Globus and Atlas Shrugged and Shrugged and Shrugged

Poor Atlas, the Titan giant has been burdened with holding up Globus' spirits as the company attempts to finalize its  initial public offering. "Oy vey," Atlas is going to get tired from carrying Globus' around during this dog and pony show. With all the hoopla surrounding a potential IPO, it seems Globus had to put the brakes on its original intent, so that it could up the ante from $100 million to $150 million. Hopefully the consultants from the Great Vampire Squid, Piper Jaffray, BOFA, et al will fare better than the genius' at Morgan Stanley that led the Face-broke sham. Price this right and you will attract investors, get greedy and the repercussions will come back and bite you in the ass.  Think Alpha Wreck. Considering that investor confidence is at an all time low in light of the recent Facebroke fiasco it will be interesting to evaluate how the Globus IPO plays out.  If one takes the time out to read the preliminaries  in the S-1 filing, Globus has done a nice job in managing its finances when it comes down to running a company.  Of course those that have become collateral damage during the process will say otherwise. But the reality is that at this juncture its all about the financial data that counts.  If anyone wonders why the Street sunk its teeth into medical devices look no further. In what other industry can a company generate on average 81% gross margins across the board? Containing COGS at 19% speaks volumes about production efficiencies at Globus. In addition, Globus has been able to stabilize their SG&A costs at 42% over the last few years, a sign that it has moved away from total independent distribution model. TSB anticipates that the SG&A will eventually come down a few points based on the current cost containment environment in medical devices. Like everything else what goes up must come down. So the question must be asked, why does Globus need another $50 million?  Could they be anticipating potential litigation settlements with other companies? Let's face it, based on this company's track record, anything is possible. Choir Boys they ain't, but then again they're not running a church or mission are they?

On the surface Globus has a pretty good war chest considering it generated $331.5 million in sales with profits north of $60 million. Globus brags that they hold the title as the fastest growing company in the industry, but I bet the Purple People Eaters would beg to differ. The concern that TSB has regarding Globus is whether they are perceived as an innovator, or are they really nothing more than an imitator on steroids? As NBA players love to say, "no question" Globus makes beautiful instruments and understands the value that visual appearances make when selling a system.  Yet, TSB must ask our readers, what has the competition attempted to copy from Globus' portfolio? How about informing John Q. Public, a potential investor, about the scope of these 5-10 projects that you intend on marketing over the next three years.  Mystique Smishtique. There should be some transparency if you want the dow.  Please, spare us the standard line that this information is proprietary. One has to wonder, what makes this company so unique outside of being managed well? Is there one product in their portfolio that is a game breaker? We would love to see the number of surgeon investors and consultants that have effected tremendous growth at Globus because without their exuberance Globus CAGR wouldn't be anywhere near where it plays.  Will they run, or will they stay after the IPO? Will everyone have reaped a windfall?

When Globus reaches their IPO milestone, how many shares of Common A will they be offering and at what price?  TSB wants to know what our readers think?

As Henry Butler sings on the latest Jeff Golub album,

Hey tell everybody TSB's back in town, I got a dollar and a quarter just rarin' to clown

But don't let nobody play me cheap, I got fifty cents more that I'm going to keep, so

Let the Good Times Roll,  I don't care if you're young or old, Let the Good Times Roll!

Paradigm Spine - The End?

Many years ago, The Doors sang a eulogy of sorts,

This is the end, Beautiful friend, this is the end, my only friend the end
Of our elaborate plans, the end, of everything that stands, the end
I'll never look into your eyes, again, can you picture what will be so limitless and free
All the children are insane, waiting for the summer rain.

Based on what has been heard on the Street, could the end be near for Paradigm Spine? The Street is telling TSB that Paradigm may be facing liquidity issues. Cash flow could be a problem, considering that da boyz have supposedly been attempting to raise $14 million since December of 2010.  Paradigm has been in existence since 2004, and still no one has taken a shot at the title, or expressed interest in buying this one trick pony.  With a "who's who" cast of characters, it's a wonder why no one is biting the bait?  Could it be that there are too many fish in the sea?  Could it be that something smells fishy?  Could we be talking fire sale?  Based on Paradigm's product portfolio, TSB does not see this company picking up enough of traction to sustain itself without an infusion of cash. But then, if TSB lived high on the hog, sooner than later the cow runs out of milk.

The fact remains that dynamic stabilization has died a slow and untimely death, TSB cannot see the cervical and lumbar products surviving in the current environment, they were DOA a long, long time ago. As for the Coflex, nice but how big of a market? What about reimbursement issues? So in closing, this was a valiant effort by V3, but since the markets are bigger than the both of us, timing is everything, and if our sources are right, time is not on Paradigm's side.  TSB wants to know what our readers have heard?  Could Paradigm be riders on the storm?

Say it ain't so Joe?  Say it ain't so!

