Friday, April 30, 2010

The Weekend Update - Lookin at Lucky

Recently, one of our readers questioned why there haven't been as many posts on TSB. We must apologize that we are not as "witty" as some platforms writing April Fools posts. For those that are curious, TSB has been seeking new technologies. So with the Derby on hand, TSB was feelin' lucky heading down to the Kentucky Derby. Just like jockey Garrett Gomez, TSB has done his job and is "Lookin at Lucky." Outside of today's race, there hasn't been anything exciting to report. So what's new? If another " total" motion preservation system is what you want, then we saw plenty of them last week. But, are they really worth writing about? Just because its your product or you have some "skin" in the game doesn't mean its going anywhere. Remember, just like in horse racing there is a major difference between the thoroughbred, the rider and the owner. Just look at the products that we reported about last week. They aren't the attractive two-year olds that TSB was looking at this morning. If the response in the comment section to the Spine Technology Summit Meeting and SAS is a barometer of things to come, the industry has way too many meetings. This industry is no longer built on patient care and clinical efficacies, it now panders to the desires of the Street better known in Louisville as the bookmakers. How does one generate realistic growth when the economic environment in healthcare has changed? What are the odds? Five or six years ago, when these meetings were being developed, industry professionals questioned the motivation, who was running them, and, was this industry becoming too commercial for its own good, placing profits before patients? If this is where we have arrived, it's time for new blood. If attendance and climate is a barometer of things to come, this meeting has seen its day. Besides, there are prettier phillys in Lexington today. Those that drink the "spine kool-aid" can discuss the papers and posters that were presented, just look at whom is placing their clinical imprimatur on these papers and one has to wonder has SAS become a meeting of something old, something new, something borrowed, and something blue? Yuan, Hochshuler, Blumenthal Young, Davis, McAfee, Philips, Krishna, Friesem, even Viscogliosi etc..... Old jockeys attempting to ride young and new horses. Unfortunately, egos, personal portfolios, and investor capital still rule when it comes to spine. One of the many questions that must be posed to our readers is, when will our Captains of Industry realize that the party is over? Hope still looms based on Baxter's recent acquisition. Yet, like today's line, the odds are always modified to benefit the race based on the forecast. Over the past years industry growth rates hovered around 15-20%, today, the titans of Wall Street have modified the industry guidance to 8-10%.

If there is anything that is worth reporting it must be NuVasive. How does this company continue to razzle and dazzle the track? Could this company be running on today's odds for Stately Victor? Could it be because of the jockey riding this horse, Alex Lukianov? Considering that this company is truly a one-trick pony platform, XLIF and NeuroVision how do they continue to win every quarter? Eventually, all thoroughbreds are put out to stud. Spare us the Osteocel story because Devil May Care is running at 11-1 odds to win. Is it consulting agreements? Mission Impossible 20-1. Is it a sophisticated educational platform? Ice Box is running at 9-1. Is it the wining and dining? Pick Super Saver at 8-1. Let's face it, NuVasive is beating Synthes, Medtronic and DePuy at their own game. But why? One has to wonder how long they will ride this horse? As long as that three-tiered training program for XLIF exists, they've got the surgeons by their hearts and minds, and you don't even need the kool-aid. But our readers must admit, it gets entertaining when a new CFO is now an expert on XLIF and spine surgery because he works for NuVasive.

So in closing, TSB is standing near "Lookin at Lucky," and I'm feeling pretty lucky. So I'll be ordering another mint julep and thinking about those not fortunate enough to take in this event. TSB wants to know what our readers think?

Monday, April 26, 2010

Are These Products Truly Dynamic?

It was a beautiful day in NOLA and there was a buzz in the air. Brangelina was not in town working on new homes. TSB was looking for Brad, unfortunately, he's on the French Riviera with Angie and the kids. The Spine Technology Summit prepped for a day of fun and frolicking when it comes to emerging technologies. TSB thought a retrospective review of three of the oldest technologies in development was apropo that were being presented at this forum merited some blog time. Interestingly, there seem to have been changes at some companies. Impliant has taken on a new CEO and President by the name of George Trutza. It is evident that this company has an affinity for former US Surgical employees. The bigger question is, what is going on with the TOPS, considering that its been four plus years in the making having hit a few bumps in the road? Is someone actually going to step up and buy this product, or, has this product become another albatross? What will this procedure cost? Will the investors ever recoup their investment?

