Speaker 1 (00:08):
All right, here we are. Welcome everyone. My name is Eric Sadowski. I'm the founder and CTO of Mimetic. I am joined here by the value analysis whisperer. Mark Copeland, thanks for joining us. cope. Good to see you.
Speaker 2 (00:22):
Good to see you, Eric. And thank you for calling me Cope, my friends call me cope, and we are friends.
Speaker 1 (00:27):
All right,
(00:28):
So let's make sure that everybody's at the right place here. This is a webinar medical device design meets value analysis. And so here's the situation. Maybe you are here, maybe you know a company that's in this position. You've done the hard work of designing the medical device, getting through all of the testing, getting through regulatory authorization, your clearance, your approval. Now you are in the market and you're ready to start ramping up sales. But there's a stall out. There's some challenges, and you may be in the place that we're calling post-Market purgatory. It's the place where you have authorization to sell, but nobody's buying. And one of the reasons for this is the value analysis process, which is not very well understood by many MedTech companies. So that is the topic that we're going to be talking about here today with Mark. I'm going to let him introduce himself in a minute, but just a couple of housekeeping things.
(01:24):
This is a conversation that I'm going to be having with Mark, but we're hoping it's a conversation with all of you as well. So use the chat box and we're going to be looking at your questions. We'll earmark 15 minutes at the back of this to try to address those. And there's a good chance that we may hit on some of those questions just throughout the course of the conversation. So please feel free to punch 'em in. The second piece is that this is going to be recorded, so if you have a colleague that is missing this, if you get on either of our mailing lists, you'll have that recording access after this. So with that said, let me hand it off to Mark. Mark, welcome. Thanks for joining. Give us a little bit of your backstory before we dive into this topic.
Speaker 2 (02:04):
Well, thanks Eric for having me on, and thanks, ed. My name's Mark Copeland. I have been in medical sales for 27 years. I've been in medical device sales for 20 years, and except for the first four years of my career working for Pfizer, it's always been with startups. So I'm used to interacting with companies that are very early on pre Rev, have a new product. I've sold the first in some places. I've been very early on with several of 'em, so I understand maybe more than some med device sales just from experience. I was a globalist for 10 years, a Philadelphia based startup that's now the second largest buying company in the world. And it's exhilarating. It's hard work. It's a different kind of job. And so I'm used to dealing with people who are very entrepreneurial, very intelligent, and do something I could never do, which is create a product that, and I'm always amazed by it. And so I have this type of experience and as healthcare has changed, selling into healthcare hospitals, ambulatory surgery centers, and now health systems has changed to the point where it's a different, you have to sell differently. And the more a new company understands that beforehand, the better prepared they are to tackle it because it's extremely manageable, but you need to know about it and know what it is. And that's what I do. I help companies understand it, demystify the process and make a couple of slight alterations to accelerate their growth in the market.
Speaker 1 (03:37):
Great. Awesome. So thanks for that backdrop here. Where I want to start here, COPE is a lot of med tech companies, many of them have a clinical founder that's identified the unmet need. A lot of med tech companies, they're putting together the medical, the clinical advisory board and doing some great work there. Is that what value analysis is all about, getting the clinician's view and sort of rounding up a number of clinicians? Maybe talk a little bit about the value analysis process. Who's at the table? What are the kinds of things that they care about? It's a good question
Speaker 2 (04:12):
To answer. It's directly that used to be the endpoint. It's now more of a starting point, frankly, and I'll tell you a little bit why. So if everybody looks around their neighborhood, depending on where you live, 15, 20 years ago, it was probably three or four, depending on the size of the city you live in, three or four independent or maybe two or three hospital health systems that dominated an area. And if you drive around now, and think about it, if you're in Philadelphia, there's really kind of maybe three health systems, maybe two if you're in Pittsburgh, there's two. If you're in Maryland, there's two. It's not dozens. So this massive consolidation of these health systems has grown in scale. And when they do that, they've had to put sort of rigors and processes in place to get new products approved, physician preference products. Now what they want is more than just a clinical benefit and they want the clinical benefit, but now you have to be able to make a business case as to why it would work for the health system.
(05:16):
Whereas when I started in this in oh five, if a surgeon liked my product and or she said, I want this product done, that's not the case anymore. And your clinical champions, I should say your clinical advisory team is usually aware of this now, but not all the time. That's why I say it's sort of a different process. I joke like I have Will Helm's Hardware in my hometown. It's a mom and pop, great hardware place. That's what it was like selling in oh 5, 0 9, maybe 2012. But because of this massive consolidation, I'm not going to say we're selling to Home Depot and Lowe's yet, but it's more like ACE and Menards sort of those regional things. And you sell differently. It's just different. I don't think it's harder, but you need to be able to talk to a group of people who are clinical and business and that's just not what we used to have to do.
(06:12):
What are some of the names of those, the titles of these other people that are in the room? Usually there's clinical people. So your chief medical officer, I should say. This is what committee consists of and what departments it consists of. So there's the your CEOC, F-O-C-O-O, but not always. Usually they get roped into some of the big things, the strategic things. But you'll have CMO, your chief medical officer, chief nursing officer, all the times you have VPs because the operating room, which is where I sort of cut my teeth in med device, because the operating room is still such an enormous revenue generator for both hospitals, atory surgery centers, they kind of automatically have a seat at the table pharmacy, the other big spend. But then you also, people like infection prevention, clinical education, which is relatively new, but it will make sense. Finance, supply chain.
