wright: Hi, my name is Sarah Wright.

I really like the collection and treatment code data and I understand you can’t have identifiable patient information, but how deep does that demographic data go? No information about the patient’s name etc, but can you see repeatable data sets? Or can you see when someone presents and needs these treatment codes?

I’m just more interested in how do you put all that together in terms of repeatability and being predictive and proactive.

Anja Maciagiewicz: I’m thinking of some of our additional products that I mentioned in the beginning – some of our volumetrics. We’re able to figure out when a patient may have come in for CPAP but also had COPD.

So we can look at a history. We can see what the patient has had, whether it’s been on the same claim or has it occurred within the past 12 months. We call that a co-occur with our volumetric data.

For the remit data, I’m not sure.

Emily Mortimer: So what Anja’s discussing is really related to the fact that, while all of our data is de-identified, we do have a unique patient identifier attached to the claim.

So we can look at things over time. There are various ways we can put solutions together that look at those different criteria.

From a remitted solution perspective, most of what we are doing right now is not as much patient-cohort related. Part of that is because what we are leveraging here is just the reimbursed claim by itself – the ERA a lot of folks call it – and we do not yet link it back to the submitted claim.

That’s really the next phase of this product, to say, “Now that we have linked to those two claims together, we have all that patient demographic information. We have the diagnosis information on those patients, and we’ll certainly be building robust solutions like that in that product line the future.

Gunter Wessels: Are you able to do some trending across reimbursement by payer and so forth?

Emily Mortimer: Mhm.

Gunter Wessels: How about switching between different modalities like lithotripsy to laser in urology?

Emily Mortimer: I think that it’s going to be a little bit dependent on what the indicators are for the modality switch. For a lot of those things it’ll be based on the modifier, so we would have access to that and could look at it overtime or for a specific provider. But it’s just going to depend on how that’s coded on the claim.

Alex Gerwer: Two quick questions.

One of the things that surprised me was when IMS was acquired, not by you folks, and then brought into IQVIA. Do you interface with drug data from IMS?

Then, the second part, are you folks making any efforts to work with some of the major EMR vendors to get clinical data to correlate with claims data?

Emily Mortimer: We absolutely work to partner with other vendors who have access to drug data.

We do not specifically partner with IQVIA. There are absolutely reasons why their DED data is very strong, but we have great partnerships that can help solve that problem. We don’t have the prescription data in-house ourselves.

In terms of the EMR, there are conversations we continue to engage in around ways EMR data can be helpful and be impactful in our products. It may or may not be related to a volumetric-type solution. Some of what we’re actually looking at are almost other investigations and other analyses. Things like patient clustering, pre-diagnosis for a rare disease state, or something like that where the clinical notes are really informative in the absence of a diagnosis.

But those are all in the nascent stage. I wouldn’t say we have an offering in that space.

Joe Hage: I’d point out that the folks in this room are a microcosm of the folks watching in TV land. So if these questions are an indication, there’s a lot of interest in how to use data to be smarter about going to market.

So Anja and Emily, thank you so much for joining us.

(audience clapping)

ISO 11607 Packaging: Are you prepared for the changes?

14 min reading time

ISO 11607 Packaging: Are you prepared for the changes?

Presented by Jan Gates, Principal Packaging Engineer, Adept Packaging at the 10x Medical Device Conference – San Diego 2019

Reading Time: 14 minutes


Jan Gates: I’m gonna be talking about ISO 11607-1 and -2. If you are making terminally sterilized medical devices, you should be compliant with this standard. The FDA and the EU and Japan really like this standard.

A little bit about me. I say 35+ years cause I’m not gonna tell you how long I’ve been in the business. I’ve worked on a whole bunch of different aspects of packaging with various types of companies.

I was very glad I got high-speed production with detergents, even though I was allergic to the perfumes. Which is why I had to get into a business that didn’t have any scent to it.

How I ended up in medical devices. I also worked with a lot of different standards, ASTM and ISO BEAM. Fun ones to be working on. That’s what this tag is.

I actually have a group of standards that I try and get other packaging experts around the United States to give me their opinion on so we can vote on them as a U.S. representative for whether we like those standards or not. And we’ve got some new ones coming up that I really enjoy.

These are some of my old products, just so you know. My only claim to fame is inventing microwave popcorn. I was pregnant with my first kid with that one.

Anyway, I’ve worked on some of these other products and then I started getting into in-vitro diagnostics here. Which was quite interesting putting these kits together, and they had to be controlled temperature shipped. My thesis work for my master’s was actually on brick packs with tomato sauce.

Now, the products I work on, I say, if you know what they are, I’m sorry. Cause that usually means you’re sick or have some problems. But I’ve worked on active and non-active devices, making sure the packaging works, some of the programmers that go with them.

Blisters, prefilled syringes, so it’s a wide variety of packaging. This is what a Packaging Engineer can do for you. And I’ll let you read that later.

We do help you save money in the long run. And we try to make sure we do it right the first time, because if you have to go back and change, that’s resubmissions for a lot of different countries you have to worry about.

The Standard Titles

Dash one is actually about design and development. Dash two is talking about equipment and process validations.

They’re actually the first standards that were ever developed for packaging, putting it on the same level as product. Because you do not have a product going out, if you can’t package it right.

This is the history of it. It took about ten years for this to be published. There was a lot of FDA inputs, as well as other people around the world.

I don’t know if you know ISO documents give you an idea that you should be doing something, but they never tell you how to do it, so we developed a standard with AAMI, which is a group that does sterilization stuff in the US, and came up with this TIR 22.

That’s a technical information report on how you can actually comply with that standard. And I was lucky I got to work as a task group leader on that standard. They had taken the TIR and made it into an ISO document. Took ’em a little while to decide to do it, but it’s there.

Unfortunately, this is a little hard to read because they also have it applied to hospitals, and it’s a little bit hard to pull out manufacturing stuff from the hospital. They’re rewriting that and it should be out in another year or two.

Now, at the end of February they just revised the 11607. And they put in human factors and use pieces into it.

They changed critical process parameters. They’ve taken that out because they found too many people were looking at one point in the process instead of the whole thing. So they wanted to make sure that people look at the whole process.

As I said before, if you don’t have acceptable packaging that you’ve validated, qualified, you don’t have a product going out, because it’s gotta survive distribution, warehouse and aging. If you’re sterilizing, you gotta make sure your material doesn’t fall apart too.

So these are new terminologies that were introduced. There is no primary packaging for medical devices any more. It’s all called sterile barrier system, and these terms should be used in all submissions and on your reports.

And I know I usually have to work with the regulatory people and make sure the language is done properly. We do work with terminal sterilized medical devices. We don’t do sterilization validation, but what we do have to do is make sure that the packaging system you have never gets a hole in it until you open it.

So we have to know a lot about the different types of sterilizations and how they affect the materials. Shall statements.