2.3%

The upcoming Medical Device Tax has become a hot topic.  If ever there were an emotional topic in our industry, just mention this tax. As innovation comes to a grinding halt, a byproduct of outsourcing in addition to numerous factors like physician owned distributorships and consulting contracts, look no further than the spine industry. Spine is one of the most lucrative industry's to grace healthcare. For years no one questioned how much was charged for a procedure, or how much a product cost. Back pain was back pain and if the patient needed it, they got it. The gross margins in the medical device and biologic industry are phenomenal. Is there any wonder why Wall Street sunk its teeth into this industry? Is there any wonder why there have been so many scams, especially in the area of workers' comp? On average, a pedicle screw can be manufactured for roughly $40 to $140 depending on the complexity of the design and the volume. A cervical plate can be manufactured for roughly $150 with screws costing as little as $8. Granted every company must meet a certain threshold for liability insurance, in addition to incurring general, sales and administrative costs.  This industry has definitely reaped the benefits.

The argument behind a kinder and gentler excise tax or no tax at all is that this tax could gut some start-up of mid-size companies out of business, in addition to stunting innovation, and placing a drag on U.S. competitiveness.  It has been reported that Europe, Israel, and Asia are working aggressively to overtake the United States in tissue engineering, nanotechnology and gene-based diagnostics. Some would argue that this is the result of a stringent FDA.  So TSB must ask our readers, what has come out of the various continents that everyone is so concerned with when it comes to spine? An expanding pedicle screw?  The TOPS system?  The PASS System? More inter body devices?  Just look at some of the most recent approvals by the FDA, can we actually call our industry innovative, as CEO's suck the life out of some of the companies that they run?

If any one party to this tax has a concern, it is the Hospital Trade Groups who are already screaming that the tax will be passed on to them via a pricing increase.  TSB must ask the question, Why Not?   Hospitals claim that they are concerned about controlling the price but they don't really paint a true picture of what their role is in delivering healthcare, as they continue to limit the number of vendors that can sell in certain facilities, beat up every rep and company on pricing, and mandate in certain situations that you pay to play in their arena.  Think Rep Trax. Think VendorRape on an elementary level. Let's be honest, what has worked in the past just doesn't play anymore, and someone has to pay for a system that is broken, regardless of how many people claim that they would like things to remain status quo. As "baby boomers" enter the golden age healthcare costs continue to escalate. Arguing that device makers will pass the tax onto the hospitals which will show up in insurance premiums is another example of the venom that hospital administrators continue to spew.  Have we ever seen a device manufacturer actually lower their price?  Have we ever seen a hospital provide a patient a discount for paying their deductible on time?  It's a game.

TSB believes that the big companies should pay to play, and that they should bear the brunt of the tax while an equitable sliding scale should be utilized for start-ups and medium sized companies.  If innovation is on the horizon, it is definitely coming from some of the incubators or start-ups that have surfaced in the past. Elephants aren't capable of innovating because "out of the box" just doesn't play at the Medtronics, Strykers, Zimmers, DePuy's, Biomets, Orthofix and even the Globus's.  Most of these companies xerox products, or acquire what they lack. Organic growth is dead in the U.S. spine market when it comes to these companies.  Don't believe it? Another cannulated pedicle screw, another inter body device? You must be kidding. If anything this will force everyone to rethink their strategic plans and how to execute efficiently.  The waste in this industry is phenomenal.

Whether or not this tax is effected remains to be seen.  Using the typical scare tactics that jobs will be eliminated is typical of those that oppose any tax at all.  Maybe its time that some CEO's tighten their own belts and the shareholders learn that the most valuable commodity that you have is your people not the number of shares and dividends that are paid out at the end of the year. But then again, we wouldn't be in this boat if we didn't think that the party was going to last forever. TSB wants to know what our readers think?

BAH! BAH! BLACK SHEEP

"Conceal me what I am, and be my aid, For such disguise as haply shall become the form of my intent."

                                                                                         William Shakespeare - Twelfth Night

Mistaken identity? On May 23rd, 2012, lawmakers in the NY assembly proposed new legislation that would allow POLITICIANS in the State of New York to outlaw anonymous speech on the internet. The bill is sponsored by two Republican Assemblymen who are seeking to turn the spotlight on "cyber-bullies," by forcing them to reveal their identity. The bill is S06779.  TSB thought it was important to table this discussion considering that 99.999% of our commentators post anonymously, for the obvious reasons, job security. TSB doubts that comments made anonymously on this blog are made because some of these individuals have no cojones.  If someone ever wanted to harvest testosterone for an Integrated Medicine practice, look no further than the spine industry. Everyone is a tough guy. The impetus for this bill was a NY State Assemblyman that had baseless claims made against him a few years ago when he was running for election, by an anonymous poster. How thin skinned have we become, especially a politician? TSB has been attacked on more than one occasion. Have we ever cried foul? Have we ever deleted one comment directed at a TSB staffer, or this blogs integrity? Emphatically, NO! Family members are off limits. This is an interesting topic because this bill is an assault on your individual civil rights, even those that don't agree with this blog, at a time that big brother is reigning in most of you like sheep, while protecting a person's rights to know who is behind an anonymous internet posting. Contrary to what some readers think, TSB has never had a problem telling someone their opinion, to their face. On numerous occasions it has gotten one in trouble, it has resulted in some being banished to the dog house, while at other times it has even gotten some of those that contribute to this blog fired. There goes Corporate America's mantra that they value its employees opinions. But that's not what this post is about.