(07:07):
When I got into healthcare, it was materials management, it's supply chain. Now they're not the same thing. One's more complex, one's more sophisticated. So there's quality improvement. It's really interesting. Revenue integrity, I had no idea what that was Five years ago I heard two people saying, I'm like, okay, what the heck is revenue integrity? So there's business people and clinical people, but I tend to think it tends to skew more business because their thought process is if it's being presented to us, it's because a clinician of ours thinks there's clinical relevance that we should be looking at it. It's almost like welcome. Now explain to us the economics of it. Does that make sense?
Speaker 1 (07:50):
It does, yeah. So do any of these stakeholders have the ability to veto your product or is it a voting process? What does that typically look like?
Speaker 2 (07:59):
Okay, so technically on paper, it's like the parliamentary process, right? Probably. Yeah, it is. So yes, people can veto it. However, there's human beings at it. And healthcare is different than us selling lumber to Home Depot. There's clinical components. So if they think it's actually better for the patient, people have to have fate. They do say, Hey, this is for oncology patients or for the nicu, we're going to lose money on this. But at the end of the day, we're in the healthcare business and that's their prime directive so people can veto it. But I joked a little bit, I hope I don't it. It's not the Vatican trying to elect a pope, it's just sometimes that teams communicate about as much and people are like, I don't know what happened. What are they looking for? And it's sort of a siloed as opposed to a super secret. So I would say that's sort of the difference, Eric, hopefully that makes some sense.
Speaker 1 (08:57):
Okay, yeah, that makes good sense. Now you as the sales guy cope, are you able to get in the room to make your case, or is this closed door where you're not really able to speak on behalf of your product and the business that you're representing?
Speaker 2 (09:10):
Rarely, if ever. And it depended on two things. I know of a health system in Philadelphia, as a matter of fact, that still lets sales reps come in and they have a monthly meeting and present to them, and you almost want to say, oh, you're the one I heard there was one. And it happens to be in Philadelphia. Most of them do not. Most of them won a clinical champion to come in and present it to them. Although when you're talking about Da Vinci robots or sort of big ticket, strategic and clinical, I suspect those folks are involved with it more. But yeah, what's made it so difficult for so many reps who've been in the business for a while, we now have to have somebody go present our product to a committee we don't know who's never been likely trained on business. So, oh, other than that, it's easy.
Speaker 1 (10:03):
So Cole, I know a lot of med tech companies, they have access to clinicians and nurses, IT many times weaving their input, their feedback into the design and development processes as they should. But I don't hear many companies that are reaching out to people on supply chain sides or people that represent more of the business side that you're talking about. How do you get access to those people? Are they willing to talk? And what should design teams do to understand the perspectives of the business-minded folks on the VAC, the value analysis committee to understand what they're thinking about?
Speaker 2 (10:38):
That's a great question. So I would say at the end of the day, the people that you would like to have as on your key opinion leader panel perhaps, or just like everybody else, I'll give you an organization that people can join or at least follow. And it's the Association of Healthcare Value Analysis professionals, a vap, it's known as, I think it's 60 bucks a year to be a member vendor. And you can learn. They have podcasts, they have presentations, they have a meeting. It's more supply chain than overarching business, but they give you great insight into it. And they're a relatively recent organization. I think they're over a thousand members now because another part, just as an aside, this value analysis has occurred in industries across the planet for decades, but it has really become prominent in healthcare in the last 10 years because of the massive consolidation that we talked about.
(11:34):
So this is the sophistication, but it's funny, just like our kids, Eric ler get on YouTube, there's plenty of, you can follow people on LinkedIn. I've got a list of people I'll send to anybody that wants to ping me afterwards and say, Hey, who should I follow? Who should I reach out to learn more? These are people who do this every are gracious enough to offer to help companies. Sometimes you can hire them to help you. I would just say it's like anything else. How'd you find the podiatrist you wanted to work with? He reached out, made some connections, went to meetings and talked to reps or whatever. I would urge people to do it even if you could only get one, but it's not that difficult. Here's the funny thing, Eric, they actually want new and innovative products that help their patients. Your folks are probably delivering it. They don't know anything about it. So I used to say like, Hey, if nothing else could you look at this because you can't decide to buy something you don't even know exists, then your input will help these companies deliver these things to you more. So there's a lot of people out there that will help and I'm glad to connect them with some of them too.
