The Spine Blogger

AB 378 - Lawyers in Love

2012-01-26T14:23:00.000-08:00

Effective January 1, 2012 the California State Law prohibits physician self-referral in the context of workers' compensation cases. Physicians will no longer be able to own an interest in a company that supplies prescription drugs and medical devices/implants. This law effectively reverses the existing California law and outlaws Physician Owned Companies (POC's) in the workers' comp space. The primary focus of the law was to address the perceived abuses related to compounded drugs (steroids or human growth hormones) and medical foods the primary objective was to place checks and balances on physician self-referral when it comes to medical implants. Many of you know that there is a growing trend across the country where workers' comp attorneys, physicians and distributors are collaborating to take advantage of workers' comp patients.

Section 139.3 (a) of the California Labor Code as amended by AB378 states the following;

Not withstanding any other law, to the extent that those services are paid pursuant to [the workers' compensation program], it is unlawful for a physician to refer a patient for pharmacy goods, whether for treatment or medical legal purposes, if the physician or his or her immediate family has a financial interest with the person or in the entity that receives the referral.

The statute also provides that no claim for payment shall be presented by an entity to any individual, third party payor, or other entity for any goods or services furnished pursuant to a referral prohibited under Section 139.9. Violation of section 139.3(a) shall be a misdemeanor, and that the appropriate licensing board shall review the facts and circumstances of any conviction pursuant to the statute and take appropriate disciplinary action if the licensee has committed unprofessional conduct. In addition, violations of this section may be subject to civil penalties of up to $5,000 for each offense, which may be enforced by the California Attorney General, the Insurance Commissioner or District Attorney.

It will be of interest to gauge the response from the many POC's and POD's that have infiltrated the California market from the East Bay all the way to Orange County. All medical devices will contain an FDA required Rx only or similar label. This prohibition applies to POC's that are supplying spinal impants and orthopedic devices. Could other states be watching the outcome? TSB wants to know has this been a long time coming? With prohibition being enforced by the Attorney General for the State of California, the market is 2/3's of the way from completely banning POC's and POD's. No matter what the outcome, TSB is sure that there will be some legal challenge to this law as it continues to evolve to eliminating POC's and POD's. You know what JB would sing:

God sends his spaceship to America the beautiful
They land at six o'clock, and there we are the dutiful
Eating from TV Trays watching Happy Days
Waiting for WWIII while Jesus slaves
To the mating calls of Lawyers in Love

MONEY BALL

2012-01-21T08:22:00.000-08:00

On behalf of those that contribute to TSB and our many readers we would like to apologize for the delay in posting. Our objective was to reenergize our batteries for the 2012 campaign. As for blogspot, we would like to ensure you that some of the changes that were initiated were not of our own doing. Ever wonder why computer geeks do the things they do without ever notifying you? With that said, we send our condolences to those that have had trouble posting. Collectively, we have decided to initiate a website that will cover more than just spine. What do you think? We believe that with our tenure in general orthopedics, recon, trauma, biologics and spine this would be a more entertaining venue. Who knows maybe we can write another article on how stem cells can grow a real mustache.

Every now and then, one has to step back and put the fun back in spine. Like the Energizer Rabbit, it keeps going, and going, and going, and quite frankly sometimes it just doesn't know when to stop. Even when it's at a standstill, it's still turning. What precipitated this blog was the screening of Money Ball, that team TSB attended. Team building, you've got to love it. If you ever get an opportunity to meet Billy Beane or hear him speak, he is truly thought provoking let alone entertaining, you know like having W come to your NSM, LOL. Or better yet, you could have some CEO get up on the podium and regurgitate some anecdotal leadership principles from some iBook, or, what some public relations firm wrote for them. So, it got us thinking, and there's a scary thought, why has this industry, let alone other industries evolved into such an us against them environment? Is it the competition? Yes fellow bloggers, there is mucho testosterone running around. Is it envy? Is it a lack of corporate loyalty? Hmmm? Is it a lack of understanding what it takes to build a business? Maybe you have all become the Street's prostitua. Is it unrealistic expectations? Short-term thinking.. Are we self-immolating right before our own very eyes? Not only are you beating yourselves up, you are getting beaten up by your CEO's, hospitals, surgeons, rapetrax, vendor-rape, and the list goes on. We have become so selfish and self-centered that Machiavelli and Sun Tzu would be proud of our behavior? They would love this atmosphere. How has this behavior affected our leadership? Too many people think these people are oracles and give way too much credit to the Lukianov's, Paul's, Orsingers, etc. Maybe things have come much too easy for all of us? Years ago, and yes young un's there is something to learn by living life, there was a fundamental understanding of how to build a business. As previously stated, organic is a thing of the past whether we like it or not. Is it because a lack of talent? You be the judge. How out of touch are some people? How many engineers actually spend time in the operating room Mr. CEO? All right, enough with the bitching. Let's just say there were rules by which we all understood we had to play by. Even the CEO of the team and the Manager overseeing the team that he fielded understood each and every players ROLE. But the one aspect that TSB truly sees lacking in our industry, is a fundamental disconnect between the rules and the respect that we had for one another. Just read your comments. What is it about the industry and the people that run it that make it so insane?