Then we have Applied Spine Technology. Another product six years in the making with numerous managerial and engineering changes. Will this product ever get to commercial launch? Or, was this another product that for all it has been made out to be, never amount to anything but a loss leader? Tom Woods, J.P. Timms, Linda Golomb, and now Craig Corrance? A long line of twists and turns in providing this organization direction. Seems like the only thing that is making progress is the evolution of their website. Sooner or later, maybe, just maybe, they will get it right. As far as the product goes, it is still too costly to manufacture. We wonder if this product would have received as much attention if it wasn't for Panjabi. So, who wants to buy this device?

Disc Motion Technology is another company that has been around for a while. One of the first companies with a concept for a posterior lumbar disc, today, it is touting this system as a total motion segment. One can argue if you resect the key components that make up the vertebral complex, eventually you'll find the root cause of pain. But the bigger question is who wants all that hardware in their software? Will this product ever get to the market? An Advisory Board that contains names from the Who's Who in Spine, TSB has heard that this company has had trouble raising capital. If Andy Greenberg and a cast from dancing with the stars can't do it, who will? But the real question is, will this product ever be approved and get to the US market? It has been utilized in Europe, but word on the street is that it is being implanted at European prices.

Retrospective data can substantiate clinical efficacy, but, time is money, and, money is time. It's game time. As an admirer of those that perform the art, one thing that we all know is that doctors are terrible businessmen. That's quoting doctors not lay people. So, TSB would like to know what our readers think? Even nice people have a "come to Jesus" moment when their dreams and aspirations are overrun with a dose of reality, maybe hitting the lottery and cashing out was a thing of the past? Until then, see ya in the Treme.

Wednesday, April 21, 2010

Facet Fusion Technology: Does it really Work?

Recently one of our readers e-mailed TSB and inquired whether there was any existing literature/white papers pertaining to facet fusion devices. This post pertains solely to machined allograft products that have been in use for two to three years. This alternative treatment to fusion is relatively new, so, TSB went in search of data that would potentially substantiate the clinical efficacy of these products, address the many concerns that have been raised implanting a cortical allograft within the facet joint, and whether there was a selection criteria that would make orthopaedic and neuro-spine surgeons, interventional radiologists and pain management physicians comfortable with these products as an alternative modality of treatment to traditional fusion techniques.

So what did we find?

The first clarification that must be made is that bone dowels or wedges are not as new as some marketing platforms claim. Bone dowels and wedges of different shapes and sizes have been around for many years, especially in orthopaedics. To claim that the allograft will "eliminate" facet pain is a bit disingenuous. Maybe, if the primary source of pain is facet degeneration, but, back pain can be and is usually accompanied by secondary, and at times, even tertiary drivers. Therefore the key to any successful surgery is patient profiling, in addition to pre-operative planning. In many respects, it's similar to laser surgery. Yet, before any of this is considered, the majority of patients prefer to be treated conservatively. This runs the gamut from administering pain medication, "hand grenading" the facet joint with a combination steroid/anesthetic injection, PT, and a good old fashion facet rhizotomy where a needle or catheter is inserted into the area where the sensory nerves meet the joint sending an electric current utilizing heat to stun or ablate the nerves utilizing fluoroscopy. So by the time the patient is desperate for surgery, the physician has extinguished conservative therapies.

But what about the osteogenic characteristic of the allograft used to manufacture these implants? Most orthopaedic surgeons are skeptics using a cortical graft, and in all likelihood will never be proponents, or, advocates of this procedure, unless they are a paid consultant. Neurosurgeons seem to like this product, yet, one must question the philosophical difference between these two disciplines. So the question must be raised, where is the retrospective data substantiating facet fusion using a cortical allograft? Considering that it is nearly impossible to develop a cancellous graft for facet fusion applications, yes, TSB knows that some will argue that it can be done, but at what cost? And, where will one harvest from? The industry would love to see the published data in addition to what financial interest these physicians have in driving the revenue for some of these companies. With the Spine Technology Summit in NOLA next week, this would have been a perfect forum to showcase results.