Speaker 1 (12:39):
Yeah, great feedback. Let's shift gears for a sec. So a lot of MedTech companies are really focused on reimbursement, getting code, getting coverage set up. If there's reimbursement for a procedure that includes a device that's already established, does this whole VAC business kind of go take a back seat or is it still relevant? What's the relationship between reimbursement? It's
Speaker 2 (13:00):
Almost irrelevant. I wouldn't say I shouldn't say that, but if you have it, that's great. They're still going to have to run it through that revenue integrity part of it. The due diligence I was talking about, you and I could talk for that for hours because it's fascinating. You can sell products that don't have reimbursement as well. And I always tell people, because I'll have some reps who say, I don't want to sell it doesn't have a code. I'm like, these health systems buy computers. There's no reimbursement for that. They buy ambulances. There's no reimbursement for, Hey, you bought an ambulance. Cool. Medicare buys you. Well, maybe I shouldn't say that, but the ones that do have reimbursement, you want to know your code, you want to make sure you're right. If you have a sense of the reimbursement, generally that's helpful. They're still going to have to test it because you and I could pull the CMS code and it says, Hey, for this, it's $9,800, generally speaking. But CMS reimburses in Philly differently than it does in Ottowa, Iowa, and we'll never know they have to run it through their system. But it's good to be able to say, we do have a code. It is reimbursed. Here's the CMS general reimbursement, but you will need you, Mr. Or Mrs. Health system will need to run this or ambulatory surgery center. Same thing. No. Yeah. So hopefully
Speaker 1 (14:16):
That helps on the, because it's a really good question, Eric.
Speaker 3 (14:18):
Yeah,
Speaker 1 (14:18):
It helps, but it's not a home run. Just because you have reimbursement, you're covered. It doesn't mean you're automatically going to be in the healthcare system. Absolutely.
Speaker 3 (14:26):
Right.
Speaker 1 (14:27):
How does value analysis look at value? Are they looking for just cheaper devices? Is that how companies should be thinking about what's going to pass the value analysis process a process? Or is it something different?
Speaker 2 (14:40):
I know you and I were laughing earlier. It's not the cheaper analysis committee, it's the value analysis and it is different. This is what I find interesting. These folks that do this are just like you and me, right? They assess if they can your product or the way you and I would look at buying cars. We all know there's like a Kelly Blue book and there's a five year cost of ownership. So Eric and co thinking about getting a car and he's going to buy one, I'm going to buy the other. And we're looking at how much does it cost, how much gasoline are we going to end up paying buyer our insurance on it and all those sort of things to look at what's the better value? The Honda or the Toyota, whatever you choose to look at, it's actually strikingly similar. But because we've so rarely had to come in, we thought the reimbursement code, Hey, we're good, right? You get reimbursed. What's the big deal, right? Well, it's actually a business analysis and that's what it is. And I'll tell you, you want to offend a bunch of value analysis. People say you just want the cheapest thing anyway that you can see them. I've interviewed, you can see they're like, Hey, hold on for a second.
(15:45):
Let me name five things we bought that were more expensive because we saw downstream, it kept patients from having to come into the ED or calling our doctor's office because their sutures burst, or it just made our cases faster or more repeatable or helped the patients in the ICU get off the vent sooner and we spent more. There were cheaper options, but they were cheaper. They weren't a better use of our money. And it's fascinating. It's actually the same. And I think you and I talk about what we want people to take away from this. If people just take that away, you're an inventor, you're smart. As a whimp, how would I look at this as a business person? Would I spend the money on this because it's worthwhile downstream longer term, that's all they want to know. That's literally it. And that's what's so fascinating about this.
Speaker 1 (16:35):
How do you prove it? So in this process, you have the business minded folks that are looking at things from the economic standpoint. You have the clinicians that are looking at clinical outcomes and they're kind of looking at the long view. Is this really in a macro sense, improving clinical outcomes, improving, improving economic outcomes for the healthcare system, whereas the device that's more micro level, it could even be an incremental increase cost for that device as long as the macro clinical and economic outcomes could be justified and supported. So are these value analysis committees, are they doing the math? Are they crunching the numbers and coming up with this business case, or is that something that device companies need to do for them?
Speaker 2 (17:17):
Well, by the way, I'm drinking smart water because I need smart help. Sorry, I figured I had to put a joke in there. No, actually it's a good question. This is where some of the divide comes. I'm asking a surgeon or a NICU physician to go present to business people who don't understand the NICU or hip surgery. It's almost like two, what's the old joke? It's two countries separated by common language. So that's where some of the disconnect, and by the way, value analysis knows this and they're rapidly that we're in the primordial ooze of these value analysis committees in health systems. It was sort of forced on them because all these health systems merged. So they're figuring it out. They know they have a communication problem. They know there's a disconnect between their employees or their surgeons and doctors and nurses, and they're trying to make it better.
(18:11):
So what we say today could likely be a bit outdated in six months for that. So we have to understand that. But they want to do a business case. But Eric, if I came to you and said, yeah, when we approached the hip from this and this and that, you're like, okay, that sounds, I have two hips. I understand that part, but I'm not sure I even understand what we're talking about. So what we have found is having a clinical case for a new product and a basic proforma to help them do the business case. And here's the interesting thing. I've had multiple over a dozen. Some are supply chain, but some are just value analysis. People say, we want that. We want, could you please give us that little Excel spreadsheet so we can plug our actual numbers in and see actually how valuable this is? And first time I said somebody, I was like, you really want my goofy little Excel spreadsheet? They're like, yes, please send that over. And then I had multiple say it. So we have to do some of that for them so that you and I can decide what car to buy, right? We're not going to trust Honda to tell us which one's the best, but we are going to use their calculator. It might help. Right. Same thing.
Speaker 1 (19:20):
Got it. And you have one of those calculators, the proforma calculators that you offer to companies as well, right?