Major media outlets have been consolidated, controlled and owned by five or six major corporations. Today, everyone's civil rights are being threatened. Most of you can predict what the obvious response will be by those that have been attacked on this blog, or called out for their childish and unprofessional behavior. According to the proposed legislation, the administrator of any website administered in the State of NY (phew thank God we're not in NY), shall upon request, remove comments posted on a website.  Additionally, the bill calls for the website administrators to have their contact information clearly posted so that anyone offended by a comment can demand that the comment be removed.  It's quite obvious that these thin-skinned politicians don't read TSB (our feelings are hurt), since we have removed comments upon request on numerous occasions. But this entire issue has become a joke. Lend credibility to the internet? The same way we lend credibility to talk television, the printed word, talk radio, the truth in advertising, political campaign ads regardless of which candidate you vote for. The reality is that politicians want each and everyone of you to remain the sheep that many of you have become.  You are not allowed to think for yourself, you are not allowed to have an opinion.  Fall in line Soylent Green. Apparently, these elected officials have been completely misinformed about the liberties guaranteed to ALL AMERICANS in the U.S. Bill of Rights.  How ironic is it that major media outlets are allowed to editorialize while average Americans like you or TSB should be prohibited. Surely there have been some cases where a judge has ruled in favor of a plaintiff, but these judgements have been far and few, and in the obvious crazy states. To quote TSB: "If its in the public domain, it's in the public domain." And if you've attempted to screw someone, because you are mean spirited, or you yourself look to pass the blame on someone else because of your own in competence, YOU DESERVE TO BE CALLED OUT.  As TSB has stated, it takes less energy to be nice and part ways amicably, than to revel in screwing other people. Just look at JP Morgan and how its CIO parted ways last week. 

What is at stake? If you disagree with someone you're not allowed to voice your opinion. But it's okay for our politicians to torpedo one another, question someone's birth certificate, make claims that some hedge fund cost people their jobs, call someone a socialist, question one's religious beliefs, while THEY ALL hide behind Citizens United. There must be a different set of rules for the sheep to follow. You cannot have a voice, because your voice might be heard. Ever try speaking or thinking for yourself? TSB has been accused of arrogance for editorializing and thinking, unlike some of the limp wrist characters that run around in this industry. Some people should try it, it actually works and makes you a better person, and hopefully it makes you a smarter person, resulting in a better society, and who knows maybe a better company to work for. Imagine that, thinking for yourself and voicing an opinion? Politicians and the Internet?  Look at whom is calling the kettle black? So in closing, remember the First Amendment.

"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise of thereof; OR ABRIDGING THE FREEDOM OF SPEECH, OR OF THE PRESS; or the right of the people peaceably to assemble, and to petition the government for a redress of governance."

This weekend is Memorial Day, pay your respects for those that have given their lives for this illusion you call freedom, put your cell phone down, shut the damn thing off, shut down your computer, stop reading your iPad and go out and live, try talking with one another, rather than at one another.

"You know there are twenty million people out of work, just waiting for a job...........there was a world once you punk, Yes so they keep telling me, TSB was there, he can prove it, I know, I know when TSB was younger people were better, People were always rotten, but the world was a better place." Have a great weekend!

The Stryker Affair

Greece is in a political and economic quagmire, JP Morgan is under attack, the Facebook IPO has turned into a laughable moment, and Stryker makes the front page of the Wall Street Journal? As usual, this turns into a teachable moment about how a rigid and victorian Board of Directors can behave.  How sensitive and thin skinned are these people? They actually read Cafe Pharma? Who knows, they probably read TSB. Oh if only to be born again.

It was reported by the WSJ that William U Parfet, Chairman of the Board reported at an April 24, 2012 meeting that "just to clarify, on the behalf of the BOD, we'd like to state that Steve never violated any company policy nor any code of conduct." With that said, this news finally brings to light a teachable moment that leaves many to ask the question, "what in the world is going on at Strykerland?" Initially they snubbed Ned Lipes for the position, Mogul leaves for greener pastures, and MacMillan is pressed into resigning. Over the years TSB has poked fun at Stryker and MacMillan, but what does this say about expectations when it comes to leadership? Is this another of those "do as I say, not as I do" moments? This will not be the first time that any of us have heard of an office romance, but really, the BOD was worried about ITS credibility?  TSB is sure that there will be a difference of opinion, and we will leave it up to our readers. But what does this say about Stryker that hasn't already been said? Are they still stuck in the 50's? Is Thruston Howell III still on the board? Could MacMillan have handled his affair with panache? Asking certain members of the Board for permission to date is the ultimate kiss of death, but then at Stryker pomp and circumstance has always ruled the day. Out of the box, these people are so deep in the box that they might as well be in their coffins, but then again some of them look like zombies.