But the biggest challenge that any of these companies have is the selection criteria. Not one of these companies can specifically provide an established criteria as far as patient selection. Facet pain is a broad generalization. So, in the spirit of debate, have any of our readers had success selling these products? What have been some of the clinical indications? And, which specialist seem to like the use of this device? Sometimes, it's not just about the money, at the end of the day it comes down to outcomes. TSB wants to know if our readers can shed a little light on this topic.

You know the old expression that if one cannot get one's way, one must adjust to the inevitable. Therefore, if the mountain cannot come to Mohammed, Mohammed must go to the mountain.

Monday, April 19, 2010

Spine Mardi Gras NOLA

On April 26th, 2010 the 6th annual Spine Technology Summit will convene in NOLA. No longer is this meeting a Robin Young production. Back in 2009, Robin partnered with P&M to provide a forum for the rapidly changing spine industry. Yet, for some of the presenters, it may be time to defer to Malcolm John "Mac" Rebennack, Jr., aka Dr. John the Night Tripper, and start singing the lyrics to his hit single Right Place, Wrong Time. Based on the current agenda, it seems that the majority of the spine cartel has decided to take a pass on this years invitation. Some gnome will be sent to sit in on "some" of these tiresome presentations. If product development is a marathon, some of these companies are now in a sprint. The usual suspects will tout their clinical, financial, or equity position in these products, singing their praises like the lyrics in the Leonard Cohen hit song "Hallelujah."

I heard there was a secret disc, that Andy Greenberg dared to risk, but he can' t really raise the dough now could you, it goes like this the fourth or fifth, the Carlson fall the Krishna lift , the baffled CEO composing Hallelujah, ......... Hallelujah, Hallelujah, ................Hallelujah,

Some oldies but goodies have decided to come back and give it the old school try, attempting to re-establish their technology after some clinical set backs, or, after an inability to raise capital to propel these products to the next stage, the eventually sale of their product to a member of the spine cartel. Besides, some of these investors are still looking to hit the lottery, and you know the expression, "you have to be in it, to win it." Some new companies have surfaced, allowing many to believe that hope does springs eternal for the spine industry. Yes, readers there are some new widgets and gadgets. The most interesting part of the day will be the diagnostic and specialty instrument segment. A must for surgeons that are poor technicians. Spine Guard has a kool product (no need to thank TSB for the plug), boy do we know a few surgeons that could use this product. The most fascinating aspect of the agenda is the categories that have been selected. The collaborators of this event are identifying newer ways to spin these presentations. No longer do we discuss fusion, it is now called advanced fusion, as though they were going to accelerate the natural process of healing because of a new surgical approach or technique. When it comes to hardware the agenda is all over the place.. There are six or seven companies on the agenda that will be updating the market on technology that has been in the works for at least four or five years. Overall, when one looks at the agenda, it seems to have lost some of its luster from previous years. But what can one expect from all the hype. Like a famous surgeon once said, "if we resect the entire tri-complex of the spine, and implant enough of anterior and posterior hardware, maybe, we will alleviate the patient's discomfort, eventually. So you know what Dr; John sang;

Slipping, dodging, sneaking, Creeping hiding out down the street, see my life shaking with every who I meet, Refried confusion is making itself clear, Wonder which way do I go to get on out of here, I was in the right place, but it must've been the wrong time. TSB wants to know what our readers think about the agenda and whether there is anything worthwhile for a potential investor to buy into?

510(K) Approvals for March 2010

Aesculap: Hydrolift VBR System
Biomet: Solitaire PEEK Anterior Spinal System
K2M: Chesapeake Spinal System
K2M: Pyrenees Cervical Plate, Semi-Constrained Screws
LDR Spine: USA Spine Tune Ti Spine System
Medicrea: Impix Manta Cervical Interbody Device
Medicrea: Pass LP Spinal System
Spineart: Romeo Posterior Osteosynthesis System
Spinecraft: Apex Spine System 5.5mm Ti Rod & Polyaxial Screw Washer
Spinefrontier: Indus Anterior Cervical Plate
Stryker: AVS Align PEEK Spacers
Stryker: Modification to Oasys Posterior Cervical System
Synthes: Matrix MIS Rods
Zimmer: Trabvecular Metal VBR Replacement System Instrument Set

Thursday, April 15, 2010

Spine Blogger Alert: Is There an Evolution Revolution

It was reported on the street that AlphaTec was pulling the Isobar Evolution Dynamic Rod and Screw System from the market, and only allowing the surgeons in the study to continue to use this product. TSB wants to know what our eyes and ears on the street are hearing.