Speaker 2 (19:27):
Yeah. And we have sort of, that's actually a broader calculator. Not only does a little bit of that, but it also says, have we the rent or the company done everything we can think of to gather all the data for them and submit it so that we can answer their questions when they say, this looks awesome, does anybody here, do our doctors even want this? Right? The other part, yeah. But what we end up doing for a lot of companies is almost doing bespoke proforma. They're very, I call 'em back of the envelope T, right? Because an English major. So I use things like it's a back of the envelope, but when we say, Hey, we decreased blood laws, like okay, cool, how much? I don't know, 50 ccs. Well is it, I don't know. Or what's the high, the low? What would you bet on?
(20:15):
And this is to the inventor, but when you grab some of that stuff, they want that information, believe it or not. But you can't just say, yeah, we're really, frankly we're pretty cool. I mean pretty cool doesn't make you buy something usually unless it's Apple, whatever, right? Yeah. So we have to do a little bit of it for 'em and it's less, it's not a Harvard Business Review, but it's how do you know if we're very valuable compared to our competitor or what you're currently doing? Well here we helped, we put this together, but stress test it. Don't trust us. Stress test it.
Speaker 1 (20:48):
Okay, so here's a scenario that I see come up often in MedTech. It's a company, a medical device company that says, we've got this new device and it's going to shave 10 minutes of operating room time. And at the average cost per minute of $37 in the operating room, that's going to translate into $150,000 of savings for your health system just based on this one device alone. Does that argument hold water with the value analysis committees? It
Speaker 2 (21:18):
Does. If you validated it and so you're $37, that's probably the way, it's more of an A SC price. Now ORs are, we say $50 and nobody looks at us and it's actually higher than that. But then they tell us, oh actually cope. Ours is, we've calculated it's $97 a minute. So there is a price you can put on it, but you have to then run it out over some time. So if it's 12 minutes a case, some people might say, well, it's not enough for us to put another case in, but as you go higher up the food chain, he's just using the operating room as an example. But I just literally had the same example for a primary care office in Baltimore, Maryland. A friend of mine called me about and same exact thing. Now they can't. But you know what you can do?
(22:01):
You can send that nurse that was waiting in this room, he or she can go over and help anesthesia get started across the hall and everybody gets done earlier. And this is what's interesting. I was thinking about this there people that are on that value analysis team, somebody is there quality improvement process improvement that tells you something. They're looking for incremental improvements constantly that are repeatable and you can never overlook those. But I have a rule, if somebody tells me 12 minutes using your example in a surgical case, doesn't matter. I know I'm talking to the wrong person because I've stress tested it with people who have both clinical and business. Usually it's a director or VP of that and they say, absolutely it matters. We pay attention to that. We claim everything. If we improve room turnover by two minutes, that's a KPI. For us, that's of significance. And I would specifically go, really? Two minutes. I'm like, absolutely. Well, I'm like, what if he can't get another case in? They're like, now, and here's the interesting thing, and I had a value analysis person teach me this. Oh really? Now we can get the person who's waiting in the OR with a fracture up to the OR because the OR got done earlier
(23:17):
And now we can get that person out of the OR and into a bid. And then it's a whole big long process and we tend to look at it like this. And if you are talking to somebody who looks at it like this, probably need to go upstairs.
Speaker 3 (23:29):
Yeah.
Speaker 2 (23:30):
Does that make sense? It does all the time, by the way, all the time Eric. Companies are like, are you serious? It comes up all the time for seven minutes, is really that important.
Speaker 1 (23:38):
Yeah. Yeah. So it sounds like you need to access somebody with the bigger picture, the line manager that you were talking about that has kind of a higher level view of all of the operations and then also the clinical outcomes that are associated.
Speaker 2 (23:53):
Usually I would say usually it's a nurse who has to know business because they have alu in both cams. What we have to have. That's sort of like the under arching or overarching messages. I spent years having a boot in a clinical camp. Now I have a boot in both and I've become much more effective at selling product, but actually solving their problems because I'm speaking the language of the health system or the ambulatory surgery center. It's the same mechanism. It's interesting.
Speaker 1 (24:20):
And so sticking with this idea of trying to shave time savings off of the operating room, how much validation needs to go into this? I mean, is this Joe, the engineer in the back room doing a time study of this, his device versus the gold standard? Or does this need to be run through a clinical trial and looked at as the secondary endpoint of some sort? How much evidence is needed to really substantiate the time savings? You need it
Speaker 2 (24:47):
Lesson than you think you need EMR Most of the time you can pull a lot of that stuff out of EMR for historical. If you want to compare to historical, same surgeon, same procedures, they can do that. But I would say if I'm doing my KOLs and they're doing the first 50 cases that we're doing as we're figuring out instruments, just using your example, I've been there a bunch of times knowing what the value analysis team or upper wants to know that secondary to does the surgeon like the product and the instrument? If blood loss is time, is it more repeatable? So we do this case in Eric and it goes great. Eric's not six seven like I am, right? But we have a six seven and we have a five two person and we have heavyset and we have small stature. Does this help us make that more repeatable so that everybody who's sort of normal size in it we can do, but this helps us in those too.