As for loyalty, it seems that even MacMillan's lieutenants exhibited little discretion. So in closing, we wish MacMillan all the best in his future endeavors, because divorce is a messy situation, and finding someone to love whom loves you is priceless, it might even be worth leaving the confines of Stryker. But TSB looks at it from a different perspective, Stryker's loss is J&J's gain. If Marv Albert was resurrected from the dead, hope springs eternal.  TSB wants to know what our readers think, is this all to do about nothing?

Weekend Update

Spine Nation:

High altitudes can have a deleterious effect on the human body, witnessed by some of the comments that have been posted regarding the viability of this blog.  One of our readers has been utilizing their crystal ball to aid in their clairvoyance. Unfortunately, when one scales beyond 7,000 feet above sea level the saturation of oxyhemoglobin begins to plummet, and a climber begins approaching the death zone.  Hypobaropathy effects each individual differently. Your vital functions begin to go, you start making poor decisions, and you begin to weaken. Even the sherpa's know their limitations. As our infamous commentator has stated, why don't we discuss innovation? The FDA, The government? Duh?  For as much time that this individual spends following this blog, one must question whether the processor is functioning or is it time for a check up from the neck up? How many times has the TSB blog site asked, what is new? Let me count the ways. He loves TSB, he loves me not! Let's see if the Sir Edmund Hillary of The Spine Blogger blogspot is up for the challenge by identifying what company or companies that this individual works for. What business model is this individual currently building?  Is he selling on features and benefits? Is he a consultant broker? Is he the point guard of a POD or PDP? What better way to invalidate our opinions that there is not anything new in spine. Don't believe TSB? Just look at the winners in the last two Spine Technology Awards and where they are today, they are breaking all types of records. Just kidding. As the call for entrants is made public for this year's spine lalapalooza, well, YAWWWWWWN. Will it be another expandable or cannulated pedicle screw? Will it be a screw an anchor that differentiates one product from another? Will it be another inter body device? God knows we need another interbody device. Another biologic? Perhaps we can increase the number from 50 companies to 51, or maybe 54?  Or, maybe we could find another stem cell company? Even the shill for the industry has been known to pull a rabbit out of his ass every once in awhile. So, what is going to make our person of interest happy? The Machine would like to appease this individual's dissatisfaction with our blog and the many comments that bring some levity to all of our lives, once and for all, or as Meatloaf (that's a singer not a dietary delicacy) parodied, "what's it going to be boy?" Are you up to the challenge?  

Instead of applauding some of the products that people are attempting to bring to the spine market resulting in the continuing saturation and demise of the industry, you the reader have this opportunity to vote on which products suck? Is it the implant? Is it the instruments? Is it the magic dust? Who knows, it could even be the company? What companies are driving down the cost of implants? Who are some of the better known POD's? As the margins continue to diminish and the expectations increase for growth what do those incredibly talented innovators have in store for the spine market? Our hopes are that our readers can shed light on Sir Edmund's plight.

You know what Jimmy Buffet would sing;

It's these changes in latitudes, changes in altitudes
nothing remains quite the same, with all of our
running and all of our cunning, if we couldn't laugh
we would all go insane.

On a side note, TSB received some information from an unnamed source that The House was voting on SB406 which had HB1725 attached to it. HB 1725 it the bill that prohibits healthcare practitioners from self-referrals for medical devices.  If this bill passes it will likely move to a Committee where they would negotiate the passing of the NO POD Bill as a joint group. Obviously, there is big money involved and every effort will be made to fight this, so if you are for the bill, pick up the phone or get on your computer and let your voices be heard.

Medtronic's INFUSE: CASE CLOSED

The Wall Street Journal published a report today that the federal probe into Medtonic's Infuse is over.  The government led investigation began in 2008, and looked into whether the leading company in the spine industry had illegally marketed the synthetic protein for unapproved intra-operative use.  The announcement ends the civil and criminal inquiry with no further findings, nor will there be any civil penalties.  Unlike Stryker and its employees which had been raked over the coals, eventually leading to Stryker pleading guilty and agreeing to pay a $15 million dollar fine for misbranding its product, Medtronic has dodged a major bullet.  

In Medtronic's case, this had severely cut into sales over the past few years, leaving the industry leader no other recourse than to independently employ Yale University's Dr. Harlan Krumholz to investigate the research backing the products safety and efficacy without having any surgeon consultant influence.  Krumholz is looking to liberate the data and let the science speak for itself.  If all goes according to plan, the data from two independent sites, one in Oregon and the other in the United Kingdom should be finalized by this summer.   

Hopefully, this entire experience will temper Medtronic's arrogance and get them focused once again.  Who knows maybe Omar is really what the company needed?  The good old days are over, and regardless what some of our readers espouse regarding the big, bad, and evil FDA, if you never have sat in on one of these panel meetings when the consultants are spewing their company paid propaganda, maybe Medtronic would have never gotten itself into this position in the first place.  But then, when Jesus takes the wheel in the operating room, it doesn't matter how well Medtronic may have wanted to police Infuse, when its it God's hands the indications begin to get stretched.  TSB wants to know what our readers think?  Will this help or hinder Big Blues image?

Jesus take the wheel, take it from my hands

Cause I can't do this on my own, I'm letting go

So give Medtronic one more chance to save them from

the road their on, Jesus take the wheel.