Let's look at corporate loyalty. Recently over dinner, TSB had a conversation with a CEO about whether the so-called "negative employee attitude" was the product of inherent corporate deficiencies, or an individual personality trait?. I am sure 99% of you can guess what his answer was? Voila! It's always the employee. Have you ever met a CEO or senior manager whom was honest enough to admit that he had an ugly baby? HOUSTON WE HAVE A PROBLEM. So I asked, what are the company's responsibility to it's employees? Is it just providing the individual a job and benefits? What happens in a relationship when one person perceives that they do not do anything wrong, or they do not listen, or do not communicate effectively? If corporations are truly people (Mitt's Witt, or is it Nit Wit) why is it that corporations suck at understanding the human element in business? If corporations are truly people, then why do they suck at managing people? So, TSB proceeded to pose questions that many of our readers experience on a daily basis in spine. Here's a sample of our discussion;

How responsive are you to the market, your customers, and your sales peoples needs? A timely execution and focus results in success. Untimely execution results in well.....your untimely execution, or a staggering company. Can you name a few? Ever work for a CEO who insisted that there was nothing wrong with the product? You know the old expression, "while Rome burned Nero fiddled." You can't make Beef Wellington out of BS.

Have you set realistic goals and objectives? There is a difference. Goals are about effort, while objectives are about attainment. How many of you work for management teams that have delusional expectations, and then hold you accountable for their ineptitude? What would be the point of providing you with a objective that is UNATTAINABLE, and then hold you responsible for it?

Do you listen with an open mind? Years ago people didn't have books written on management, leadership, strategy, tactics and execution, yet somehow they managed to succeed. Could it be that common sense no longer exists? Did it die? Today, confusion reigns. How did yesteryear's companies flourish without Drucker, Covey, Kotter, Menkes, or Maxwell? Unfortunately, too many people read these books and then begin to believe that the company, or their employees are their laboratory, spewing out anecdotal quotes thinking that this will motivate when the problem lies within the corporation. Leadership goes beyond academic intelligence, and contrary to what is written in books sometimes one has to look beyond the individuals magnetism or charism. Do you want style or do you want substance?

Do you provide your employees with what they need to be successful? If a carpenter does not have the right tools, how can one build a house on a foundation? This goes back to the adage that one cannot make Beef Wellington out of BS.

Do you make promises that you cannot keep? Haven't we all heard this before? The companies that respond win, the companies that BS their customers LOSE. Just look at who are the contenders and who are the pretenders.

Have you ever participated in an anonymous 360? This is TSB's favorite considering how fragile and insecure most of the CEO's and senior managers are in this industry.

So how does this tie into MONEYBALL. The companies that have succeeded in many respects are like Billy Beane. Individuals who are or were willing to step off the ledge, take a chance, learn from their mistakes while at the same time keep life in perspective, yet understand that there is a human element to any venture. They realized what it takes to build a great product, go against the grain, and that doesn't mean stealing other people's IP. But let's give credit where credit is due, behind every Billy Beane there is a Paul Podesta and without Paul's genius, Billy and the 2002 Oakland Athletics would have never accomplish what they did. The most memorable moment in the movie comes when one of Beane's scouts confronts him, telling him that he was in over his head, that he doesn't understand that "this is the way its been done in baseball for years (sound familiar)." This is exactly what this blog has been about, this continues to do it the same way because for some ungodly reason, are you listening you brilliant investors and BOD's, you think you have a formula and it works regardless of the situation or environment, but its just not that simple.