(25:42):
And people would say, okay, well what's that mean? Look now, regardless of the patient that rolls in our case time is close to 43 minutes and we know we tracked it right now, I'm more repeatable. That matters to the people who want to know our or block utilization is a KPI and we need to try to get to 95%. That means our ORs are operating 95% of the time the windows open. Right now we're 82%. That's what I think a lot of people don't appreciate. And if you can measure some of those things. But the only way what's really valuable is if you have one of those people on your kale and they're like, Hey, while you're at it, what matters to when you guys look at this, what else matters? Because we're looking at does this plate reduce a fracture? And they're saying, well how about blood loss?
(26:31):
How about case time? Are there less trays? Could you track those? Because these are things that matter to them. Those are costs, that's overhead, that's time. But you don't know until you to some of those decision makers. And I happen to be a Rosetta Stone for some of 'em because I talked to 'em. So I help. But I would go to the source and like I said, I'll give you four names at the end and say follow them, connect with them, ask if they'll help. And they probably will. They're domain experts. I'm just a whisper. How about that?
Speaker 1 (27:04):
That's good. Alright, so getting back into your sales seat for a second. You're bringing new devices into healthcare systems all the time. Have there been situations where you really wished that the design team that was developing this product did some different things during the development process? They collected different types of evidence where they maybe introduced different thinking into the product that would make it more appealing to the value analysis committees? Any insight or advice or engineers like me that are thinking about things mostly during the design and development stage?
Speaker 2 (27:39):
The things that I've seen over time in that type of example have been more the or, and I'll use the OR because it's my background or has a saying, you don't really know until it's under hot lights and cold steel. And they're saying is like, Hey, well this looks great, but will it perform? You just can't predict. But I would say those tend to be my examples from a value analysis standpoint or business standpoint. It ends up just being, I can't think of anything off the top of my head. Eric, that jumps out at me. I wish I could. It's a really good question. It just ends up being more business time and money and they're interchangeable in some cases. Have we tracked that Ed blood loss would be, we don't put a dollar on blood loss, although I'm sure some actuaries could, but it's important especially if it's yours, but it is important. And so I wish I had a better answer for
Speaker 1 (28:32):
You. It's okay. I mean, so let me feed into it a little bit more. Let's say that in a surgical device case, you're looking at improving clinical outcomes by a certain percentage and maybe there's also reducing readmissions that are associated with a particular product or something along those lines. From the value analysis side, the things that are likely going to be compelling to them is that information that engineers should be thinking about. I know from our side, a lot of times we have a very product or device centric mode where we're thinking about how do we get this device really functional and how do we get it through verification and validation. But sometimes if we flip it around and we think about, well, what's it going to take in order to get adoption for this product? What are they going to need? What problems in healthcare are we solving? We kind of flip it from being device focused to being more outcomes focused where we're really trying to solve a problem and sometimes getting that input from people like yourself and those on the value analysis side to maybe redefine what it is that we're building in terms of the problems that we're solving more so than the technology that we're pushing. Does that make more sense? It
Speaker 2 (29:43):
Totally does. I'm glad you described it that way. So I'll give you two examples of things. You mentioned one of them. So reimbursement rate hospitals right now, and I think ambulatory surgery centers, but I'm not certain I had to check on that. If you get a surgery and a hospital right now and you get readmitted within 30 days for anything that's on the hospital, used to be CMS was like, okay, that's another admission pay reimbursement for that. They changed that. So your product may not help with that, but if you think it might, it's probably worth trying to figure out how you would document that, how you'd measure that. And sometimes it's just how you sell it, right? Because you can't make a claim that you can't prove. But sometimes when they say, oh, this is stronger or less invasive, and they say, Hey, this might help us keep people from coming back in the 30 day window and you as a good salesperson say, I can't make that claim.
(30:39):
We don't have any proof that says that, but you actually think it would. And they say, oh, I'm convinced of it. I'm going to say, well, okay, I don't have any proof, but you say whatever you believe, but make sure you understand. I'm not saying that, but if you have something that shows that that'd be tremendous infection's. The other one and infection's the one that everybody steps all over and hospitals are really trying to decrease surgical site infections. ais a hospital acquired infections and you can't come in and say, Hey, because we have a sterile pack tray and it's one of them, we could probably decrease infections. And if you decrease one infection because hospitals have to pay for that, Eric comes back in for that surgery and God forbid he has an infection that's going to cost that hospital anywhere between 22 and $75,000 to treat you.
(31:24):
And that IV antibiotics you have to be on for a year that's on the hospital, it's forces quality from them. You can't make that claim. But if they say, we think this might help us decrease the risk, you'd say, great, but I don't know how you could, those are hard things to prove. But those are two examples where hospitals in ambulatory surgery centers and doctors and health systems, they're all looking for things like that. I'll tell you the one I hear a lot about is if we do this, this, does the patient not need to call my doctor's office every six days worried about something because that's a drag on our doctor's office And that's a big drag. And so sometimes it's like that, but you have to think creatively. But you also, if you ask these folks, they'll tell you what matters. And the best way to do it is, Hey, what are you currently doing? Yeah, how's it going? Well, the patients do great, but then what do you dislike? I hate all the phone calls I get afterwards. So maybe if we think we're going to decrease phone calls, maybe we should track that. Let's track that. It's hard to say. That's why it almost has to be bespoke, but knowing these things, you can prepare them for them, but you can't always deliver.