To Sue or Not To Sue

On Friday, May 11th, 2012 it was reported in various media outlets that multiple law firms had announced that a law suit seeking class action status had been filed in the U.S. District Court for the Southern District of Florida on behalf of purchasers of Common Stock of Mako Surgical between January 9th, 2012 and May 7th, 2012.

The Complaint alleges that Mako Surgical and certain Officers and Directors had violated the federal securities laws.  Specifically, the Complaint alleges that Mako had failed to disclose adverse facts, including that the Company was poised to suffer a wider first quarter loss, that utilization rates were dropping, that the Company outlook lacked a reasonable basis, and that the defendants lack a reasonable basis for their claims regarding the Company's outlook.  So this got us thinking and debating the financial issues surrounding multiple companies that exist in spine, and the potential legal action that investors could take regardless whether these spine companies are publicly traded or not.

We have witnessed the demise of multiple companies, Vertebron (RIP), Impliant (IP acquired), Archus (Acquired), Spinal Concepts (Acquired) Innovative Spine Technologies (RIP), Applied Spine Technologies (IP acquired), Disc Dynamics (RIP), Disc Motion Technologies (MIA), Hydrocision (Acquired), Cardo-Medical, and REO Spine (A blast from the past), for various reasons.  Some for mismanagement of funds, some for plain stupidity, and some for plain old greed. So the question that we posed during our round table discussion was whether or not current investors in some of the smaller spine companies, that are hanging on a thread or show no growth, have legal recourse if some of these ventures have failed to achieve forecasted milestones?  How does one take control of your investment?  A hostile takeover?  Litigation? What happens if the BOD is stacked with Cousins, Brothers and Sisters? What if the company is spiraling out of control?

Does it behoove an investor to access audited financials, or should the investors be able to hire an independent auditor acting on behalf of their interest?  What happens if a CEO and CFO are "doctoring" the books by transferring money from one company to another company without disclosing these facts, is this grounds for litigation. Could these individuals be perpetrating fraud? What happens when a company claims that it is doing better than it really is, utilizing this information to create an atmosphere of growth when in fact a company has no growth or has lost revenue?  The beauty of the U.S. legal system is that every company or individual has a right to a fair trial, but can some of these companies sustain the financial burden that litigation would present?   

Granted there are companies out there that have raised tens to hundreds of millions of dollars and probably generate revenue that leaves investors shaking their heads.  If you were an investor in a privately held company wouldn't you want to know how your money is being managed?  What the Mako scenario tells us is that investors are unlikely to sit back and be duped by the company or the underwriters.  Granted Mako will have its day in court, but could this lawsuit be setting a new precedent across the board in the device industry?  TSB wants to know what our readers think?

Sunday Editorial

Before MM goes any further, today is Mother's Day, and those of us at TSB want to wish every mother a happy and healthy MD, and no that acronym does not mean a Doctorate in Medicine. On April 26th, TSB posted a blog entitled, "Is There Anything That Money Can't Buy in Spine."  In addition, to that post, many of you have read our opinion on the commercialization of the spine industry. A few years ago we even suggested that rather than publish spine surgeons commercial interest in the back of the annual NASS booklet, by law NASS should have them wear golf shirts with company logos and baseball hats as they walk around the show. But back to the editorial. Upon finishing Professor Michael Sandel's book, "What Money Can't Buy, The Moral Limits of Markets," ironically our mailbox had received another e-mail from ISASS, aka The International Society for the Advancement of Spine Surgery. The e-mail was an invitation from Heather Howard on behalf of Chairman Larry Khoo and James Yue the Co-Chairs of this ISASS program. The faculty is the Who's Who that have been as responsible for the commercialization of medicine as have their mentors, and many of you know who they are.  But today's editorial is not about any of these individuals.  It really is about the concerns that are raised when you receive an invitation at the cost of participating at $30,000 per station. Obviously the going rate in today's market.

Now before anyone goes on a rant, TSB knows that no one gets to play in ISASS' (love that acronym) sandbox without paying an admission fee, but $30,000?  Obviously this course is being held in the City of Lost Wages, Nevada on July 21-22, 2012 (I'll give ISASS a plug for free, unlike their good friends at OTW).  It's all about critical mass Drs. Khoo and Yue, and based on our number we're definitely giving you visibility.  But TSB must wonder, if surgeons haven't gone too far in the commercializing medicine? Don't believe TSB, why is ISASS offering to promote the participating companies on their website and generating e-blasts as part of the admission fee? Does anyone believe that the advertisement of your participation as a company is going to attract some fledgling spine surgeon to attend the "OCCTTLSTL" Hip Hop Surgeon Training in the middle of the summer no less, in the adult playground capital of the world? Do any of these surgeons really care as long as you're dropping your 30 grand on the table?  So here's what you get for your fee;

1 Lab Station:

1 Cadaver: All you need is a torso with head 

1 Set of General Instrument: Most companies can supply these tools that will attend

Battle Gear:  Scrubs, Masks, Caps, Shoe Covers, Gloves (How expensive is that?) 