What the movie also teaches us is that the art of arbitraging is unique in that one profits from the simultaneous sale and purchase of an asset in order to profit from a difference in cost. Timing is everything. Maybe the spine market can learn something from its inefficiencies. Ever work for a company that pissed money into the wind? TSB is sure that many of you have. Considering that pricing has deviated substantially from what was once considered the norm, how do we ensure that pricing along with our livelihoods does not continue to erode and you do not perish? Fluctuation in pricing in the spine market has resulted in decreasing profits across the board. Why would someone want to underwrite another IPO when we don't even know what will happen with healthcare in this country? In addition, this has placed a tremendous strain on start-up and early growth stage companies. Who will survive and who will perish? If INFUSE has been battered and bruised, do those stem cell aficionados believe that there isn't a plan percolating for them?

But the gift of giving will continue as you walk the aisles of CNS, AANS and NASS take a look around and ask yourself, what's new? Where are we going? Are we making things better? Are the patients really benefitting from all these procedures? Are the outcomes getting any better? Hey what happened to the total disc market? Or, has it all come down to the almighty dollar? Who knows, maybe the Chinese will teach us that they can copy our implants and technology and sell them at a cheaper price around the world and even in the U.S.. Don't believe it, ask the Koreans. Unfortunately for many of you, it comes down to who is running the company, do they have the cash to make things happen, have they surrounded themselves with their friends because of their insecurities, and then you'll know where your organization is going. So as we springboard ourselves into another year of fun and games, TSB wants to know will you make a difference, or will it be business as usual. To paraphrase a line in the movie, "many are called, but few are chosen."

7 Habits.......of Highly Unsuccessful People

2012-01-08T14:58:00.000-08:00

On January 2, 2012 Forbes magazine published an article entitled "7 Habits of Highly Unsuccessful People." The interesting aspect of this article is that many of us have experienced the consummate CEO that was successful at first, and then.................well you can fill in the blanks. What TSB thought was enlightening is that there have been many individuals in spine that have fallen victim to their own success. TSB encourages everyone to read this article. Here are the 7 Habits;

THE CEO AND THEIR MANAGEMENT TEAM SEE THEMSELVES AND THEIR COMPANY DOMINATING THE MARKET

THERE ARE NO CLEAR BOUNDARIES BETWEEN PERSONAL AND CORPORATE INTERESTS

THEY THINK THEY HAVE ALL THE ANSWERS

THEY RUTHLESSLY ELIMINATE ANYONE WHO ISN'T COMPLETELY BEHIND THEM

THEY ARE CONSUMMATE SPOKESPERSON OBSESSED WITH IMAGE

THEY UNDERESTIMATE OBSTACLES

THEY STUBBORNLY RELY ON WHAT HAS WORKED FOR THEM IN THE PAST

How many of us have experienced an individual or individuals that have fallen prey to one if not all of these categories? Exhibiting confidence is an important element when factoring what drives success. Yet at times, is there a fine line between what is truly attainable and what is fantasy? As an industry, we hear many of the successes, but do we ever learn from the failures? Do we take the time to understand the relationship of causation to effect? How many truly understand leadership? What TSB has learned is that instinct and experience plays a much greater role in leading the right way, than reading some motivational book. Anecdotal quotations will only take you so far, and sooner rather than later reality catches up to you and bites you in the old arse. If you haven't experienced it, how can you understand the challenges and needs of your team? If you've ever been an athlete, you know that relying on your god given abilities will only take you so far and then you have to draw the line between inspiration and perspiration. Whenever someone sets goals, the objective is to make them attainable. How many leaders still live on fault line thinking 20% growth or even 50% growth in a shrinking market? Don't believe it, you be the judge. TSB wants to know, who do you think is a great leader in the industry and who needs some schooling?

Breaking Up Is Hard to Do!