When you are working with ISO documents and they say shall, you must comply with that. Well, there’s over 115 ‘shalls’ in the ISO documents.

There’s a few that you can actually say, “Well that isn’t applicable to my product,” but almost everything else has to have the shalls done with it. I put a few up there. These are ones I found in my role as a consultant, a lot of companies have problems with. I don’t want to read ’em to you all. I do have a few more slides saying what those things are.

Joe Hage: Jan, do you have a favorite ‘shall?’

Jan Gates: A favorite shall. The newest, the hardest one to do? I’m not saying it’s my favorite, but.

Joe Hage: It’s your favorite.

Jan Gates: No, my favorite is actually sampling plan. Statistical sampling.

Because I’m finding most people don’t know how to do that very well. But this one is actually been reinforced with the new standard that’s come out saying that you have to show and document that you can have aseptic presentation, and you have to have documentation that the people actually know how to open your package correctly. So that’s been a fun one to go through.

Test method validations always kills people off. I’ll talk to it a little bit.

So this is my first one, why it says statistics.

Statistical justification

To do that, we have to make sure we have our risk assessments known.

From that, we can develop the confidence in reliability around defects. Once you get your confidence and reliability set up, which is individualized by company, then we can come up with a way of having a statistical sampling.

A lot of people are trying to use AQL, it’s a AZ one point four by the quality group, American Society for Quality, but it says right in the scope it’s not for individual lots, so you can’t use that, you have to have a different way of doing your statistics.

So I always try and work with the company and get a policy set up so that the engineers don’t have to know all their statistics too, they can just point to that standard and get the sample sizes they need.

We’ve got test method validations. This is a very key thing to know about. They say just because test method is published, that does not mean that it’s validated for your lab.

You have to validate that test method.

A new ASTM test method

There’s a new ASTM test method that we’ve put out on how to validate packaging test methods, so that’s been a help for people so they can actually figure out how to do it.

Test method sensitivity for whole package integrity is very important to do, and some people don’t know how to do that, but it’s a fairly easy one.

You have to have Design and Development Documents too for your packaging. Just like you do with your product, you’re supposed to be doing it with the packaging too. Some companies will put that into their design reviews when they’re doing their product stuff. Other times companies will keep that as a separate type of design review.

Equipment EIOQ. This one has been an interesting thing; the clause talks about requiring it for your equipment.

What I have found is a lot of people will do the installation qualification, and then they mix up a material OQ with the equipment OQ, and then they get a new material in that has to be sealed at different conditions, and it doesn’t work because they have to redo their EIOQ. And then you want to make sure.

Hopefully you know what all that is, EIOQ’s and know Q’s and PQ’s. A lot of people don’t realize there’s production drift with your PQ, which is supposed to be your nominal center point on how you’re producing your stuff.

Well, you’ve got to make sure that that drift is within your OQ, your extreme parameters for your production qualification.

All those qualifications

Joe Hage: Jan, to be safe, I’m confident someone watching this video does not know those acronyms. What do they mean please?

Jan Gates: Okay, a DQ is a design qualification.

You’re required to find out what the extra worse case conditions are that your product will ever be in and test them.

An EIOQ would be equipment installation and qualification. Making sure that it actually works the way that you think it’s gonna work with all of your information pulled in there. And that includes parts for consumable parts, and the electrical work, and everything works right.

And then you have the OQ, which is an operation qualification for how you think your production will actually be set for a high and a low.

And then you have your PQ, which is where your supposed to be operating all the time as a nominal.

Okay, so we get through all that. I’m just giving you little highlights on this.

Here’s your PQ, it says you must have a minimum of three lots for medical devices. And please note it says minimum, that means you can have more. And a lot of people don’t realize that sometimes three isn’t enough, especially if you’re only doing maybe a hundred units a day.

If you’re doing that as a lot, you might want to do more than one or three lots of a hundred units.

There are best practices.

Statistical Equivalents.

One thing that’s fun is statistical equivalents. Sometimes you will find out that your statistically equivalent stuff really practically doesn’t make any sense, which you need to put into your protocols and what you’re working on to show that it’s okay, even if they’re statistically nonequivalent that might mean that it’s still okay practically, and that’s where you might get something that has…

Like I’m doing case compressions, you might have a 25-pound difference, and statistically that’s significant from another one on this 25-pound plus or minus difference, but when you’re looking at the test method and cases themselves, 50 pounds really doesn’t make any difference between cases.

Well, I can just say that’s no practical difference where I’m trying to use logic with my statistics, and a lot of people don’t do that.

Well of course with production qualifications, you should have consecutive lots, and you’re supposed to have all of your production stoppages and material changes and stuff. But sometimes you can’t do material changes.

You should have three lots of material you’re trying to test. I had a case where three lots of a foil pouch would give me ten years’ worth of production.

That wasn’t practical, so I had to come up with a new way of testing the material so that if they changed the master lots somewhere along the line, I could actually see it, and incoming receiving, and decide if we needed to re-qualify.

Stability testing.

Everything has to be stability tested. I know people are doing it with their products, but you have to do it with materials too of the packaging. You’ve got to make sure it’s actually gonna last the same length of time as your product. And believe it or not, that’s difficult for some people to understand.

Luckily, there is a ASTM test method we’ve developed that helps with that. And usually they look at just the sterile barrier system, but you also want to make sure any cartons or cases and other things you might be using, labels, don’t have any problems and fall off, or discolor, or fall apart.

Oh, the other note, what’s nice, once you do qualify a material with aging, you never really have to do it again if you change the design, because the aging is separate from performance, which is a different kind of test.

Anyway, I talked about humidity not being part of the aging considerations. Well, we’re having a lot of problems with people not understanding humidity, and so that’s something we go through, making sure people understand that what you’re really worried about is the actual water vapor density in the air at a particular temperature and humidity. Not, excuse me, at a particular temperature and with a saturation of water in there.

You’re not really looking at relative humidity when you’re doing your tests.

So in that case, like if I’m doing something that’s two to eight degrees, and I bring it into a room that’s 20 degrees, it’s gonna be sweating, okay?

You don’t want to test at an accelerated temperature and aging with something that if you actually took that 20-degree thing and put it in to your eight degree that it would start having problems there too.

So those are things that we work through as a packaging engineer to make sure that we do the tests properly. Because if you don’t you get labels bubbling up or something falling apart that shouldn’t be.

Aging and Performance Tests are two separate things.

Performance test is the vibration and the handling that’s out in the field and what’s happening to it. Where aging is just having the material and seeing if it’s gonna fall apart on you.

The best analogy I could figure out how to do was rubber rot on tires. You know after tires get about five or six years old they start cracking? And it doesn’t really matter if you’ve driven on them or not. Well that’s aging. Your tire has hit its stability, and you shouldn’t be using it anymore.

