<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=1870319619753375&amp;ev=PageView&amp;noscript=1">

The Knowledge of Medicine and Business: Lessons from a Spine Surgeon

Robert S. Bray, Jr., M.D. has nailed the crossover. He has combined a 30-year career as a neurosurgeon with business acumen to place him at the forefront of healthcare.

His vitae includes: U.S. Air Force Major and Chief of Neurosurgery at David Grant Medical Center, Founding Director of the Institute for Spinal Disorders at Cedars-Sinai Medical Center and more than two dozen patents, copyrights and developments for surgical methods, tools and implants.

Bray is the Inventor at RSB Spine, a spinal implant company that he helped found with partner John A. Redmond in 2001, and Founding Director and Chief Executive Officer at DISC Sports and Spine Center, a multi-disciplinary facility that has grown to three Los Angeles area locations since 2006.

ORTHOPRENEUR spoke with Bray, who solely performs minimally invasive outpatient spine procedures. In his words, here are the lessons that he has learned as a surgeon entrepreneur in today’s changing medical field.

Some people consider the economy to be bad, or consider it a negative, or consider all of the new changes in medicine to be horrible. I consider them to be growth opportunities.

You have to understand where the field is, and where it’s going and what it needs. Stick with the basic concept of quality and develop the rest around it.

Implant companies are undergoing a rethinking of how they’re structured. We don’t have the margins anymore to pay independent reps; people are looking at direct wholesale to hospitals; they’re looking at buyer groups; they’re looking at consolidation of the number of vendors they’re in, which makes it hard for new or limited-sized vendors to get in the door.

It is a very, very difficult time for a startup. Actually, I couldn’t advise an individual with one idea that would be the way to start. That said, I certainly would have some advice on where to start.

If a young entrepreneur has a concept that he truly believes in, rather than taking a drawing on a napkin to someone, he is much better advised to take it and spend some of his own money, taking the idea at least through the patent application process. Have it prototyped. Have an engineer draw it up. Have it submitted to the U.S. Patent and Trademark Office. Have the patent either in process or even all the way issued. Now, that has a cost, and depending on the complexity of the device, it could be as low as $40,000 or $50,000. It’s probably going to be upward of $100,000 by the time you have a prototype. Take it all the way through, and get the patent tested, and reviewed, and argued and pushed through.

The value of taking that to a company is dramatically higher on a percentage return for the entrepreneur vs. just the drawing on a napkin, where the company has to put their resources towards its development. Very few companies now are actually doing that; they are not taking outside ideas. They will take something that has a patent.

Intellectual property has a very significant value in the marketplace, and taking a concept to that level is one way to get a good start.

The next level from intellectual property is jumping to sales. As an entrepreneur starting a small structure with just one good idea, trying to get that one good idea to actually get sales so you can later sell it to a bigger company requires you to build an infrastructure. That’s why I say that in the current market, that’s a very difficult thing to do. Why? To get a one-piece idea to go out and sell, you have to hire independent reps because you can’t hire them all yourself, you have to get your own consultants, your own quality control, your own production, your out of house, your shipping. You have to create the entire infrastructure of a larger company just for that one piece, whatever that one good idea may be. The net margins on that is almost zero by the time you go outside and purchase all of those services.

You have to look at carrying that idea on a net margin basis of next to nothing or negative, with the hopes that it achieves enough sales that one of the larger companies wants to buy it. They don’t really care how much money you have made on it. They just care how many customers you have, how many implants you’re selling and what’s your growth rate.

You have to be willing to create a structure that will have negative dollars for quite a long time. Therefore, you have to be willing to go raise capital at a start-up level. That’s VC money, and VC money is very expensive. You lose controlling interest, and your net at the end of the day is limited. In the current market right now, this minute, there aren’t that many purchasers.

What have I learned through all of this? RSB, John Redmond and I are recreating the entire thought structure of how we function.

Spine surgery itself is evolving very rapidly. All of the instrumentation development procedures have to look on a forward basis, because they can’t be stale ideas and they can’t be big-access ideas. The entire development of these new ideas leans toward minimally invasive. So we at RSB are undergoing a complete rethinking of our entire development process and the lines we deliver—how we get our implants, how we’re going to sell them, how we’re going to wholesale them directly, how we’re going to take them to reps—or even without reps, how we’re going to take them directly to hospitals.