Speaker 1 (32:31):
Yeah, it's a really good point that sometimes it's better to take the device and put it to the side and focus more on the standard of care. How are done right now? What are the problems that you're seeing? What are the phone calls that you're getting based on how things are done right now? And so taking more of that problem centric approach with healthcare systems in many ways might be a better way for companies to get that feedback and understand how should they develop the product, how should they position the product in order to address those problems that exist in healthcare instead of taking more of the technology first approach.
Speaker 2 (33:05):
And I just saw, by the way, a really smart guy put a note in there saying, develop at risk programs that support your claims with health systems. You expect to use your products. And I know Mike A. Little bit, he's spot on. It's really difficult for med device to take that leap. But imagine if I said, I think my product does this, I can't quite prove it. And Eric, you're the doctor I'm selling to and the health system. You go, yeah, we think it will too. I'm like, okay, I'm going to charge you $4,000, but if this doesn't deliver, I'm reating you 500 bucks every time because we're sharing some of the risk. And now sadowski iss like, Hmm, that's interesting. And I think we're going to see more at risk. That makes people very, very nervous because they have to deliver what they think they're promising. Right?
Speaker 3 (33:53):
Right.
Speaker 2 (33:54):
And he makes a great point and I have wanted companies to do more of that because I'm so confident in the things I bring and I'm like, yeah, don't worry. Don't count on that rebate check. You're not going to get it. I know we're going to X, but that's where I think you're going to see a lot of this go.
Speaker 1 (34:09):
Okay, good stuff. So we've got some good questions coming in. Let me just recap on some of the key themes that I've heard from you so far in terms of three takeaways that we've gotten out of this conversation or I've gotten out of this conversation so far. The first is know who's going to be on that value analysis committee. It's not just clinicians, it's going to be people from supply chain, from quality and many of the other areas that you mentioned. So there is point number one. Point number two is getting inside of their heads. A lot of times US device engineers, we're very focused on the technology, on the product, how it works, all of those things. Whereas the people that we're selling to, they're focused on their problems and their patients and what those issues are there. So understanding how they're thinking about things and maybe reframing what it is that we're building to address those problems.
(35:02):
That's the second key takeaway that I heard. And then the third is building up this business case. So you can't just expect these healthcare system to do all of that work for you. They may have their own analysis method, but putting together your own proforma, kind of simplifying that and sharing, here's the business case that we think makes sense for your healthcare system. That can be a compelling way to go about this process as well. And I would even think that from a designer development standpoint, having that pro forma early while we're designing and developing things that can inform design decisions, that can really help us engineers figure out, well, where are we going and how are we going to efficiently get to that point? So it's a little bit like creating the commercial or creating that proforma before you build the product might be a good way to go. And any other key takeaways? I
Speaker 2 (35:51):
Think you nailed the important ones, but I would say here's driving ambulatory surgery centers, hospitals, and health systems insane right now. And if you can help, even secondarily, you are better positioned to succeed. There's not one place that doesn't have a staffing problem. So if your retractor system lets them use one less person in the or, that's valuable. If you can help them, what was the one I was thinking of the other day? Oh, if you can help them get more time, clinical time with patients and less whatever else they want that that's what the primary care conversation I had yesterday. They want their doctors to talk to you as opposed to typing in all kinds of stuff. And then are there things that allow it to be more repeatable? Here's another one by the way, supply chain issues. 30% of people in supply chain right now, their 30% of their time is spent chasing down back orders.
(36:45):
Some of it's covid, some of 'em are not sure that's important. I urge companies that are submitting say, make sure, tell them check, here's our supply chain. We have 12 months of product on the shelf or five months, whatever it is you have, they're going to want to know can these guys actually deliver to us if we actually turn the spigots on? And finally training. This is the thing we talked a little bit about if you have an airway management system and the ICU, the nicu, the ER and the or, you have four departments and they have five different choices they want, one of the things they do is they pick the one that's best for most of them, like all organizations and committees do. So they can train everybody so that if that nurse works on weekends at one of their other sites or that doctor is doing rounds when they need that airway, they want to know I'm trained on it and they've trained everybody on it and they've checked them off. And the more variables you have, the harder it is for quality. That's important. I know of one company that we were helping that the health system said we're not buying the cheapest, we're buying that one and it's way more expensive because everybody in this facility, we can train all of them because the company supported it. And when's the last time an engineer thought about that?
Speaker 1 (37:59):
Yeah, great
Speaker 2 (37:59):
Point. I can tell you when's the last time a sales person thought about it. It's not that common. It's a different concept because they're training
Speaker 1 (38:06):
Is
Speaker 2 (38:06):
A big deal. They're not moms and pops, they're not Home Depot, but they're getting there. Right?
Speaker 4 (38:12):
Hey Eric from Matic here. Most MedTech companies focus on the technical side, but more often than not, they struggle to sell their devices when they finally reach the market At Arch Medic, we flip the switch, we get early market insights to inform your technical direction. And while we're developing your device, we'll continue to get market feedback to pressure test the key assumptions and de-risk the commercialization process. If you're looking for an experienced team to help you navigate the technical, regulatory and commercial complexities of MedTech, you should check out matic.
Speaker 1 (38:47):
Alright, so we got some good questions here. I've got 'em up on screen. We got some smart people sending in stuff. I'm like,
Speaker 2 (38:55):
I need to read all this afterwards.