2012-01-01T14:07:00.000-08:00

On December 30, 2011, David Sell of the Philadelphia Inquirer reported that Synthes had fired the first salvo in an attempt to make a statement regarding non-competes and corporate raiding against three former Synthes employees, and the Almighty Stryker. The three former California employees are accused of allegedly breaching their confidentiality agreements and violating patents. As to what this confidentiality and these patent violations pertain to leaves much to the imagination. If the accused are AO/ASIF consultants what could they possibly know? The confusion surrounding this story is that Stryker hired them to sell nails, screws and plates to fix broken bones and then goes on to state that it is mostly related to spinal ailments.

Synthes charges that Michael Russell allegedly used Synthes medical devices to complete a surgery on behalf of Stryker. If the device in question was an implant, and for those of us in the industry, when the terminology device is used, it usually means an implant, why would Synthes care? The last time TSB noticed, no one was billing for instruments per se in a surgery, therefore, what's the big deal? Unfortunately, there was no comment from Synthes attorney Anthony Haller, incredible that the old Wyss meister still has his trusty relic Tony at his side.

So TSB has to ask our readers, is this a case whereby Synthes is attempting to enforce a non-compete and are utilizing the typical legal tactic of piling on accusations in the hope of intimidating these former employees from pursuing their right to work? Isn't this the United States, or will we be mandated to acquire a work visa to be employed in this industry? TSB has not met too many salespeople that had, or were privy to confidential information, let alone violating patents. The truth is that companies in this industry are so desperate to preserve market share and revenue that they enforce these ridiculous non-competes. If your products are good, why worry. If your surgeons are loyal customers, why worry? But then again, when your product portfolio no longer has the technological advancements that you were once known for, isn't it time for litigation and threats. And then there's Stryker. Back in the late 80's and early 90's Stryker become known for these shenanigans and old habits die hard. So you know what Neil Sedaka once sang in early 60's;

Don't take your implant business away from me
Don't you leave Orsinger in misery
If you go, then Synthes will be blue
'Cause breaking up is hard to do

Remember when you held me tight
You covered those IM nailing cases thru the night
Think of all that we've been thru
"Cause breaking up is hard to do

2012 New Years Day Readers Poll

2011-12-31T21:41:00.000-08:00

Is Osseon the next company to fall? Word coming out of the New England area is that there is trouble in paradise, could this be the next company in financial trouble? Ultimatums are a terrible way to have a relationship, usually ends up in divorce court, and this ain't Judge Judy the Nudie that we are talking' 'bout. So, what's the buzz tell us what's a happening. Where's OTW when you need all that insight? TSB wants to know, and so does the market, do they have legs or are they running on borrowed time? Who's next?

Merry Christmas to All

2011-12-24T08:38:00.000-08:00

As the Silly Season is upon us, TSB would like to wish all our readers, including the Cheetah Nation, a peaceful and joyous holiday season. Liberate yourselves from the insanity that you subject oneself to for at least a few days, it will be therapeutic. Hug your kids, love your significant others, and keep things in perspective. Closing those PO's this week will only get you inches closer to $1 Billion, or your bonus. Contrary to a minority opinion, those that contribute to our blog love this industry, we even like Nuvasive, but when you're news, you're news. If you learn anything this coming year, keep "Da Noise" that exists in this crazy industry to a minimum. Some would call it balance. Some should actually try it, it works. Whatever you believe, TSB knows that our blog provides a heuristic venue to explore and investigate the many recesses that exist in this crazy industry.

So in the spirit of the holiday season, and yes my judaic friends that does include hanukkah, last year you whined about us not giving you a shout out. Have a healthy and happy 2012 (shhh! don't tell anyone that we're devout capitalists), and while we're at it, can someone remind the POTUS that the shamash is always the first candle lit, an amateur Jew at heart looking for votes. Until then, Merry Christmas to one all, Ho! Ho! Ho! Santa's got to go, he's got to deliver toys for all his spine girls and boys.

Team TSB

Come Dasher, Come Dancer, Come Prancer, Come Vixen, Come Comet, Come Cupid, Donner and Blitzen, lastly Rudy we're on our way.