Wednesday, April 14, 2010

Guess Who's Coming to Dinner?

No its not the 1967 drama starring Sidney Poitier, Katherine Hepburn and Spencer Tracy. TSB had a controversial dinner with one of his surgeons discussing Physician Owned Distributorships and Hospitals. "Dr. Famous," by the way, picked up the tab. TSB hopes we didn't break any of those AdvaMed rules. As we discussed these topics, unexpectedly, he looked at me and said, "we/doctors are a peculiar group of people, we think just because we were smart enough to graduate from medical school and become a surgeon, we believe we can be good at everything we do outside of medicine. It's an inherent arrogance."

Mentioning the recent ruling that was reported on OTW, even Dr. Famous felt that its self-aggrandizing to preach how bright of a businessman one is when physicians can selectively choose the patient that they operate on. He equated it to running an insurance company, using the former US Healthcare as an example, where they were willing only to underwrite policies that were not over a specific age, and, had minimal health risk. The argument that I posed was that this country was built on a free market economy and physicians should be able to own a hospital if they choose to. His response was, "if they're willing to take care of everyone, including medicare patients and the destitute, he has absolutely no qualms about physicians owning their own hospital." Obviously, Dr. Famous has some integrity and a code of ethics.

The most interesting aspect of our conversation was his observation that if physicians had the right to own facilities without restrictions, most companies would find out how quick the pricing of implants would come down, and, that there probably would not be a need for physician owned distributorships, nor would there be all of these fictitious consulting agreements. Yet, even he questioned the legality of such a business model asking whether there is a difference between state and federal laws that are applicable to POD's. So TSB wants to know what our readers think? Would the delivery of healthcare be more efficient both medically and financially if physicians were allowed to continue to build and own hospitals without restrictions, or, would it become a reflection of how poorly they run their business, magnifying the current climate in healthcare?

"I know you deceived me but here's a surprise, I know that you have because there's magic in your eyes, I can see for miles and miles and miles and miles, oh yeah"

Monday, April 12, 2010

Five to One - Are Spinal Surgeries on the Rise

Jim Morrison once sang;

Five to one baby, one to five, no one here gets out alive, now you'll get yours baby, I'll get mine, Gonna make it baby, if we try, the old get older and the young get stronger, may take a week, and it may take longer, they got the guns, but we got the numbers, Gonna win, yeah we're takin' over. The AMA reported that complex spine surgeries that rely on hardware are on the rise, resulting in more complex and costly procedures. So the question must be posed, is there data that substantiates better pain relief or function with more complex spinal procedures?

Medicare patients undergoing spine surgery fell during the period from 2002-2007. This was driven by a decrease in the rates of pure decompression surgeries. However, during this period there was an increase in complex fusions utilizing pedicle screws, rods, cages and biologics. The highest risk for major complications was observed in complex fusions, in addition, higher hospital costs were associated with these procedures.

What has surfaced is that there is a need for more evidence regarding the efficacy of these surgeries, especially, lumbar stenosis. One author stated, "it seems implausible that the number of patients with the most complex spinal pathology increased 15 fold in just six years. The root cause of this problem is diagnosed by Dr. Eurgene Carragee of the Standford University School of Medicine who states, "...devices are aggressively marketed, so much so that there promotion may sometimes cross the line of professional conflict of interest among profession leaders and institutions." Complex fusions are more profitable for surgeons because reimbursement is significantly higher.

So in closing, TSB must ask our readers, "Are surgeons performing more complex spinal fusions?" And, "are we seeing procedures that compromise an ethical obligation to patients in lieu of monetary rewards?" TSB wants to know what our readers think?

Saturday, April 10, 2010

Sunday Op Ed Piece - Good Night and Good Luck!