But here's the kicker, a disclaimer states that the $30,000 does not include the honoraria or the consulting payments to the lab faculty, and that participating companies may choose to provide consulting payments to chosen faculty according to "their" normal policy. Does that mean the surgeons normal policy, or the company's? You have to love medicine, especially if you think that we haven't commercialized it to the extent that an organization like ISASS promotes the education of their members or peers, you as a company get to pay an admission fee to promote some screws, wires, and that some of the surgeon participants may even have a vested interest in a company and potentially they are using this forum to further commercialize a venture that they may have a capital investment in.  Can you hear disclaimer?

Ironically, at the bottom of ISASS e-mails is a famous quote from Albert Einstein, it states, "a person who never made a mistake, never tried anything new."  What it really should have said is, "a person who never made a mistake, never tried anything new, but it's much easier when you use someone else's money."  Maybe what TSB should do is end his blog posts with our favorite Einsteinism: "the definition of insanity is doing the same thing over and over and expecting different results." So in closing TSB will leave you with the legal definition of insanity;

"mental illness of such severe nature that a person cannot distinguish fantasy from reality, cannot control one's behavior due to a psychosis, is subject to uncontrolled behavior." Market Economy? No Way! Market Society!  Everything is for sale. TSB must ask one question: how much is ISASS laying out for this meeting, and don't come back crying talking about the cost of promotional marketing.

TSB would like to wish all of our readers a Happy Mother's Day.  PS: I'll see you at the turn in Pauite, we're outta here!!!!!!!!!!!!!!!!!!!

A Generation of Regeneration

Recently, while working on a project, TSB began to wonder about the advent and evolution of synthetic bone graft materials, and the many claims that exist regarding the efficacy of one product or one's science that has been utilized to exceed a competitors claims.  It would be interesting to hear the opinions of our readers. As regenerative therapies gain momentum and revolutionize preferential modalities of treatment. What is it about one product that truly differentiates itself as the leader, as a game changer, or is some of the science that exists behind the curtain regarding the science, more smoke than mirrors?  Questions that still abound are:

Is it the Science?

Is it the Structural Composition?

Is it the Chemistry?

Is it the Porosity?

Is it the Resorption Rate?

Is it the Sintering Technique?
Is it the Silicate?

The industry is enamored with marketing nomenclature. "Does it taste great, but is it less filling?" Is there one product that is really that much better? When will we see commercials reenacting an incident whereby someone benefits from a specific bone grafting material? Maybe someone falling out of the bathtub after a Cialis moment? The industry throws around words like osteoconductive, osteoinductive (BMP), osteostimulative (Actifuse/Novabone), bioactive, osteoinductive potential (Alphatec WTF), platelet derived growth factors, Bone Morphogenic Proteins, and last but not least, the latest and greatest craze stem cells. It's a wonder no one has trademarked the line "osteoproductive." It does produce bone, doesn't it?  Granted, some of these fall into distinct yet separate categories, but they are all engineered in one shape or manner. Do some of these products work better than others? Which ones? TSB is sure that the public would love to hear our readers take on this segment of the industry.  Is one product safer than another, if used properly? If the intent is bone remodeling, how does one substantiate that one material recruits mesenchymal/osteoprogenitor cells faster, differentiating into osteoblast which secrete the matrix for the onset of bone formation? How fast is fast?  Is it nanoseconds,  is it a matter of minutes, of hours?  And if in the end, bone remodeling does take place, meaning a successful outcome, does it really matter what magic dust is used?  How do some of these companies substantiate their claims?

The AIDS epidemic of the 80's created tremendous opportunities for pull thru revenue that many have taken advantage of.  It also let the marketing boogeyman out of the closet.  But what is it about one product that makes it so unique in comparison to another?  Is it truly science? Is it marketing? Is it about relationships?  Are surgeons basing their decision making on science or on relationships? TSB wants to know what our readers think?

TSB Case Study

The legal definition of fraud states that fraud is a misrepresentation of a matter of fact, by false or misleading allegations, or by concealment of what should have been disclosed that deceives and is intended to deceive another so that the individual will act upon it to his or her injury.  As the legal dictionary states, "fraud is commonly understood as dishonestly calculated for advantage." In recent years, some of the most notorious people convicted for fraud have paid the price for their nefarious behavior. The poster child for fraud would be the infamous Bernard Madoff who was convicted of investment advisor fraud, mail fraud, and wire fraud to name a few. Fraudulent behavior includes false statement of material facts, knowledge on the part of the defendant that the statement was untrue, intent by the defendant to deceive, a reliance by an investor or victim on the statement, and injury to the alleged victim.

TSB's Case Study is directed at our legal eagles that read our blog. Let's say we have a fictitious company in the spine industry, for sake of discussion let's call them Company X.  In four years, company X has burned through roughly $20-25 million in investment capital, revenue is weak, and "X" has exhausted all means by which it can raise additional capital. Company X decides to issue a Press Release on Orthopedics This Week reporting that within the past few months Company X has had record breaking sales, a result of making multiple changes to their instrumentation, and substantiating this claim by stating that they have received plaudits from surgeon customers, not informing a potential investor that 80% of its revenue is generated by investing surgeons. Furthermore, the declaration that Company X has had a record breaking quarter is in print.  All the while revenue has been flat, or as any financial analyst would interpret, in decline.