The Culture Club

2011-12-20T05:05:00.000-08:00

As the year winds down, the "2011 Year in Review" has brought to light many of the problems that continue to exist in the spine. What we have learned over the last few years is that our recidivistic nature supersedes our ability to execute. TSB loves to quote Einstein's definition of insanity for the obvious reasons. Management in spine companies are fused in a time warp. They have forgotten where they came from and how they got there, regardless of what you believe, money and power can have a way of obfuscating reality. Dilution or is it delusion occurs. The eventual outcome is that many of these leaders forget what it took to get out of the box, or never understood what out of the box really meant. Considering that out of the box means moving in diverging directions which could potentially result in novel or innovative ideas, the fact remains that when you become the Street's bitch, you eventually lose the eye of the tiger or sometimes the eye of the cheetah. Shareholder value, that becomes your focus, don't believe TSB, just sit in on a Stryker or NuVasive call. Just look at Steve Jobs, love him or envy him, he was a visionary, an outlier, albeit in a completely different industry. It was always about the product. Yet, whatever the inevitable, some of us will leave the industry in a wooden box, while some will leave in a gilded box. The difference is that a gilded box influences others to believe that you were successful, because money is still perceived as a sign of success and power, sometimes even anointing one to sainthood. Regardless, what the Street has predicted for our industry, many continue to live in the past. What worked at Medtronic, J&J, Zimmer, Synthes, or Stryker in the roaring eighties and nineties has outlived its usefulness. The battlefield terrain has changed. The rules of engagement have change and the question remains do the generals have the ability to adapt and survive? Getting your testi's handed to you can be a humbling experience, just look at Nuvasive's recent demise in the stock market. How long does Alex and his minions plan on riding XLiF and neuro-monitoring? As one of our commentators suggested, the stock for this company is a highly manipulated stock. Isn't that a barometer of the lack of confidence that investors have in a company that once touted their innovation and responsiveness as cheetah like? How quickly Lukianov forgets, but then again, isn't some of this about smoke and mirrors? One can only ride the propaganda machine that your public relations company spits out on your behalf so long and then, it's game time. Yes, there are isolated exceptions, whereby some companies are showing growth. But in the larger picture, they are small companies generating growth by shear will, while some do it by buying business a la POD's and POC's. But, as far as the big boys go, or those that want to grow up, let TSB quote one of our favorite philosopher's Paulie "Walnuts" Gualtieri, "fuggedaboutit." Organic development is something the food industry has learned to capitalize on, the spine industry has lost focus and direction with how it arrived at this fork in the road, vis-a-vis INNOVATION and CAPITALIZATION, and we have no one to blame except ourselves. Where are the emerging technologies? The readers are correct when they poke fun at and criticize the industry leaders. Many can thumb their smug noses, but time eventually catches up with you, just take a visit to the graveyard of spine. Stability, not volatility and movement have reigned over the years, and then for some reason a school of thought emerged that if you are not growing by leaps and bounds, a sudden change in direction will solve your growth problems. It would be interesting to identify when this mercenary attitude become prevalent. Just look at some of the companies within the industry, they are a revolving door. Are the expectations unrealistic? You be the judge.

Consolidation is not a thing of the past, it is the future. No fellow readers the days of start-ups will not disappear. But, it has become difficult to launch anything unless it is truly an emerging technology. Many smaller companies are finding this out the hard way. Access to capital as in the pre-2008 bubble burst is long gone, and with that, so are the excessive valuations. Not only are many of you attempting to figure out how to survive in the battlefield, you are also dealing with leaders that still want to fight in a conventional war. In today's market place, the sales representative or manager that has the ability to preserve and sustain your customer loyalty and revenue is much more valuable, than the gunslinger that rides into town and promises you the world, for the obvious reasons. There are no magic bullets. In addition, they are a hired hand, until the next deal comes along regardless whether its a distributor or surgeon. The tenured sales rep or manager at your company knows what the challenges are that must be addressed in order to maintain your business, the question is does anyone on your executive management team listen and have the cojones to execute, or, does it fall on deaf ears? Is your company listening and being responsive to your battlefield needs? Do you have the ability to be pro-active rather than reactive? But then this has been our point all along. Are you better off than you were two years ago? Maybe that's why we all laugh at the industry. How do you sell when you have no samples, no marketing collaterals, no bone models, an inadequate training program not just on the clinical issues, but on the environmental issues that you are challenged with on a day-to-day basis? Think how absurd it is when company executives claim that they don't want to be like the company that they previously worked for, yet surround themselves with the same people that they worked with at that other company? Create a new culture? Highly unlikely. More like an attempt to catch lightening in a bottle by copying that culture because you think you can do it better, and then one day you wake up and you realize that you are no different than the company that you claim you did not want to be like. You've become the 4,000 pound Gorilla that has an inability to innovate because everything becomes an exercise in accounting, you need to have meetings because everyone needs to cover their ass or wants to be heard, so all that execution that you once told the market you were capable of doing better and faster has come down to a grinding halt. The result is that you start losing customers. You know the people that will only tolerate your BS to a point and then shut you down by moving to another company or product. Surgeons are customers, and an unhappy customer means you're in trouble. So as Jethro Tull once sang,