And be careful, ’cause the US is the only country in the world that I have found that actually allows tires that are over five years old and not been on a car to be sold as new, and they shouldn’t be. That’s why we’re seeing a lot of the tires falling apart out on the road.

This is just to show a performance test that was done with D4169 in ASTM, and it simulates what’s happening out on the road with a truck. And I had fun trying to get a drop test and a compression test on vibration.

And we’ve been using this particular test method for something like 35 years and refining it and making sure that it follows what’s actually happening out on the field.

How high is up?

This is always fun, trying to figure out what altitude you want to test a non-permeable package to. Because if you can go over the continental divide, and you go over 14,000 feet, guess what’s going to happen to your package?

I had a problem with a bunch of sterile medical devices being shipped to China, and we had ’em on a plane, and they went up to 18,000 feet, and I had only tested to 16,000 feet.

I thought if you’re gonna get up to 18,000 feet the pilot should have an oxygen mask or something, but they didn’t. So that was pretty interesting, that was 25,000 dollars’ worth of product that we were sending there for testing that could not be used.

These are the normal performance tests that are done. There is ASTM and there is ISTA, International Safe Transit Association, but they are not as broad as a consensus standard as the ASTM, and they’re a little more restrictive on what can be done.

This is not being used in medical devices too much right now because there’s one part of the test seems to be overdone and it destroys the packages when it doesn’t really happen in the field, we’ve got to fix it. These test methods are used for environmental conditioning of cases, just to see if they’re gonna fall apart and have problems.

It’s best when someone can develop their own standards for testing. They can take all the different test methods and string ’em together in a way that makes sense for them, but most companies don’t know how to do that at this point in time which is why the other test methods are there.

I was talking about performance testing and aging test, if you are going to work on it, you have to make sure that you don’t get those defects confused. So this was a performance problem because this IFU actually punctured a hole in the pouch when it was doing vibration.

This is a design problem from a performance test. If you were doing aging with it, it would still be a performance problem. If it were an aging problem, you would have a crack going up the foil pouch. And its hard to keep those different types of defects separated, but that’s what packaging engineers work on.

These are just talking about the ‘shalls’ on how to do it.

The biggest thing that I have found too, or one of the big things I should say, is packaging engineer or product development has to test the product after distribution testing and conditioning to make sure the product is still good.

In pharmaceuticals we do it a lot because some of the liquid products, if they get vibrated at the right vibration level, they actually precipitate out the active ingredient and have problems.

Here we can have something break in a medical device that wasn’t set up properly for shipping, and we need to make sure if it’s still functional or not.

I always find it easier to try and have the product testing done separately from the package testing so we don’t overlap each other. As long as we do the same tests.

So you got to know your distribution system. I don’t have time to go into this but I always put the bicycle in because I had problems with that once. This is a general distribution mapping, just to show people what it looks like when you’re shipping things.

Where you’re handling it, where you’re gonna stack it, where you’re gonna put it on a plane. I went and did a detailed analysis for a multiple shipping issue that we had at one point in time. Trying to show how many times when we had round trips going on with a product we were getting different handling plane transits, those things.

My ASTM test I can probably justify up to one or two round trips. Beyond that we’ve got to do other kinds of tests, cause those ASTM and ISTA was not set up for multiple testing.

Update. Here’s update on my opinion, not a lot of changes. These are the reds, are the ones that are big and new. And there is a new labeling requirement that’s gonna take a lot more room for sterile barrier systems.

This was the O2-2, and you can read that. Human factors we have to do a lot of testing on. Doctor Laura Bix at Michigan State is about the only person I know that’s working on that and actually developing numbers that we can use and test to. I want to show this really bad.

Joe Hage: Okay.

Jan Gates: This is design. Do you think the FDA would like the way this product was being used? So this is where I’m just trying to say you’ve got to design…

You’ve got to design your product properly so it can be used properly. This is just to show you some examples of how they think the sterile barriers should be labeled so you can inspect the sterile barrier before use by the customer.

Unfortunately, even though it’s in the standard, these have not been checked. You have to validate it yourself that they’re actually gonna work. And we do have some new challenges, and then off just two slides and then I will be done.

Jan Gates: Well, what I will say is, having had the luxury of a little extra time to review your presentation there’s a lot in there.

Jan Gates: Yes, it’s an awful lot but I wanted to make sure you had some technical information to ask questions to whoever you’re working with.

Joe Hage: The point I would make is that packaging is a lot harder that I thought.

Jan Gates: And I’m only skimming the top for ya.

Joe Hage: So with a half hour skimming the top, and not having enough time for even that, my advice to anyone watching this video is, there’s a lot, and you need a packaging engineer.

Jan Gates: Yeah, well we’re also looking at this third-party distributors are doing really weird things with the packages that we haven’t validated, and they are. And that’s scaring us. And then with the new stuff where they’re actually handling and putting product into UV cabinets for 24 hours a day.

I don’t have UV inhibitors in my packaging materials, and I don’t know if it’s in the product either. Spraying… hydrogen peroxide.

Joe Hage: Jan, you’d be more familiar certainly than I. What percentage of companies that need a packaging engineer have one on staff?

Jan Gates: Big companies tend to have at least one.

Joe Hage: Okay. big companies have one.

Jan Gates: Yeah, smaller companies, well really big companies will have 25, 30, so that you can do a lot of development on packaging materials and get things done before it has to actually be used anywhere.

Smaller companies I’m finding… I know I worked with Dexcom when they were first starting up and helped them with a product and they kept calling me and calling me, and I finally said, “You need a full time packaging engineer.”

So they got a full-time engineer, they now have 12. So there’s a lot more than what most people realize can be done and helped with the packaging engineers, so.

Joe Hage: Well.

Jan Gates: And I think it’s fun because it’s always changing, and it’s always new.

Joe Hage: I’m grateful for this presentation, and that you’re making it available online for later. It sounds to me as though, at a minimum, folks should be getting a consultation from you or the folks at Adept, talk to a packaging engineer sooner rather than later.

Jan Gates: Yeah, the sooner, because we can give you little ideas that will help with shipping, sterilization, what kind of materials to use, then we can disappear for a while until you get everything done and then…

Joe Hage: I recently worked with a manufacturer who had his entire clinical trial pushed back like a month or two because packaging was an afterthought, and the bottle that they had didn’t survive the drop test, and then they had to go, and then they needed another carton, and it was a mess, so if they had only asked Jan first.

Jan Gates: And there’s other ones too but…

Joe Hage: Ladies and gentlemen, Jan Gates. Thank you Jan.

[applause]

Creating Cash Value in Your Medical Device Company

14 min reading time

Creating Cash Value in Your Medical Device Company

Presented by Deborah Douglas, Managing Director, Douglas Group at the 10x Medical Device Conference – San Diego 2019

Reading Time: 14 minutes


Deborah Douglas:

Hi. Douglas Group is a firm which sells companies. That’s all we do. We represent sellers, a hundred percent.