The Facts

Company X really hasn't had a record breaking quarter or month.  The numbers have been inflated by a  one time sale to a foreign stocking distributor that inflated the metric utilized by the company to measure its progress, since the company has always based its progress on surgical implantations. In Gladwell's World this would be considered an outlier occurrence.  Company X's intent is to use the Press Release to inflate the company's image, with the intent of enticing or attracting former or potential investors into infusing additional capital into the company.  Company X decides to enlist Doctor Famous, a surgeon investor and BOD to call on former and potential investors.  Doctor Famous is well aware of Company X's financial status.

The Legal Question

Is Doctor Famous or the CEO committing fraud if they are knowingly soliciting capital by misleading potential or former investors? Or, is this another situation whereby the old adage applies, caveat emptor?  What happens if the seller is knowingly selling a latent defect?  TSB wants to know what our readers think?  

My Aching Back

If you did not have an opportunity to watch The Sunday CBS Morning Show, an expose highlighted the ongoing work at the Texas Spine and Joint Hospital located in Tyler, Texas featuring Dr. Kevin Pauza. For those not familiar with Dr. Pauza, he is working with fibrin a combination of thrombin and fibrinogen found in our own body as an alternative modality of treatment for certain back ailments?  What jumps out is the staggering differences in the number of surgical procedures that are performed in spine compared to coronary heart disease and hip replacements.

Regardless whether 90% of disc injuries heal themselves, the numbers speak volumes about the politics of spine surgery and healthcare in the United States.  It was reported that 1.2 million spine procedures are performed annually, three times the number of coronary procedures and four times the number of hip replacements. A third of those spine procedures were fusions.  In the opinion of Dr. Pauza fusion in many instances is the wrong answer.  But the question must be asked, what if Dr. Pauza's work substantiates his hypothesis regarding a cocktail of thrombin and fibrinogen? What happens if one can regenerate the disc without surgical intervention?  Surely, the usual suspects or skeptics will say other wise, especially, if they have done a tremendous job lining their coffers on the back of pedicle screws and inter-body devices.

What is encouraging is that Dr. Michael DePalma of Richmond, Virginia believes that the ongoing efforts of those surgeons working with stem cells or those that are involved with the fibrin study could alter the way patients with back pain are treated.  What we did learn is that there are 20 facilities across the United States that are currently involved with the study with a success rate of 86%.  Dr. DePalma's observations were that even if the fibrin works on 50% of the patient that this will be a major breakthrough.  TSB is sure that the naysayers that are sitting around selling pedicle screws will attempt to throw some cold water on this post, or on the work that surgeons like Dr. Pauza are doing, but you know one way or another you can't make everyone happy.

So the question that TSB must ask our readers, are we looking into the crystal ball of spine?  Who needs a vending machine or POD, all you have to do is identify a material that will regenerate the spine and all our troubles are over.  Is the future now?  TSB wants to know what our readers think, could this Delorean be taking us to the future?

Friday's Editorial

The examination of a product, a procedure, or how a company is organized and managed can be unsettling. One caveat that we have always lived by is to start with knowledge, because, knowledge knows no boundaries.  Some people don't like what is written on this blog, yet, the majority believe that we provide a forum where people's feelings and opinions can be truthfully expressed.  Some have even accused TSB of being sententious.  Could it be that many of us work in this industry because we really do want to make a difference, rather than just having a job, or bragging how much money we make? Let's be honest, flashing the diamond encrusted Rolex is rather superficial, especially for a man. TSB believes that too many of us focus on the accumulation of wealth, rather than what is beneficial to the patient. A dispassionate analysis always leads to the minorities emotional reply, and we expect it.

Everyone is entitled to have their day, to taste the public's ire.  Even TSB gets thrown under the bus. Yet rather than delete some deleterious comment, we leave it posted for the public to scrutinize it, and let you be the judge of our platform. Why should some of you have absolution? Because it is politically incorrect?  Because your past comes back to haunt you? As we ourselves promulgate, it takes less energy to be professional than it does to be a dirt bag. None of us is perfect. It's a matter of how you manage your imperfections that determines whether you are a good person. The question must be asked of our readers, "isn't it all of our responsibility to figure out what works and what doesn't for the benefit of the patient, and not only for the industry? What is acceptable and appropriate? Our collective behavior violates the underlying trust that the patient, also known as the consumer places in each and every one of us, especially the surgeon.

So rather than call out some of our readers, or the blog itself, try serving up some introspection on yourself the next time someone comments, maybe you will learn something about yourself rather than critique the forum. We all have our insecurities, it's a matter of how you manage them that really counts. Some people believe that it's okay to be nefarious, to treat people with ill will, to crush the opponent.  And every now and then we all do it.  But you will be judged by your character and if you deserve it, so be it.  So in closing we appreciate everything that our commentators say whether we like it or not, the secret is whether you use it to your advantage or do you continue to do things the same way expecting different results.  As Jerry Garcia use to sing "goin' where the water tastes like wine."