Happy and I'm smiling walk a mile to drink you water
You know I'd love to love you and above you there's no other
We'll go walking out while others shout of war's disaster
Oh, we won't give in let's go living in the past

Once I use to join in every boy and girl was my friend
Now there's revolution, but they don't know what their fighting
Let us close our eyes outside our lives go on much faster
Oh, we won't give in let's go living in the past

TSB wants to know what you think.

2011 - A Year to Lick Your Chops or Lick Your Wounds

2011-12-13T18:27:00.002-08:00

Yes fellow Spineophiles, its that time again, when Santa comes down the chimney with echoes of "Ho, Ho, Ho, Santa's got to go, he's got to bring toys for l'il girls and l'il boys." As we rapidly approach the end of another year in the wacky world of spine its time for TSB to look at the winners and losers for 2011.

January brought us a deep freeze, depending on where you were. Though these companies were use to warmer climates, revelry played out for Cardo Medical and Facet Solutions. Cardo couldn't get out of their own way, the blind leading the blind, attempting to capitalize on its acquisition of Vertebron, laid this dog to rest once and for all, while Facet Solutions was gobbled up by Globus Medical, aka, when will they go public, for pennies on the dollar.

February had Nuvasive cautioning analysts' that the winds of change were coming, inevitably experiencing a smack down by the marketplace and the Street. Even Bill Walton wasn't capable of posting up Lukianov considering that even with XliF, Walton is running on bad wheels. Thank goodness that Memphis is winning at the box office, considering that the stock has been a chihuahua lately, hey Yoquero where's the chalupa? Can I hear $11 dollars? By the way, for all of those drinking the kool-aid, it is purple isn't it, spare us the complaints of NuVa bashing, it is what it is, a one trick pony, is all that horse can do, it's a one trick only, it's the principal source of their revenue.

March came in like a lion when DMT better known as "no motion" experienced a capital crunch, along with Applied Spine being sold to Rachiotek for pennies on the dollar. Love Panjabi, but his advisors and investors should've been fired a long time ago. It was during the Ides that the first shot was really fired at INFUSE putting the holy grail of biologics under the electron microscope. March entered riding the lion, but left like a lamb.

April brought us headline news with Dr. Makker and Sundaresan making the cover of various media outlets with questionable practices, while Zimmer and Wright Medical made their own news announcing the hiring of Paul Graveline and the resignation of Gary Henley as CEO, but the big story in spine was the pending acquisition of Synthes by J&J. Will the arbeitsgemeinschaft osteosynthes fragen ever be the same? Synthes was always more Armani than Brooks Brothers, at least during yesteryear, today, they should fit in well considering that the company was and is run by a pharma dweeb who looks at salespeople as a necessary evil.

May had Larry Biegelsen, a Wells Fargo analyst touting that the acquisition of Synthes by J&J could benefit Zimmer, well Larry, don't want to disappoint you, but we're still waiting, and waiting, and waiting. Medtronic announced and initiated layoffs, while John Viscogliosi hit the road entering Centinel Spine in every Bar-B-Que contest East of the Mississippi. Wasn't he running a spine company? The NJ State Board of Medical Examiners levied civil penalties against Drs. Errico, Balderston and Goldstein for failing to disclose to their institution their financial interest in ProDisc using the widely held Jon Corzine defense, it was merely an oversight. But the big story in May was the resurgence and advocacy of POD's. It's truly a shame that surgeons can't earn a living being surgeons, they now insist on being salesmen, c'est la vie. The silicon chip inside Tony Koblish's head finally switched to overload and Orthovita was sold to Stryker for $316 mil in cash. You know what Henry Butler of The Three Kings sang, "let the good times roll." It
was in May that we poked fun at our favorite whipping boys, the stock analysts' of the device world. Where are those smart guys? As ATEC stock continues to plummet it's awfully quiet on the home front. In May we announced 20% is a thing of the past, unless you're a POD, and everyone was tightening their belts leading to a year of fiscal austerity in spine.