The objective of sellers in the medical device space is a little bit special, relative to other sellers in the world. I would say medical device owners want one plus one is 10. Other people want one plus one is three, five maybe. But the medical device owners really want a much more aggressive stance.

Most of the medical device owners who come to us come to us a little ahead of time, before their company is really ripe, before it’s really ready for sale. But some not.

Let me get a little feel for this audience, if I could. How many people in this room own all or part of a medical device company of your own? Okay. How many people here work for a medical device company? That’s a bigger part of the population. The other thing I hear a lot of as I talk to people are service providers to medical device companies. How many people own a service provider? Okay. And how many people work for a service provider? Okay, so it looks like that’s maybe half of this group, something like that.

We sell companies. We’ve been doing it for a little over 25 years. We’ve sold 130 companies. Most of those weren’t medical device companies. For the first 10 or 15 years, we focused pretty much entirely on manufacturers, plastic manufacturers, and metal manufacturers. Only in recent years have we really gotten excited about this segment. And it really is an interesting segment.

I’m a big believer in what we do. I think it’s really a good thing. I grew up with a guy who came from Communist Russia, way back when. This’ll date me! And he had an expression. He said, “Free enterprise is shameless exploitation for the common good.” I like that! I’ve always believed in that incentive being there for business people making a really big difference in the marketplace. My eldest daughter was home from Cornell recently with a bunch of friends, and they were all talking, and I couldn’t help myself. I kept throwing them little comments. And, finally, my daughter stopped the whole conversation, and she said, “You have to understand my mom! She thinks there’s some kind of healthy selfishness that’s really good for the world!” I do! I think that’s true.

Medical Device Technology Approval

When you talk about the medical device space, too many of the people that come to us come a little bit too early. They come before their technical approval is quite in place, and that’s really hard to do. You really can’t make it work that way.

Medical Device Technology Approval

The FDA currently regulates 190,000 medical devices in the U.S. And, of those devices, they’re made by some 18,000 different companies in the U.S. It’s a big group. It’s a big population. And businesses have to deal with really complex rules in this space.

How many people here get involved with helping owners get technical approval? A pretty good number! It’s a pretty good number of the mix. I think it’s very critical, and it’s really important to the process, and we try to wait until we get there.

Salability Foundation

Salability Foundation

Some owners come to us before they’re quite ready. That’s fine. We can deal with that sometimes, but we can’t deal with it too far in advance. Or, it’s just not going to work. It’s going to hurt value so much.

Or, the other thing that happens to business owners is they come before they’ve gotten a final approval. And then, the investors who come in behind them, they don’t want to buy the company. They want to reimburse you for part of your cost and get a majority ownership for doing that. And that’s not where most business owners want to be. It doesn’t work too well.

When we talk about the salability foundation, we really talk about trying to wait until technical approvals are in place. Some initial sales have happened. That does not have to be huge. We’ve sold a lot of companies that literally multiplied by ten within a couple of years of acquisition.

We have to have the technical approvals in place, and we have to have the initial sales at least well-begun. We sold a company not too long ago. This was about three years ago. And, the company was smaller than our average. Most of our companies are $10 million to $100 million in sales. This one was about $7 million, so it was youngish, relatively. Had great profitability, and, frankly, we had to create a lot of competition to get the pricing right for that company. We ended up with about 20 offers, less than $10 million. It was frustrating. It was hard to do. But, we had two offers north of $30 million, so we closed it for $32 million, and everybody was happy. It worked out well. You don’t always know that’s going to happen.

You have to be able to show some production beginnings, not very far along, but you at least have to have good estimates of what production costs are going to be. We have a lot of clients we’ve dealt with in the very early phases where, in their first production runs, costs were 70% of sales. That’s tough, and that’s hard to deal with. But, if you can show that, as soon as that sales volume ratchets up, those costs are going to go way down, it helps a lot. We see a lot of companies start at 70% of sales and end at 20%, or 25%. And, buyers can see that. Buyers are aware that might happen.

Value Impact Today

Value Impact Today

So, current positioning of sales, profitability expectations, measurement of those going forward, the solidity of future sales estimates. Do you have good demographic information on where your sales are going to go?

I think of Andy May, and the balance-testing stuff. That’s a great spot! I mean, it really is! You know the demographics are going to increase like crazy. I’m not sure how you protect it. I’m not sure what you can patent or otherwise protect to make it absolutely secure. And, you want to be in front of everybody else. So far, you are, so that’s good. But, I think that will be a beautiful place for a medical device success. It’s going to go well.

A lot of medical device companies have started off tiny. Medtronic was two guys working out of a garage in 1949. Now, they’re $30 billion. That’s amazing. Cook Medical, I just learned they just started in 1953?

Audience member: Six.

Deborah Douglas: Six, I’m sorry. But they’re over $2 billion now. I mean, it’s been a magnificent start from a very early-on time.

The Selling Process

There’s a business author I like. It’s Michael Gerber. He wrote “E Myth.” Some of you probably have read his stuff, way back when. Michael’s a friend of mine, and I like when he talks about his business. He says, “Every business owner wants to sell a business. They all do,” he said, “If they can’t sell a business, they don’t own a business. They own a job!”

There’s truth in that. You really want to create that value. And when the time comes, what I would like to talk about here is just a few little tips about how you go at that when it’s time to sell the company. It’s a tough process, and the competitors are unruly, and it becomes difficult. It’s like a police effort to hold back the competitors. It becomes really rough sometimes.

And finding the right competition is hard. It’s very important, too. We probably spend the first two months doing two things.

Identifying Buyers

The Selling Process: Identifying Buyers

One is figuring out who the competitors are going to be, who’s going to be interested in the company. And, to do that, we talk to a wide array of buyers. We will talk to many different kinds of buyers and we’ll ask them, “What’s your primary target as you make acquisitions today?” We’ll ask them, “What did you buy lately?” We’ll ask them, “What’d you pay for what you bought?”

We can’t always find all of that out, but a lot of it we can. We’ll ask them, “What’s changed in recent times?” What’s new about their direction? That really might make a difference in figuring out which buyers are good for us.

We will talk to an average of probably 300 buyers for one seller to figure out who the right buyers are. After doing all that, we’ll have a list of 30 we think are just right, that we think fit really well. So, it’s worth all of that effort to figure out who those buyers might be and what those buyers might be willing to pay for the company.
And, the best buyers change constantly. Sellers come to us, and, over half the time, they say, “I know who’s going to buy me. It’ll be one of these two or three guys.” They’re always wrong! We’ve done it a long time and they’re always wrong. I mean, it’s never those two or three guys. Maybe the guy who was a great buyer last year has acquisition indigestion. It happens! Maybe there’s new leadership, and that new leadership wants a new direction in the future of the company. Those things make a difference. We try to learn a lot of that, as we talk through this process with the prospective buyers, as we go, and it really helps.