Speaker 1 (38:57):
So the first one here is how do you make sure your product gets on the value analysis committee's schedule? Assuming that's competitive, there's a lot that's trying to get into that funnel. How do you get into there and what's the process for getting on that calendar?
Speaker 2 (39:12):
Fingers crossed is not a strategy. Now you need to get their attention because I had a health system tell me they last year, like a standard eight hospital, two ASCs, they had 257 new product requests that they had to cover and they meet once a month. That's a lot. And they meet for two hours. So I urge everybody to do is first of all, it's your clinical champion, but you want them to deliver what I call a home run executive business summary. And I'll help anybody. I can send them the structure because what it does is it leads with, here's the problem we have in the or the er, the ICU, wherever they are, here's the issues, here's what it's costing us. If you know these things, here's the time or staff and we've identified a solution and then you run sort of through the proforma. It's designed to, I say punch 'em in the nose, but it's designed to catch their attention so that they go, we should put this on the agenda. You have to sort of get their attention. And so I found this is very persuasive and helpful to get you on the agenda. Awesome. And again, anybody that wants to just connect with me, I'll
Speaker 1 (40:12):
Send them. It's a great tool. I've looked at it and it's really compelling. Good, thank you. Alright, second question here. Do you see a meaningful difference between for-profit and not for-profit healthcare systems in the way that they set up and conduct value analysis within their committees?
Speaker 2 (40:29):
I have not noticed one, although I'm sure there is. I had somebody the other day tell me they got very early on a national agreement with HCA, which is the biggest for-profit health system in the country. And we were both laughing. They're like, well the economics, you must have a heck of an economic business plan because they're for profit. They're not bringing it in if they don't think there's something like that. And that's not a dig at anybody. That's just an accurate statement. So I haven't noticed one. And if somebody has I'D please connect with me and tell me about because I'd love to hear about it. I have not seen that at all actually.
Speaker 1 (41:06):
Okay, good. So another one here, if the sales team is no longer in the room, how are companies reaching the clinical champions and how has this changed the role of marketing?
Speaker 2 (41:17):
Boy, there's way smarter people than me to talk about this, but it's a little bit like pharma. You're using social media. I mean there's a guy on Matthew, Ray Scott who promotes personalized videos, use them. I don't think he's crazy. You still go to conferences, but that's hard. It's a crutch. We've all relied on actually, I think. And there's a bunch of Ben device companies that don't have reps in hospitals every time they're being used and they get along fine, right? So yeah, it's hard. I don't know if I have a great answer for that, but from a marketing standpoint, talk about the problem. Talk about the problem you solve, problem, problem, problem. And then people will start paying attention to you and then we'll say, what do you do? You can say, well we have a solution and they'll come to you. That's my
Speaker 1 (42:01):
Non-marketing pitch. It's good. Focus on the problem and maybe use some social media channels to get out there and build connections. A lot of what you said is it's still very relationship based, getting in touch with the right people and having these conversations to try to address their problems.
Speaker 2 (42:18):
Yeah, it's a
Speaker 1 (42:19):
Good question. It is a good question. Alright, this is a long one here. So hospital value analysis needs to see the benefit of the bottom line. Given this, does the design development of medical devices need to integrate value-based innovation model, which includes the cost benefit modeling earlier during the conceptualization stages to evaluate the trade-offs and decision-making, not just the clinical risk risk assessment.
Speaker 2 (42:47):
Yes, yes. That's a very well smart, educated
Speaker 1 (42:54):
Person saying
Speaker 2 (42:56):
In one minute what I said.
Speaker 1 (42:58):
That's right. That's right. They embedded the right solution right there in the question.
Speaker 2 (43:02):
And that's the thing, Eric, you and I were talking about, we now have to think both like a clinician and a business person. So what would a business person want to know? Why would they pay more? They're not against it. We all pay more for things. What do we get out of it? And you shouldn't think about that earlier because it's not the gravy train days of 2005 walking in, hey, whatever charge and everything, some of your spreadsheet with your pricing, those just don't exist anymore.
Speaker 1 (43:27):
Yeah, I couldn't agree more with what was suggested in that question and what you just said that understanding those outcomes, the evidence that you're going to need, the cost benefit, the sort of healthcare economics, that information should really be driving product development. And a lot of times engineering teams are flying blind. We are designing products just focused on function and getting some feedback of clinicians, but we're missing the mark on what healthcare systems are really looking for to solve their problems. And so I think getting clarity on what is going to drive that value analysis process, doing that on the front end could really help product development teams in a big way.
Speaker 2 (44:06):
And I actually think Eric, there are companies now that are trying to take a proactive view of this and it's going to be a big competitive advantage for
Speaker 3 (44:12):
Them.
Speaker 2 (44:13):
And so I do think as startups and entrepreneurs, we look for competitive advantages because we're fighting against the big dogs and how do you beat the big dogs? You figure out competitive advantages and edges. This actually is an edge. If you can do it, it's not that easy. I'm not saying it's oh tonight they'll just start doing it. But the more you do it, the more competitive you will be, the
Speaker 1 (44:32):
Faster. Yeah. Well said. Alright, here's another one. So when we're calculating annual revenue from a procedure for value analysis, do you use the Medicare average reimbursement and multiply that by estimated procedure volume or is there another route that you take? Do you have a calculator for that?
