Monday, August 27, 2012

The Spine Industry: Guilty of Unrealistic Expectations?

TSB would like to thank all of our followers, on twitter, and those that continue to support us anonymously. Based on your feedback, those anonymous posters that do not contribute in a professional manner will be censored. No one is interested in reading baseless accusations regarding surgeon involvement with specific companies, unless that information exists in the public domain. Why?  In order to protect your anonymity, no one has the right to indict individuals by name, unless they are in the news, are under investigations, or have had legal charges levied against them.

MSM has had the privilege to travel and discuss the state of spine with many that carry competitive products.  Since the market crashed in '08, after the analysts' had downgraded growth expectations, your companies and their management teams continue to forecast revenue expectations that are unattainable. Why?  Slaves to the Street?  Most definitely, its about the stock and the shareholders  instead of the products. Adaptability? Not on your life. The reality is that these individuals are living in the past, or, they do not possess the ability to change.  How many of these individuals sold in the heyday of spine, still believing that some things have never changed?

No one ever said that man has the necessary skills to adapt to a changing environment. At the end of the day, man is a creature of habit, and old habits die hard. Your life's experiences are ingrained in your personalities. The spine market was already evolving before the Great Crash of '08.  Hardware innovation was grinding to a halt. With that in mind, everyone loves to say that they embraced change, they did it in the 2008 election, unfortunately none of us were are willing to make the sacrifice, because change is good as long as it doesn't effect you or me. Call it selfishness, call it greed, call it human nature. It's in our gestalt to deflect blame on someone else rather than look oneself in the mirror. But for those of you that compete in this "zero-sum market," contrary to what the new oracle of spine David Pavid may predict, exponential growth is not a sure thing, even if you believe that you can create 20 new products, or come up with creative ways to buy the business. MSM hears it from the distributors and their sales people who are sustaining marketshare but losing revenue, due to pricing pressures, to reimbursement issues, insurance denials, lack of innovation, in addition to having to compete in this cesspool that we call spine. Some of you will disagree. So how do you adapt and change in a hostile environment that has you pitted in a game of blink with your customers on one side, and your company on the other. The ability to sustain existing business or one's marketshare without losing a customer may actually be a testament to your character. Someone whom has built a reputation and a business on integrity, education, commitment, and a passion for one's craft. TSB can hear Doctor Famous ready to jump off the altar and attack. "What value do you bring?" "You are driving up the cost of healthcare!" Surgeons deride your skills, yet ironically, when their children do not possess the proclivity to follow their parents into medicine, where do they turn? Where else? The industry that they criticize, because by hiring their offsprings, you are going to drive down the cost of healthcare. They turn to the Medtronics, the DePuys, the Zimmers, the AlphWrecks, the Globus' to name a few. TSB calls them "children of entitlement" regardless that some will accuse TSB of envy. Walk a mile in my or your shoes and then you have the right to mouth off. Even in the adversarial climate that exists within America's hospitals your loyal customers know your true value.  Running sets around, getting up at 4:30 a.m. to cover a case, having to buy another lunch for an ungrateful office staff, even if its an outright violation of the laws. TSB does not see things getting better until we hit rock bottom, and only then will  the industry realize that the old ways of doing things just don't work anymore. Yesterdays dreams, are today's challenges.

So as we turn the corner and head into the last quarter of the fiscal calendar, who will be the market leader when we enter 2013?  Who will back up their promises with innovative products that will improve patient outcomes?  Where do we go from here?  Has spine's heyday come and gone or do we have some more life left in the old girl?  TSB wants to know?  

48 comments:

  1. Its hard to comment on this. There really isn't a question posed, more of an essay from MSM's perspective. The market leader won't change anytime soon. 99% of new product launches will be line extensions, not innovations. Where do we go from here, now thats a good question and I don't think anybody can be certain. I'm working on my plan B, fortunately, as a distributor, I am not handcuffed to an individual company as an employee. I can gradually build other streams of revenue while continuing in this business as long as I can.

    The heyday is gone, in general, but there are still a LOT of people making a good living in spine and there always will be. The people in immediate jeopardy are those with no relationships working for anything other than Tier 1 companies, and there are a ton of them. I don't think we need to give them any advice, they know whats going on. But even with most of them removed from the industry, it won't amount to much of an increase for the rest of us. I think the main driver of conversions in the next several years will be the conversion of good reps from the legacy companies. Medtronic is paying competitively for now, but that is subject to change every year. DePuy/Synthes is clearly heading for pharma reps with their comp plan and if they implement that plan to the Synthes reps, well, lets just say there will be a lot of opportunities. Its bound to happen, they can't pay the 2 sales forces so differently and expect harmony at the first combined NSM.