Competition is the key, and we really work hard to make sure competition happens.

We sold a company a few years ago. This was a nice-sized company, about $30 million. Had a really good footprint with its customers, really strong. They all loved him. This company was $30 million in sales, but wasn’t very profitable. They made about $1.5 million on $30 million in sales.

But, we got great competition. And, when the competition got really tough, we ended up selling that company with $1.5 million in profits for $80 million cash. It was amazing! It was a lot of fun [laughs].
And, you can do that if you manage that competition really well. And it’s worth the time.

Preparing accurate and appropriate data

The Selling Process: Preparing accurate and appropriate data

Now, in that first two months, say, we’re doing that conversation with buyers, but we’re also doing a lot of other things to help to get that information on the company in place. We go through the technical details of the company. We need a lot of information that, typically, we don’t have. Our clients have it.

We get a lot of technical information from our client and put that together really well. We also research a lot of market and demographic information. We tend to be better at that than our clients are. It’s a process of looking hard to see where the market is going, and who’s doing what, and what the future looks like, and what your competitive advantages are in that marketplace. So, it’s worthwhile.

We go through physical inventory of what it’s going to take to manufacture your goods, and we put together a lot of information on that for the buyers. We go through what people skills are needed. What do you have in primary people skills, and what do you need to grow to the next stage? It really helps.

Competitive Control

The Selling Process: Competitive Control

We spend our first two months doing those kinds of things, along with the buyer ID, and then we go through the competitive search.

Competition is really key. We sold a company where an owner came to us with a $20 million offer in hand. They said, “We like it. It’s not quite firm yet. But we’re talking to them about $20 million, and we’d like to accept it. But, because they’re not moving very fast, we want you to go ahead and take it and work on getting us other buyers. But, we want you to exempt that buyer from any fees for you.” Well, we said, “We really can’t do that, but, if you like the offer, accept the $20 million offer. Go forward. If it closes, great. If it doesn’t, come back and talk to us, and we’ll help.”

Well, these guys signed a letter of intent that gave them six months. Six months is really long in this business, and we really don’t give anyone more than 60 days, typically. And, the buyer came back to them at the end of six months, and said, “Oh, we don’t quite have our stuff together yet. We need a little more financing. We need a little more due diligence. Can we have 90 days more?” Well, our client said, “Okay,” and gave them 90 days more.

At the end of the 90 days more, they came to us and said, “Okay, we’re ready now.” Well, we started going out to sell the company, put together a package, started talking to buyers, and the original buyer came back to us and said, “Hey, no fair! We’ve done all this work! We’ve spent all this time, and you’re going to sell it without us? It’s just not right!”

Well, in the meantime, we also learned their original $20 million offer had been 80% note, 20% cash. We would never do that! So, we said to the buyer, “Look, you’re welcome to put in a proposal, and we’ll look at it. But, two things. One, we think your price is low. Maybe not crazy-low, but low. And, two, we’re not going to look at any offer that’s not 100% cash at close.”

So, they thought about it for about a week and came back with an offer of $22 million, cash at close, and a $500,000 non-refundable deposit to show their heart was in the right place. It worked! We got it closed. We were fine. Everybody was happy. End of story.

We have another client, right now, actually. This is a client that’s been difficult. They came to us. We did a lot of research on buyers. We were getting started. And, they said, “Well, we only want you to talk to three buyers.” We can’t do that! Three buyers is nuts! It’s really crazy. And, we said, “Okay, we’ll do that at the outset, but then, if we’re not getting it done, you have to open that door for us more.” And, they said, “Okay, we’ll do that.”

Well, the first, their favorite buyer, came to them with an offer of $16 million. That was way low. I mean, this company is not huge and profitable, but they are going to be. I bet they’ll be $300 million in five years. They’re a really good company. So, we told them, “No.” They went away. They came back about four days later and raised it to $20 million. We said, “We’re getting closer, but we’re still not quite there.” Well, they raised it to $25 million, cash at close. Our client was happy and said, “We’re going to take that.”

We were working on the LOI to get the terms worked out before we signed, and one of the other buyers came back and offered us $30 million. We thought that was pretty exciting. Our fees, by the way, are based oddly. They ratchet up. They’re pretty low at a low-end price. Then, we get bonuses, and, in this case, we were in a 10% bonus level. So, they raised it then to $35 million. So, for us, that’s a million. We like that! And our client said, “No, I really like those other guys.”

So, we signed with the other guys. It’s not closed yet, but I think it will. But we want the client to be happy, too. That’s got to be a part of it. And he feels they’re going to be better for his people, better for his product long-term. So, he’s happy, and we’ll get it done.

We sold a pet medical product last year. We’ve done several pet deals over time. This one was small. It was $5 million in sales. Most of our clients are 10-plus. But, $5 million in sales, kind of promising for the future. We ended up with six or eight offers for that company. They were a little under $5 million. We ended up with one that was $12 million, cash at close. We took it! And we closed it! Done! Happy ending! Good place to go.

As you go through this process, it’s worth it to take a little time and effort and to torment over who those buyers might be. It really is a bit of time and effort, but it’s really worth it. And, you can increase your potential so very much by doing that in a short time. There’s a magnificent growth path and potential success.

And, in this industry, it’s also exciting we’re doing things that have healthy innovations that make a difference for people all over the world. So, we like it and we find it exciting. Thank you!

Questions from the Audience

Joe Hage: What strikes me about your line of work, I mean, it’s self-evident, but it’s all about the art of negotiation.

Deborah Douglas: That’s true.

Joe Hage: And, I guess, quantity. You gave an example where they said, “Can you talk to these three people?” And, you’re like, “Uh, I can, but why wouldn’t you expose yourself to everyone who might be interested in you?”

Can you talk about that? Do you end up typically going with one of those three because they have identified it ahead of time?

Deborah Douglas: No, it’s very rare. And we did in this case because our client especially loved the one buyer that came forward with the 16, then the 20, then the 25. They really liked them a lot, and felt that they’d be really great for their people.

They, in the meantime, had become annoyed with the $35 million guy, so it made them not want to take it.

Joe Hage: You talked about, sometimes, coming in too early in the process. Can you help us identify what’s the ideal time to start thinking about it? I believe the unfortunate story is a lot of people begin to think about, “You know, maybe it’s time I begin to get out,” as they’re on the decline.

Can you talk about that?

Deborah Douglas: That is true, and that’s disastrous when that happens. The trend is more important than the numbers, in fact. Actually, the trend is very important.

So, you need to do it while you’re on the climb. Also, most business owners who start and develop that early stage company aren’t the same guys who are going to be great at managing it at a higher level.