My relationship with John Redmond goes back to when he owned Redmond Instruments. We started an instrument business to make the knives, forks and spoons, the kerrison punches, the curettes, the pieces that are more of a nuts and bolts business—if you make this piece and sell this piece, and it’s good quality, you make this margin. We did so, so that we didn’t have to go out and raise venture capital money.

We, subsequently, sold that line to Integra in a move that raised us a bunch of capital. Integra has gone forth and sold, ever since, a line of instruments that still has my name on them to this day.

My career has undergone renovations and changes.

DISC’s fit is the development of outpatient spine and sports. What can be done to make care more affordable and of a higher quality? How can we do both? That’s a challenging topic. How can you make it more affordable—and not some of the words that the government has used, which is “adequacy of medicine.” I’m talking about quality of medicine. How can you make quality of medicine more affordable and make it grow?

As the project began, I started it with just five physicians.

We now have over 40 physicians. We are completely debt free; we are very profitable year over year and month over month, and we’re still on a double digit growth curve in this economy. I believe there are a number of reasons for that. One is that we have chosen to change from just surgeons to multidisciplinary. Our structure has everyone in it: pain management, anesthesia, conservative care doctors, physical medicine rehab, chiropractors, acupuncture, nutrition, rehab facility; we’re multidiscipline, we look at the problem across the board. We added full-scope orthopaedics—shoulder, knee, hand, foot, ankle, everything—and became a broad center. We have spent a great deal of effort on developing relationships. We represented all of the U.S. Olympic teams for the last two sets of Olympics, for Vancouver and for London. We’re going forward with working with national governing bodies now, which actually expands the number of athletes we can take care of. We signed a contract with Red Bull; we’re the official center for all of Red Bull North America. It gives us athletes to tell stories about. Part of the way that growth happens is to choose a way you’re going to market and develop your reputation.

You have to develop a quality product and it will sustain the growth.

How do you do that? When we started DISC, since outpatient spine surgery basically didn’t really exist, the insurers didn’t recognize it. To date, there are no Medicare codes for outpatient surgery; they don’t even have them yet. Starting with zero codeable material and developing relationships, we have become contracted with Aetna and United, and we’re working now with Cigna. Blue Cross is difficult, but we’ll get there eventually. We’re progressively working toward a structure that works within the insurers’ structure, as they have realized that this is where it’s going. Once they do realize, they actually want it to go there because we have fewer complications, we have fewer overall problems.

As medicine is changing, there is certainly strength in size and numbers.

We clearly have no plans to sit still.

We are in negotiations for a very big potential expansion, which will take this model and consolidate with other structural groups. You will see a rethinking, a reconsolidation of the potential between hospitals, because they don’t want to lose all of the outpatient business, and the outpatient business doesn’t want to necessarily throw away all of its spinoff business that can’t be done as an outpatient—they don’t want to be isolated as affordable healthcare becomes reality. There’s going to be a rethinking there too, with what the proper consolidations are.

To sum it up, for anyone to enter any of these fields, whether you’re talking about starting your own company, or your own ideas, wherever the entrepreneur is thinking about starting—spend the time to learn from the quality places where business information is available.

If you go into it without being informed or surrounding yourself with people who know, you’re going to fail.

It has to be done with business sense, and it has to be done with eyes wide open on what is changing. Change is consummate to what is happening in the business world of outpatient care, in the world of minimally invasive procedures, in the world of healthcare.

Change is here and change presents opportunity. But you can’t do it without understanding.

It takes someone who wants to go above and beyond.

I don’t sleep a lot. I’m probably a 14- to 16-hour a day guy, and weekends and more.

I sail race boats, and I ski and I have family. You have to find balance somewhere, or you will burn out, too.

It’s a wide open playing field right now. Who will be in it and how it will be defined will be a fascinating topic to watch over the next couple of years. But it will absolutely be the people who go into it with the knowledge of both medicine and business.

Source: Orthopreneur | View Full Article

New Call-to-action

discmdgroup

About the author

discmdgroup DISC Sports and Spine Center (DISC) is one of America’s foremost providers of minimally invasive spine procedures and advanced arthroscopic techniques. Our individually picked, highly specialized physicians apply both established and innovative solutions to diagnose, treat, and rehabilitate their patients in a one-stop, multi-disciplinary setting. With a wide range of specialists under one roof, the result is an unmatched continuity of care with more efficiency, less stress for the patient, and a zero MRSA infection rate. Read more articles by discmdgroup.

Request a Consultation

PLEASE PROVIDE SOME BASIC INFORMATION SO WE CAN FOLLOW UP