Have a great weekend, TSB is outta here!!!!!!!!!!!!!!!!!!

Textbook Tommy

Have you ever worked for a Textbook Tommy? By definition, "the Textbook" is the proverbial VP of Sales, ahem excuse TSB, "the Executive VP of Sales" that comes into an organization and rather than attempt to absorb and digest, creates chaos and bedlam. Somewhere  along this type of individual career path, they started to believe everything that they read in some textbook rather than attempt to figure things out themselves.  Let's be frank, this industry has too many Textbook Tommy's running around, you know the kind that promise the world and quite frankly do not have a clue as to how they arrived at the fork in the road, hoping that somehow they'll take it. Too often, books can create an illusion rather than deal with reality.  Interestingly too many sales and management bibles discuss the ineffectiveness of sales people and sales teams.  TSB thought that it would be interesting to take a different perspective and discuss the ineffectiveness of people like the VP of Sales.

When authors recommend evaluating structural issues, what some Textbook Tommy's fail to understand is that the structural issue may not be the people, it may be the company, or more often than not, it may be the CEO.  So how do the Textbooks of the world fair in this type of environment?  Our experience is that they make irrational decisions to cover their own personal inadequacies.  If the structural problems run deeper than a problem that would be a personnel issue effecting a change may be difficult, and heaven knows many of us have seen too many heroes perish in a flash fire in this industry.  So let's talk about some of the scenarios.

What happens if the company that you work for doesn't provide its direct or independent sales people sales samples and marketing literature?  What happens if the company's rationale is that you can demo your product on your iPad, is this a good scenario?  What happens if your company doesn't have enough of inventory or instrument sets? What happens when the Textbooks of the world want you to forecast the number of surgical procedures your region will potentially deliver for the month, but, your business model is built upon an independent distribution network?  Contrary to what one learns in the Textbook, managing an independent distributor like a direct sales rep is a formula for disaster.  The fact remains that sales processes for independent distributors in comparison to direct sales people take on an entirely different set of management and communication skills. Some will not agree, but the fact is that you work for the distributor and not the other way around. A lack of action and responsiveness to an independent distributors needs will come back and haunt your organization.

Time is money.  And if you cannot provide you sales model with the necessary tools to get the sale, you yourself fail.  You fail at being a leader, a manager, and most of all you probably never sold in your life.  There is a distinction from being a life long manager versus a sales person.  But then most of the Textbook's in this industry allocate their resources to inefficient processes.  Ever work for a company that spends investors capital to build a lab only to find out that there burn rate exceeds their return on investment.  TSB is sure that some of you can identify to this scenario.

How many of you are subjected to sit in these senseless sales meeting that waste your time, only solidifying what you already know, that the Textbooks of the world do not understand the business. Recently, TSB  sat in a series of sales meetings wondering what the CEO and VP of Sales were smoking.  As someone so eloquently wrote in a textbook, these types of sales meetings bring no value and demotivate.  Motivation by intimidation is one of TSB's favorites.  If the company cannot provide you with the necessary tools, how do you build a house?  How does one get results?

Rather than asking whether the Regional Sales Manager knows the business, maybe its time that people start to question whether the VP of Sales knows the business.  If you've bounced around from company to company without ever getting real results, how do some of these companies actually hire the Textbooks of the world?  Rather than focus on the Regional Managers, maybe some CEO's and BOD's need to ask the VP of Sales to conduct some product training, and make some sales presentations themselves.  If the VP of Sales lacks those skill sets, how does anyone expect them to be able to evaluate their direct reports?  Management by intimidation worked well in the 50's and 60's, but that just doesn't play that well in Peoria any longer.  And if the VP of Sales themselves cannot execute a sales presentation or product training, how is that individual themselves committed to excellence?

What TSB has identified is that many Textbook Tommy's come into some of these companies and realize that they have created false expectations. So what do they do to buy time? Immediately they need to surround themselves with their own friends, the usual suspects, attempting to do things the same way that they did things in the 80's at Medtronic, or how they once were mentored by someone that was a dinosaur in management to begin with.  Ever wonder why a VP of Sales or CEO never administer a 360 evaluation?  The answer is because they are insecure and do not want to know what their employees really think about them.  Ruling by an iron fist only works so well and then failure sets in.  

The Textbooks of the world have a propensity to divide and conquer rather than create a guiding coalition.  This behavior justifies their existence.  The organization becomes their laboratory. Rather than creating balance and solidarity, they create chaos.  So their modus operandi is to play their employees off of one another, rather than unify the team.  This becomes a morale breaker only verifying that the Textbooks truly have no people skills.  The Textbooks fail to grasp that people are still an organizations most valuable product.  Don't believe it?  Try to sell some of your innovation via the internet, from a vending machine, or better yet from a lab that no one attends.

So in closing, TSB wants to know who are the Textbook Tommys of the Spine Industry?  Do they have the ability to adapt or are the just the poster children for Einstein's definition of insanity? You be the judge.