Speaker 2 (44:51):
I use the CMS model because I know it's the hardest case for us to prove because it's always the lowest price. So if I use that and I prove I have a pretty good business model, then I can say, hey, and this does not take into account private payers. Like I had somebody from an A SC, an administrator told me the other day on my podcast, by the way, if somebody would've listen to it, she said, we have contracts that are Medicare plus 85 or 80.85. We have some that are, the implants are carved out. That's where that revenue integrity company comes back. But I know if I'd say, Hey, CMS reimburses you $9,400 on average for a total knee in an ambulatory surgery center and I've run this out over, you said you do 300 of these a year, I've shown a cost savings. I'm like, I know I'm pretty good and I'm conservative. And you're only going to see upside if your private payers are better, which they always are. And then they can plug in their own numbers. But yeah, I use it because it's the hardest to prove that I'm good. And if I can prove I'm good there, I'm probably really
Speaker 1 (45:56):
Good. Alright, good answer. So cope, you've mentioned this term a couple of times and I got to tell you, I have no idea what it is. Revenue, what is it? Revenue Integrity. Integrity.
Speaker 2 (46:06):
Yeah.
Speaker 1 (46:06):
Unpack that for me. What are we talking here?
Speaker 2 (46:09):
Okay, so you and I run an ambulatory surgery center and we have 19 different payers because we have different patients coming in. Eric's Blue Cross Blue Shield, I'm Blue Cross Blue Shield of Michigan, that guy's Aetna. And we have patients coming in and each one of them has a different contract with our ambulatory surgery center. Eric comes in and he's young and his might pay Medicare plus 0.85 Copeland's old and he's on Medicare. We're paying the Medicare rate, but the Medicare rate varies from regions too. So when we come in and we say Medicare general rate, we're looking at the general, they still have to plug it into their contracts and they have software that does this to say that code Eric that you were talking about, they have the reimbursement code 2, 2 8, 5 2 or whatever. It's they plug it in and they're like, oh yeah, on these three patients we have scheduled next week we'd get paid this on those coming up that are Aetna, we get paid that.
(47:06):
There's so much variation in it. And that's so weird about healthcare is they don't buy buy the same donut, but everybody pays different prices. So they have to have revenue integrity so that they know if you come in and you're $3,000 in implant, you can still make money on Medicare, you'll make it on the others, but they want to see how much each one's unique. Does that make sense? It does. They put it through literally revenue integrity. Wow. I'm telling you, I had no idea what it was either. And because I'm big and dumb, I just say, what the heck is that?
Speaker 1 (47:38):
It took you 45 minutes to give you more complex it sounds like. Yeah. Alright, I think we got time for one more question here. So as an inspiration for all of us looking for ways to measure value, could you share an example of a company that did something surprising to quantify an unexpected value?
Speaker 2 (47:56):
That is an excellent question. Yes. I won't name the company, I sold it for a long time, but they had a very innovative product despite its five 10 K approval, it was actually innovative and as we joke and this time, I mean it was innovative and it cost a little bit more than sort of something that was currently on the market and readily accepted. But on the backend you could turn rooms over in the or faster. You could eliminate the legs. I mean significantly, you could actually keep the hospital from having to buy more hundreds of thousands of dollars of instruments. And when they put it together, you could show a place that if you buy this many, you'll see this actual return on your investment. But it's not like in a cost savings, it's on a value. And when you would talk to the certain entry level people you were talking to, they didn't get it.
(48:47):
When you went up the food chain. I had one say to me, she was a director of surgical services. She's like, please tell me we're doing this. Please tell me we're doing this. And when they ended up doing it, and so it was very much about problems in a different part of the hospital that they eliminated that were very expensive and it was very, very successful. I can't give too much of an example, but yes, it exists. You just have to think about it and ask. It's not, God knows if I can figure it out. We all can.
Speaker 1 (49:20):
But it sounds like sometimes the benefits may stem beyond just the clinical area that you might be focused on. There might be some tangential benefits that could be realized through different parts of the healthcare system.
Speaker 2 (49:32):
Sometimes it's downstream and sometimes it's upstream, not just right where we are. And that's where if you're only doing it in the er, you might be missing value. That's the ICU or whomever the floors don't See. That's why you do a lot of reconnaissance, a lot of questions and learn it. It's hard. It's hard. I'm
Speaker 1 (49:49):
Not saying it's easy, but that's what you do.
Speaker 4 (49:51):
Awesome.
Speaker 1 (49:52):
Well cope. This has been fun. I learned a ton here and I think everybody else has as well. Want to thank you again for doing this. Let's do this again. What do you think? Thank you. Let's do this
Speaker 2 (50:01):
Again. We all know ribbon integrity now and you're so much smart. You're so much better at this than I am. Hopefully it helped. Like you and I were talking, what do we want? We want it to help people that are trying to design better products for patients. And I hope we were able to do it. Next time we'll do it live. We'll do it together.
Speaker 1 (50:16):
Alright, that sounds good. Same room. And thanks to all of you for joining us. Hope you've gotten a lot out of this. We will send out the recording if you've subscribe to MedTech Mindset or the value analysis side on Mark's newsletter so you can get it through either of those channels and then follow up with myself and Mark if we can help you another. Anyway, thanks for tuning in. We'll talk to you soon, Eric. Thank you.