So, it’s really prudent to exit before you begin that tail downward. Maybe at the stage where you realize you need to do things you don’t know how to do, it’s time to get help. It’s time to get somebody else in there that can take it to the next stage.

Joe Hage: What’s characteristic of a company that you can’t get the deal done? What are the obstacles to close it? You’re great at what you do, this is your livelihood, you can get a deal done, provided …?

Deborah Douglas: There are very few deals we haven’t been able to get done. We’ve done 130. We’ve failed on four. So, we have a really good track record.

Of the four that we’ve failed, then, one guy had a stroke and was completely incapacitated for months. That was unfortunate. One guy had a 90% customer concentration, and the 90% customer was sold to somebody who owned a competitive division!

Joe Hage: Okay.

Deborah Douglas: Kiss of death.

So, odd things can happen to make it not succeed. But, typically, if you work it very well and you work it very diligently and there’s no huge trauma to the company, we can usually get it done.

Joe Hage: I’m thinking much like a recruiter hiring talent, a company might think, “I could go with them. They’re an expert in what they do. But 35% is a lot. I probably know someone in my network, so let me see if I can fill the job on my own.”

I know about the steep. I recognize that. But I’m wondering, do you find that, in your role, an obstacle for people choosing to adopt someone with your skill set because they’re like, “Well, if I can get $10 on my own, is she really going to get me $13, and I’m just going to lose the $3, so I should just do it by myself and mitigate my risk?”

Deborah Douglas: We find that, if people are looking at professional investment bankers to help them sell, our competition is usually structured the opposite of us. They use a Lehman Formula. 5% on the first $1 million, then 4%, three, two, down to a reclining one.

Ours actually goes the other way. For a typical $10 million seller, we’d be 3% at $10 million, 5% for the 10- to 12-piece, and $10% over 12. So, it’s going in the opposite direction. Usually, most sellers like that because they know we have a strong incentive to get the best deal.

Now, we have occasional guys like our guy right now, who says, “Oh, I don’t care how much it is, I like those guys.” Okay.

Joe Hage: And, sometimes that makes sense.

When you find yourself in that situation, where there’s a pre-determined buyer, is there a role for you or is it like, “Hey, if you know the guy and you’re going to do it, then what do you really need us for?”

Deborah Douglas: Well, you do worry about that, and we think about that. In this case, they really need us because they have a jerk of an attorney who’s made him mad and made him go away three times already [laughs].

Joe Hage: The attorney’s not watching, don’t worry.

Deborah Douglas: So, we can help with that [laughs].

Joe Hage: Okay. Actually, I do have one more. Please indulge me.

Deborah Douglas: Okay.

Joe Hage: If we don’t use Douglas Group or a service like yours, what are the other options for people looking to sell their businesses?

So, what are the array of types of services, and why would they consider going with you versus those competitive options to help you liquidate your position?

Deborah Douglas: I think all of the really viable competitors are going to be full-time sellers of companies. Some of them sell and buy companies. We don’t. We just sell.

You can look at both of those, but all of those are going to be contingent, success-based fees. You really need that because we will have, commonly, hundreds of thousands of dollars into a job. Of course, and you don’t want to have paid us that if we don’t get it finished.

Joe Hage: Fair enough.

Deborah Douglas, thank you very much.

Innovations In Ostomy: Measuring Sh** For A Living

14 min reading time

Innovations In Ostomy: Measuring Sh** For A Living

Presented by Michael Seres, Founder & CEO, 11 Health at the 10x Medical Device Conference – San Diego 2019

Reading Time: 14 minutes


The video and transcript follow.

Michael Seres: As you’re probably all aware, about 133 million people in the U.S. live with long term, complex chronic conditions. So it’s a huge burden of cost to the healthcare system that continues to spiral out of control.

And really, we have to think about a healthcare system that moves from reacting to problems to one that prevents problems. And my company, 11Health, which I get the privilege to talk to you a little bit about today, focuses on those people connected to medical bags, and specifically as Joe said, ostomy bags.

In case you don’t know, and hopefully you’ve digested the beautiful lunch, an ostomy is basically where part of your intestine, part of your bowel is brought to the outside of your body and you literally go to the toilet in a bag.

My son, sitting at the back with the mobile phone, takes great pride in telling his friends that his dad measures shit for a living. I might have put it a little bit more eloquently, but then he’s 21. Actually, 11Health now is the only company that analyzes what comes out the body, to determine how we think about what we put back in the body. Let me explain to you a little bit why.

About Me

I was diagnosed with the incurable bowel condition, Crohn’s disease, age 12. I had my first surgery at 14, and 25 further surgeries later, an intestine – most of you might know starts at around six foot in length – ended up at 40 centimeters and stuck to my pelvis. I was in what’s called intestinal failure; kept alive through intravenous feeding for 22 hours a day.

Then, on October the 8th, 2011, at exactly 6:01, I kissed goodbye to my wife and didn’t know if I’d see my kids again. And I became the 11th intestinal transplant patient in the UK at a hospital in Oxford. Since that moment, I’m a two-time cancer patient and currently waiting on a stem cell transplant.

So, now you know my background and you know more about my insides than most people know about my outside, you’ll understand why 11Health is not simply about making money. It’s about the ability to make a difference to someone else’s life. I’ve been connected to medical bags of a different variety for about 35 years, and so I’m also a customer of 11Health, so to speak.

As Joe very eloquently put, you go home after ostomy surgery not just with sheets, but a plastic jug, and with a request from your doctors: “please measure your shit in this jug and tell us how much is coming out your body.” Because unless we know how much is coming out, we don’t know what to put in and you’re going to be readmitted on a regular basis.

The reason I put this slide up is actually the icons you can see to the right, because the icons to the right, as we talk about medical devices and we talk about solutions in healthcare, are really how I live my life today as a 21st century patient and about how we all are going to start to live our lives in the future.

How we interact with patients is very different today to, perhaps, how it has been in the last few decades. The National Health Service, NHS, is the UK National Health Service that saved my life. The doctors you see up there. But there’s also a lot of social media icons. That’s where I met Joe, obviously online, not Tinder, or Grindr, but, I swiped left. Didn’t work. But no, Twitter, YouTube, Google, Skype are really all how I consume my life today; and it’s really about building a toolbox, a kit for patients and how we interact.

And now as I’m a patient in the U.S. health system, I get to see the difference between healthcare that’s a right and healthcare that’s a privilege. But we won’t go into the politics of that. But fundamentally, healthcare, for me, is just a series of relationships. It’s not actually about the device or the technology or the compliance. It’s about a series of relationships. And the closer you get to those relationships the closer your outcome will be. Because as a patient, from my perspective, I don’t actually want to consume health. I want to consume my life, and I want to live my life. And I want to have the tools and the equipment and the technologies and the devices around me to allow me to engage in life, not have to think about health the whole time.

The Market Problem

So, why medical bags? A few facts for you that might actually be quite interesting.