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  3. Thanks for the FANTASTIC post! This information is really good and thanks a ton for sharing it :-) I m looking forward desperately for the next post of yours..

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  4. I don't think the Spine industry is so special. This describes the milieu of most industries in today's economy. With Spine in particular I think it is more of a "sobering up" after the party.

    Waking up early, buying people lunch, scrambling....that is the lifestyle of any employee who works in the trenches in any industry. You either need to be really good at it, go back to school, or find a way to get a seat in management.

    In a service based economy the only objective measurement of productivity is numbers, so yes, the boss's will always lean on you to sell more. Just as the managers of industrial economies demand that you sew 1000 buttons on shirts a day or you get the can.

    Is this a tragedy? No, it is just daily business. We have happy hours to help cope with such. Just don't invite your surgeon buddy for once and you might actually be able to really relax (and only have to pay for yourself).

    The spine industry will continue to make sure the surgeon gets what he needs for a successful surgery. I think more needs to be done help get the surgeons "sobered up" these days and help them realize that the hospital administration looks at them the same way your managers look at you: skilled labor.

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  5. outstanding 6:47.....the wake up call or sobering up needs to happen with everyone involved, including the hospital admin and staff. Hiding behind "not for profit" while paying their execs millions has to be addressed. if anyone believes the hospitals havent become profit driven machines.....you arent paying attention.
    thank you MSM for finally reigning in (a little) some of the ridiculous comments. you, however are partially to blame.
    you started this ball rolling. As much as your play

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    1. ful banter is just that, you are very much involved, and i believe enjoy starting the fight and inciting the crowd......you scream fire in a theater and make your own wild accusations, then sit back and giggle at the anger and panic.

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  6. I refuse to give a hospital a discount when they continue to build new wings and gobble up other facilities. If you are so broke stop the capital bleed. It's like raising taxes while refusing to cut spending.

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    1. Good luck with that stance. I'm assuming that you also will not accept a discount on a car purchase if you are remodeling your kitchen? I agree that they have largely won the game of negotiation by claiming they are losing money. Meanwhile the only construction going on in my town is hospital related. I must assume that some of that is based on an investment in infrastructure that attracts more profitable business and not just building because they have a ton of cash and want to have a building with their names on the dedication plaque.

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  7. the amount of greed and waste in the hospital admin is ridiculous. there are execs making a mil a year and their sole function is to raise money thru donations.....less than 5% of total healthcare costs are from pharma and implants....yet we are greedy bunch of thieves.

    the fda gets into the game too....know what a pma costs now? 4x what it was 10 years ago.....70% is "Admin fees".....

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  8. check out AHD..com
    look up free stats on your local hospitals....very enlightening

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    1. Not much there other than gross receipts which is interesting but doesn't tell me much. Detailed financials were not in their system.

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    2. They are there if you are a member and the data is from 2010. Although the margins are small the revues look good for most major institutions. The question is, are the hospitals truly loosing money on Spine cases. Does anyone know the answer?

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    3. The sad truth is that many of the hospitals don't even know if they are loosing money or where they are loosing money. The only hospitals that seem to know are generally surgeon owned, maybe because they are so specialized.

      Question: What is the next wave of product innovation? What is coming that has the power to actually capture market share?

      MM: I like the new direction!

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    4. Hey TSB, Have you banned anyone yet? I have not heard boo from Bally Balldez?

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    5. Hospitals are only losing money on spine surgery if they aren't coding for reimbursement correctly. Most of you would be shocked at how little your average hospital knows about current coding policies in spine surgery.

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  9. I want an inexpensive way to get a single level lumbar decompression and 360 fusion through a 2 cm incision (responding to 11:08)

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  10. 11:20 - WOW,, really? Wouldn't a hospital be losing money on any procedure or specialty if they aren't coding correctly?

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    1. Yes, they would. My point was/is that spine surgery is profitable if it is being coded correctly. Let me translate this into words that you might be able to understand; SPINE SURGERY IS PROFITABLE FOR HOSPITALS. PERIOD. This was a response to the question asked by 10:56am, "The question is, are the hospitals truly loosing money on Spine cases. Does anyone know the answer?" Were you just bored and feeling like attacking a comment at random? Down boy. Down.