The turn of the millennium saw the beginning of the spine bubble where there were more start-up and early growth stage companies than any of us would have imagined. To paraphrase former Fed Chairman Alan Greenspan, along with the boom came an irrational exuberance. Parallels exist between what was developing on Wall Street and what was happening on Spine Street. The same way investors bought CDO's, collateralized debt obligations, without worrying what was inside of them, surgeons were investing in start-ups without really understanding whether the companies that they were investing in had product and intellectual property with any real short-term let alone long-term value. Many contend that the watershed moment for the industry was defined by the acquisition and eventual sale of ProDisc by the Viscogliosi Brothers. Many surgeons saw their peers cashing in and cashing out on the spine boom and they rushed to get in on the action. The consensus seemed to be, if they can do it, why can't we? As TSB likes to say, timing is everything.

The start-ups and early-growth stage companies that began surfacing were the equivalent of financial vehicles creating, packaging and selling potential emerging futures in the form of their own credit default swaps to surgeons. Surgeon investment was their insurance policy for future survival and minimizing risk. Unfortunately, change can be unexpected since markets tend to be dynamic in real time. Yet, the key to many of these companies survival would be that with surgeon investors, and a continuing trend in price increases, much would remain status quo. Rising implant prices created a false sense of security and their own momentum as bubbles do. But markets are never stable. Just like the housing bubble, we are in the spine bubble. The market is correcting itself not because of some recent post on pricing, but because of a dynamic called supply and demand. As less innovative products emerge, the so-called "Others" will be starved of growth revenue and market expansion. If we believe in free-markets, look at what happened to the price of flat-screen televisions as an example. Could it be that many of these companies are not in the bubble, but on the bubble waiting to burst?

Like any business if you are not innovating new products that change outcomes meaning improving the quality how can one continue to command the same pricing and margins that the industry once expected? What has happened over the last five years is that with a glut of commodity products the ordinary trajectory for profits begins to decline as competition increases. This just doesn't apply to the manufacturers, it also applies to the providers. These dynamics not only affect profitability, it also affects the industry's code of conduct.

The success of others, regardless of how it was achieved, has driven many in the industry to extremes. It has raised many legal and ethical questions because of the underlying intent. Imagine what this market would be like if there were no laws or regulations that provided oversight for what can and cannot be done. Many of the side deals that exist are reminiscent of the deals that existed on Wall Street, and many of you know that eventually it caught up with everyone. So today, many of these early growth stage companies are experiencing their own "stress test." In some respects, the structure resembles a ponzi scheme. As pricing continues to fall, many of these companies will teeter on the brink collapse.

In closing we marvel at physician owned distributorships, surgeon investors, distributor brokers, and illegal inducements when all of this is a by product of an industry that was hyped and hyper inflated. TSB wants to know what our readers think?

Wednesday, April 7, 2010

The Worm Has Turned

Recently one of our readers provided TSB with a Consignment Agreement from one of its major hospitals. It's really not important where this facility is located for our readers. The language in the agreement was surprising. Upon consigning the product to the facility, the seller assumes complete responsibility for their implants and instruments regardless.

The seller must replace consigned inventory at no additional cost, the seller/sales representative and a designated hospital employee will be responsible to reconcile the inventory on a scheduled basis, ensuring accuracy. In the event that there is a discrepancy, the facility assumes no responsibility until the dispute is resolved, placing the onus on the seller. If it is determined that a surgeon at the facility did not implant the device since the last reconciliation, the facility will not be responsible for shrinkage.

The construct prices follow:

Anterior Cervical Fusion (1 Plate, 4 Screws): $1,700
Anterior Cervical Interbody: $1,100
Stalif or Zero P Type Devics: $2,800
1 Level Lumbar Fusion: $4,700
ALIF: $3,200
TLIF: $3,200
PLIF: $1,600
Cervical Disc: $3,250
Lumbar Disc: $9,000
Osteo Biologics: 40% off of 2009 List Price (you must provide the price list)
BMP's: 10% Rebate

The agreement is structured for two years, a comprehensive catalog must be presented to the facility, introduction of any new product must be pre-approved by the facility at least 30 days in advance, any product not pre-approved will not be reimbursed. The facility and seller agree that after two years, the price increase will be no more than 3% and that if there is a decrease in Medicare reimbursement pricing will remain unchange if that decrease is less than 5%. In the event that the decrease exceeds 5% pricing will be re-negotiated, meaning paying less.