The ostomy market itself is a $14 billion market. That’s a lot of shit. And it’s part of a wider medical bag market. There are about five million patients around the world, one and half million patients in the U.S., and 130,000 people will have a bag attached to their body every year in the U.S.

For those of you who may have experienced it in your lives or know families or friends that do so, the challenge with managing a bag is they do burst. And they do leak, and they do spill. And, as Joe mentioned, your nerve endings are cut, so you don’t actually know when it’s going to happen. So, quality of life for patients in that situation is quite a challenge.

Just to give you a few facts and figures, because we’re in that industry. An ostomy, of which there are three types, but the two biggest, colostomy (closest to the colon) and ileostomy (further up the body) are the number one and number three most readmitted surgeries in the United States. So, huge problems.

84% of patients have skin, wound issues, lots of complications. And there’s no standard of care, sadly, for patients living with bags. It’s quite an antiquated sector, generally coming out of people that have bowel cancer or inflammatory bowel disease. So, quite well-known, quite established conditions.

And actually, it dawned on me, lying in bed in Oxford as these bags were leaking, that healthcare companies in this sector have actually had long enough to try and fix the problem. But what we see quite often is, we build further products to patch a problem the previous technology or the previous thing has created. And, actually, why are we doing that?

There are 2.1 billion dumb bags produced a year. That’s 2.1 billion bags that are causing other things to happen that we can then layer it on with other products and sell more things. And we can just spiral and spiral. So, you have to be a little bit crazy to think you can fix it.

11Health’s Solution

So, what we did was, at 11Health, we built a smart bag. We dissected an ostomy bag; we put sensors and technology in the bags to actually try and measure what’s coming out in real time. And see how we can get from there, we can start to pick up early warnings of the leaks and spills and infection markers, et cetera.

The big challenge everybody is talking about in healthcare is data. What about all that data? What about all that technology that’s coming out? What about that information we all know everybody’s thinking about, data? How do we manage it? How do we deal with it? And, oh my goodness, what about HIPAA and compliance around data?

There’s an interesting fact out there that the majority of patients share more of their healthcare data on social media than they do anywhere else. So, as a long term patient, there is nothing I wouldn’t share of my data to give me an opportunity to live a longer life. Or be at a school concert with my daughter or be at my kid’s events. Because actually, what happens when around data is, we get caught up with a vocal minority who say we can’t share this and we can’t share that. And you’re absolutely right. There has to be standards and there has to be opportunities.

But, actually, sharing the data gives us an opportunity to find solutions. What we happen to do in ostomy is create the largest data set of information so that we can actually try and deliver a solution. And what that allows us to do is work out in real time not only what’s happening from the bag but what’s happening around contextual data. Because just as important to people on devices and people on equipment is, what’s happening in your everyday life? When are you consuming your food? Are you sleeping, are you eating, are you walking, are you talking? All the information we can pick up from Fitbits and Apple watches and this and that.

But how do you bring it together to look at a patient’s life in the whole? How do you think about putting that together? And then what is the difference between clinical data, clinical evidence, and real world data? And how does the industry and how do clinicians and how does the FDA and how do other bodies look at the difference between clinical data and real world data?

For me, it’s the combination of two that actually allows us to deliver some personalization around healthcare. Because as we move to a healthcare industry that’s going to be about outcomes, about value-based care, moving away from fee-for-service to bundle payment models to outcomes, we have to understand what’s important to an individual in order to deliver those outcomes. And you can’t do that without talking to the individual.

Sources of Your Data

I mentioned to you that we share more of our data on social media. In fact, only 16% of our data comes from a health environment. The rest of it comes from outside, our real world. And as you can see on the top right there, it’s Google and Facebook. And the others are starting to try and predict trends.

So how do we use that data to deliver better outcomes? Facebook and Mark Zuckerberg conducted an organ donation campaign on Facebook. It got more people registered for organ donation than any other healthcare campaign in the history had ever done. So, we have to think about where all this data is coming from.

11Health – Combining Technology and Human Interventions

At 11Health, I think what I’m particularly proud about is how we then interact and what we do. And this is the combination where you see technology and human interventions. What we have the privilege to do is buddy up a brand new patient with an osto-mate.
From pre-op to the continuum of care, they get a buddy; they get a support network. They get someone who lived that experience, who’s not only using the technology but has walked in their shoes. Part of pre-op set up, and we now have 40 patients that have gone through our health coaching program.

As you’re starting to see with Medicare and other commercial pairs, you can start to bill and get reimbursed for patient coaching. And we can start to see how that changes outcomes. As an example, with our coaches, we’ve been able to reduce the clinical interaction by 40%. We’ve been able to take a readmission rate of about 30% of patients in the first 90 days down to zero, through a combination of technology and human intervention.

It’s not rocket science. Because the single biggest reason patients like me get readmitted is dehydration. Can’t stay on top of fluid balance. Too much output, not enough input. Logic to most people. Most of you will go, “I feel a little bit thirsty. Maybe my lips are dry or maybe I’m feeling a little bit tired. I’ll take onboard some more water.” Patients like myself can’t absorb that. We can’t regulate our fluid balance in time. So constantly you’re dehydrated, you go back. IV hydration, $16,000 of costs. How do we prevent it?

The New Gold Standard in Patient Care

Well, we can actually prevent it with a combination of human interventions. And what we’re trying to do is deliver a new gold standard. Because what also strikes me as you start to build solutions and we start to all think about how we build new technologies and the impactive devices – how many different standards are out there?

Just by way of a little anecdote. We were working at Cleveland Clinic. Cleveland Clinic have 18,000 ostomy patients and 21 colorectal surgeons and no standard of care. Every single person from every single different surgeon will be discharged with a different protocol. And a different way of doing it.

So how do you cope in that environment as a patient? And also, how do you build a solution, that doesn’t have a standard of care? Well, that’s where it goes back to, hopefully, the data and the ability to do things.

Patient Innovation

And as I come to the end of my talk, because Joe told me to be brief-ish, I wanted to raise a couple of challenges with you guys today as you think about it.

In healthcare, we have amazing people that deliver amazing solutions. You know, healthcare is predominantly paternalistic. The very best go to med school, trained unbelievably well, and we have to deliver a solution. But, as an end user, that solution is always given to us. It’s not often co-created with us.

So as we start to think about designing and developing solutions of the future, why wouldn’t we ever start with the end user? Why wouldn’t we ever build a solution from all those end users? Because in my case, the end user is me, the patient. But it’s the surgeon who’s operating. It’s the nurse who’s got to deal with it. It’s often the CIO, because I’ve got to integrate the data. It’s regulatory and compliance. Why wouldn’t we sit around the room together at the beginning and build a solution from the ground up?