      ~11:20am

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    2. For every dollar the surgeon makes, the hospital makes 10

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    3. I heard that a Hospital consultant was quoted saying "a spine surgeon is worth an average of $4mil in profit for a hospital per year." This is why hospitals have been hiring surgeons like crazy. They pay a guy right out of fellowship around $500k for a couple years and then put him/her on production.....hospitals clean up and take care of overhead and insurance. Hospitals got smart about 6 years ago and started hiring as many local Gen Practice docs as they could and are now forcing the referral pattern to their surgeons....i heard an administrator actually tell a spine doc "good luck with your referrals

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  11. MM, I appreciate TSB and have followed since beginning. However, time for you too to stop the stones with name calling AlphaWreck. Sure I work there. It's Alphatec thankyou.
    Are the glory days over for spine? Perhaps in the short term. But the old girl of spine presses on & we'll all have to adapt to pressures of change.
    Thanks

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    1. 2:38: I like your attitude on Alphatec. Is it still a toxic place to work? I understand it is terrible - cut throat, back stabbing, and even abusive at times. But, maybe the people who behaved that way are gone?

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    2. It's better, bad seeds gone

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    3. As a distributor, I have never perceived it as toxic. Clearly not perfect, but neither was the legacy company I worked for. Just a different set of issues.

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    4. 3:30 JP is gone?

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    5. Making positive changes

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    6. JP still there & my department boss. Just say resources are better allocated between groups

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    7. Regardless of product quality and the toxic/iuntoxic work environment, it's hard for most in this industry to respect a company that believes it's fine to sell to PODs.

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    8. POD = many things right. Physicians on disability? Patient owned doctors? Piss on docs? Preferred obamacare docs? Physicians of deformity. I hear you 7:44 and have a difficult time with it too. But for now it is what is & pays the bills for wife & kid.

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    9. Try drug dealing or prostitution. They can pay well too and help put food on the table for your wife and kids. Might even get more respect if your kid asks what you do.

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    10. So I guess allocating resources and making positive changes justifies a $300k + salary since 2008? The veil of ignorance has been lifted. No wonder the term AlphaWreck has been coined in the industry with a $1.67 stock price. TSB may be on to something.

      http:/www.sec.gov/Archives/edgar/data/1350653/000119312511112278/d8k.htm

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    11. On the West Coast a majority of Alphatec's is Dirty. This was only allowed so the VP of sales could keep his job. There is no way they will achieve growth if they stop selling to and through scum.

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  12. I need cortical ACDF bone up to size 12, anybody carry this? Where can I get up to size 12?

    RR

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    1. This is a blog, not a spine flea market

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    2. Look in your underwear.

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    3. These responses to a patient in need are typical of the spine industry.

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    4. so what you are implying is that a surgeon gave a consult, told a patient they would need a cortical bone spacer that is 12mm high, and sent them out to find one? Right....

      Let's see - 2:39. Are you a rep/distributor or a patient.

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  13. Why would you use a size 12 cervical interbody?

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  14. Depuy Synthes has your 12. Why use a 12mm graft you ask? Maybe due to partial corpectomy for one. There are many reasons. It may not be common but there is most definitely a place for a large interbody cervical graft.

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  15. Why not use a fibula for anything larger than a 10? Most hospitals have them and they work great.

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  16. The issue with hospitals saying they loose money on spine is that the people saying that are given a budget. So sometimes peri op manager say they are loosing money. When in reality thy are just over budget. Could be due to increase of cases, new surgeons etc. These managers are not allowed or told the actual amount of revenue the spine program brings in.

    Question: if you bill a hospital a certain price and they in turn bill 300 percent increase of that cost to a private payer. The private payer then only reimburses the hostipal 50 percent increase. Is that a loss or gain? Answer : Hospital says they are loosing money because they billed 300% mark up but only got a 50% mark up. Which in reality is still a gain.

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  17. 9:33 am, I agree with your post about the hospital pricing. I am dumbfounded that the industry keeps getting painted with the "greedy brush" when in fact it is the hospitals that are capitating their costs to us and then increase the prices to the insurance company. Then ofcourse they are a "nonprofit" institution. Now isn't that the oxymoron of our times. I still don't understand "nonprofit hospitals" making a multi, multimillion dollar profit?!

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  18. JP is a joke. An embarrassment to himself and the industry. But perfect for that place. How many times has he tried to launch Solus and failed? Trestle Fuxe?

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  19. Joke is right, how can one launch anything with all the young, snot nosed, unprofessional, inexperienced engineers they have to work

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  20. This is a wonderful post. I would suggest you to also go through spine treatment in Houston, TX. Thank you for sharing this post. Good job.

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  21. Well hello there! In your post did you base on any studies or here are only your private thought? Waiting forward to hear your answer.

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