So the game is on. If this isn't happening in your respective markets, its inevitable that its coming. So, TSB wants to know some of the pricing scenarios that are beginning to surface in various markets throughout the United States. Maybe its time that we tighten our belts because healthcare is in for a ride. What are hospitals in your territory paying for an XLIF, TLIF, Stalif, Zero-P, Cervical and Lumbar Disc, biologics, or BMP's? I've seen the future and it doesn't look good for anyone regardless of where you are in the food chain.

Tuesday, April 6, 2010

The Surgeon Salesman: Truth in Advertising


When the woodcarver Geppetto created his wooden puppet Pinocchio he was a true visionary in the sense that as far back as 1883 he knew the day would come when a modern day Pinocchio would surface. Unlike this fictional character, today we have a real life character that is currently working at the Nebraska Spine Center, situated in Omaha.

Recently, OTW ran an article on the new Custom Spine articulating TLIF device. So TSB lobbied sources regarding this product. What jumped out from our interview with a few former employees was that the surgeon in question, John McClellan failed to disclaim to the writer of this article Elizabeth Hofheinz, and OTW's readers, that not only is he an investor in Custom Spine, supposedly, he is also a board member.

So the question must be asked of our readers, can we believe anything that is said about a product when the ultimate authority fails to disclose his financial ties to an organization? Is this an example of medical marketing at its best? With proper disc space and end plate preparation have we ever had a problem with traditional TLIF's? One must admit that most interbody products are packed with enough of magic dust, whether it be a synthetic or BMP, to enhance the fusion process.

So in closing, one must ask the penultimate question, is it new, is it true and will it really make a difference in the outcome? TSB wants to know what our readers think?

Monday, April 5, 2010

Attention Shoppers, There are Deals to be Had

Recently, one of our industry sources mentioned rumor was circulating that Amedica was evaluating some of the early-growth stage companies in hope of acquiring hardware that would compliment their silicon nitride Valeo portfolio. Regardless whether there is truth, it really got me thinking about the industry as a whole and what has transpired over the past five years. In many respects there is a major shift in what the future will hold for many of us, and which technology will set a precedent for future ventures. Let's face it, "me too" products no longer are attracting investors, considering that there is "mucho dineros" sitting out there looking for the right investment.

The recent economic downturn has reigned in over investing, and decreased risk taking into many ventures that have done nothing but glut the industry with products that are really not changing the outcomes. No need to elaborate on those products since most of our readers know what they are. Many of these companies thought that by designing and manufacturing a product, they were going to be acquired because their design was better. Many of those features were and are insignificant. Just because you designed it doesn't mean its good or that it is worth something. Yes, many of you will argue that you still generate revenue, but TSB must ask how? By brokering a surgeon? By signing a consultant? By enlisting a surgeon investor? Investor due diligence usually sniffs out those deals.

As pricing continues to effect revenue, many of these so called "other" companies are becoming vulnerable to competitive pricing, in addition to finding newer ways to expand market share. In many respects it's a Mexican standoff. The company, the distributor and the hospital. These companies have been looking to de-leverage themselves by cutting commissions in addition to laying people off, while needing the distributor to be interested in these products. The distributor on the other hand is looking to maximize their profitability by getting the most for their service and potentially their surgeon , and then we have the hospitals which have become smarter, squeezing the market for every dollar that they can, or, even capitating price per construct. So the only alternative to survival is to either rely on their investing surgeons, or their surgeon consultants, or cut back door deals with distributors. Many of these companies are surviving on commercial paper rolling over their line of credit to the best of their ability.

Years ago the early-growth stage mantra was that smaller companies moved quicker, were more responsive and addressed the surgeons needs. That argument has fallen to the wayside. What once worked is falling on deaf ears. Another problem that these organizations face is that many executives continue to pay themselves salaries that are equivalent to working for a legacy company. It reminds one of the Wall Street brokers that looted the system only to bring it to the precipice of disaster. Unfortunately, the government will not be there to bail out these companies when they meet their destiny.

The potential payback will be limited. Therefore, if you were in it to win it, you're now in it for the long haul. Based on the preliminary backlash to Obamacare, the days of 100% growth and a quick flip are over. So, yes fellow readers, even if Amedica is in the market the question that must be asked is, will they set another ridiculous precedent if they buy some hardware to compliment their product portfolio? TSB wants to know if our readers have heard any scuttle butt on the street?