In almost any other sector outside of healthcare, we start with the end user. Tesla wouldn’t make an update if it wasn’t what the customers wanted, et cetera. So my challenge back is, as you build CEOs, CIOs, chief nursing officers, chief this, chief that, why wouldn’t you have a chief patient officer on board?

There’s a movement in the U.S – #WeAreNotWaiting. It was created by a great friend of mine, Dana Lewis, who’s a diabetes patient, and she built an artificial pancreas and is now partnering with Medtronic in building that. There’s Sara Riggare, a Parkinson’s patient in Scandinavia, who effectively built the quantified self-movement. She sees her doctor once a year. Everything else is monitored through her Apple watch and other gadgets.

So there’s this movement of patients. Patients like me going, “We can’t wait for all you guys and all the companies to build solutions. We have to do it ourselves.” I live with a 50/50 survival rate. That’s the odds I live with every day. I can’t wait for years for a sector to come up with a solution.

So this is my last slide. My final request, other than putting chief patient officers, on all of your companies and boards, et cetera – Why are we not obsessed? Why do we not start with an obsession with the end user? We have to think a bit differently to change healthcare. Thank you very much.

[Applause]

Q&A

Joe Hage: As a performer in a chorus, when we sing a ballad, the audience is just like, and there’s this pause before they applaud. And that’s how I felt about your presentation. Because it was so personal and so relevant. And my first question is not for you.

Michael Seres: Good.

Joe Hage: It’s for your son. So you’re going to have to put down your phone. 21 year olds, I mean, am I right?

Michael Seres: Please embarrass him.

Joe Hage: First, I’ll ask a question, to which I know the answer. Are you proud of your dad? But then, a quick follow up, I understand you’re 21. Dad’s been having surgery as long as you’ve been alive. What’s it been like for you and the family? Please stand, introduce yourself and tell us what it’s like to be the child of patient like that.

Nathan Seres: So I’m Nathan, and I’m his son. And, I would say it’s been tough, but I have an extremely strong dad. I want to say just dad, but my mom as well. They’re both incredible. And I work for him now as well. I’m the digital content producer for his company. So, good things come from bad things basically.

And he hasn’t made it hard for me, you know, there would be Sunday visits. Every weekend after my Bar Mitzvah, we’d go up to the hospital and see him in bed, every Sunday. And my mom would stay up, stayed up there for, I think, about 8 weeks. But, we were around a community of people that helped us and people that loved us and, you know, supported us. And it wasn’t hard because they made it easy for us. Yeah.

[Applause]

Joe Hage: So, I’m sure there are other questions. But I do want to ask you, I recognize this has been basically a life-long journey for you. And you mentioned, you were diagnosed with Crohn’s at age 12.

So, even at that stage, it’s been part of your entire adult life. You have the skills needed to become an entrepreneur for a business that’s so meaningful for you. I think it’s a rare situation, certainly as a teen, that someone would be diagnosed with such a situation and, then, make it his life’s work to do something about it. Can you talk to us, just briefly, about, did you then go to school and say, “I’m going to be an engineer,” or “I’m going to enter medicine”?

Michael Seres: Ah, no, I really didn’t. All I wanted to be was a soccer player. And, then, realized I was pretty shit at that, so that was never going to happen. Excuse my language.

Joe Hage: We’ve been talking about shit the whole time, so you’re fine.

Michael Seres: I think the truth is there were two defining moments. One, I was 14 at the time, I went to see a gastroenterologist who ended up becoming the Queen’s physician. So, I guess if he could stick a tube up the Queen’s backside, he could do it to me, it was fine.

Joe Hage: Classy.

Michael Seres: Classy. But he said to me as a 14-year-old, “I won’t take you on as a patient unless we’re a team. You’re going to teach me as much about what it’s like to be you, and I’m going to teach you what it’s like to be me, and we do it as a team.”

And, then, when I went through transplant, my surgeon said the same thing, “This doesn’t work. You won’t survive unless we do this together.” And after transplant, I was given the greatest gift, another life. Out of some family’s worst possible moment, they gave me the chance of another life. So the opportunity to give back is huge. That’s the mission. It’s just to give back to something.

Joe Hage: What became of the 10 before you?

Michael Seres: Three are still alive. And, I was actually the first of a re-started program at Oxford because survival rates hadn’t been good. But I had an amazing surgeon, a guy that came from Miami. Came from Miami Jackson Hospital and re-started the program at Oxford, a genius. And, yeah, my best friend, we speak every week.

Joe Hage: Just the idea of it, I mean I’m sure everyone has someone in their life. I’m thinking if I were to kiss Beth goodbye and say, “I don’t know if I’ll ever see you again.” I mean, you must have just been terrified.

Michael Seres: Yes, of course, but I had absolute trust in my medical team. And I think, there isn’t a person in this room who hasn’t faced challenges or their family faced challenges of different degrees. Everybody will have had something. And so, you choose which way, you either go left and you give up or you go right and you get on. And you know, I’m lucky like that.

Manish Sharma: Manny Sharma. It’s very interesting about you, which I find fascinating, is you had a near-death experience literally, right? That’s why you had such clear perspective on what it makes work. And that’s what I find when we look at medical device industry. Patient centricity that we all talk about it, but not most of us are able to do it. We always think physician is our customer. But really, patient is our customer.

But only folks who have that near-death experience does it truly understand where the value really lies. Whose life really matters. Can you talk a little bit about, as you’ve taken this journey, like what is your advice to device companies and others? Once you have all of these, and you’re talking to them about creating a chief patient officer. But they can’t get out of their own way, because they’re still doing the things the way they are doing. And only the folks like you who have that type of experience have the clarity of thought, what really matters.

Michael Seres: I think, it’s also very hard because, if you’re building a med device company from a company perspective, you have to follow the money. And, ultimately, you get focused on – how am I going to get paid and how am I going to get reimbursed?

But I think you’ve got to have clarity of, why am I doing this and who am I doing this for? And quite often, the patient isn’t the only end customer. The physician is a customer. The payers are customers in their own way, and patients or others.

And I think what’s happened over time is, that’s got skewed so heavily towards physician and payers that the patient has, in a sense, been an afterthought, or just re-delivering a solution.

I think the advantage people like me have got today is, the healthcare trend is moving towards the consumer. It’s moving towards the patient. We are making more decisions. We are much more informed than we ever were in the past. And love it or hate it, Google and other things, we all come to the table now with a different mindset.

The challenge for medical device and for anybody in the medical sector is, in a sense, are you brave enough to engage with patients? It’s really hard for them to move, effectively, 180 degrees now. But I think, those that don’t will be the ones that won’t survive. Because the power now is going into the consumer’s hands. It’s coming away from physicians, fee for service is changing. Value-based care, outcomes-based care, how do you know how to deliver a solution for an outcome unless you ask the end user what outcome’s important to them? So I think the timing is also important.

Joe Hage: I’m so glad you joined us today, Michael. Let’s hear it for him.

[Applause]