June had TSB announcing the departure of Mike Mogul from Stryker, and a Federal Appeals Court overruled that the trial judge from the First District Court in Boston had applied the False Claims Act and Anti-Kickback Statute too strictly in the Whistleblower case against Blackstone. Poor Orthofix, talk about being kicked in the nuts, they like paying their executives wonderful bonuses, maybe its time they settle this suit and move on to better things, just like Medtronic did this week. Ortho-fix should just clean up that dog of a spine division formerly known as Blackstone, SUCKERS!!!! Norian was sold to Kensey Nash and TSB announced that there would definitely be jail time after the verdict in the Trial of the West Chester Four. The Guyer Family experienced their own loss when Jeff Guyer passed away in June. Hopefully, the Guyer's will have a peaceful holiday season. POD's and attacks on sales people become the topic du jour and Ortho-fix announced the resignation of Alan Milanazzo whereby TSB provided the play by play of that stellar career.

July brought us the Spirit of Edgar Dawson and the ghost of Marshall Urist and many of our readers responded with passion regarding BMP's. Synthes and Globus entered into the ring for another suit. Could this have been Wyss' parting shot at David Paul? The FDA issued a warning label to AlphaWreck for PureGen resulting in pink slips in the Biologics Division at d'Wreck. July was quiet as it usually is.

August had us asking the question whether technology was distracting the Art of Surgery. Even Jack White formerly of the Raconteurs and White Stripes commented that technology may make things easier, but, does it takes away from man's creativity? Once again, it takes an artist to shed some reality on the facts of life. Are we training a generation of surgeons that will lack the necessary skills to know how to operate? That was the six million dollar question that a veteran of surgery posed. Once again, the market for spine was down graded. Rachiotek and Yale University filed suit against everyone's whipping boy, Globus when it comes to law suits. Synthes, Medtronic, Rachiotek? TSB could hear Sonny and Cher in the background, "and the beat goes on, and the beat goes on, the drum keep pounding a rhythm to his brain."

September brought us memories of the Ali-Wepner fight when Medtronic and Nuva geared up for the Rope-a-Dope, while Sharp's and Scripp's hospital systems issued a storm warning on POD's claiming that they were unwelcome at their facilities. Did anything really happen? NuVa took it on the chin and their stock plummeted to 18.65, leaving TSB to ask the question, will they ever see 18.65 again? By the looks of their recent performance, even the analysts' aren't drinking the kool-aid.

October brought us boot camp for the Spine Technology Awards as everyone was polishing their silver and putting out their fine China in preparation for that venue. Spinal USA made the Wall Street Journal claiming that they were a legitimate company invoking Jim Pastena to claim, well, that they are a real company, duh! TSB did ask the six million dollar question, where is the innovation? Pedicle Screws, Cervical Plates, Interbody Devices, Biologics, as Clara Peller use to say, "where's the beef?' Then we wonder why hospitals are capping pedicle screws at $500 like Medstar is in Ohio. Olympus made headlines by some nefarious activities that have now garnered the attention of multiple federal enforcement agencies in Japan and the U.S. resulting in the V Brothers getting some unwanted publicity. By the way, what were they doing in the Olympus Booth at the Chinese Orthopedic Associations trade show? Can someone say $14 +$22?

November brought Nuvasive more bad news as its market cap continue to fall faster than a speeding bullet. Where was Superman? Did anyone see him? Word on the Street was the NuVa was taking it from all sides, including losing one its biggest hitters Dr. Cappucino. NASS was another humdrum meeting, David Paul was spotted walking the floor with his bodyguard Tatoo or was that a human troll?

So as we wrap up another year Santa is looking out for those that are naughty and those that are nice. It will be interesting to see where stocks like Nuvasive and AlphaWreck end up. Will they rebound and make those soothsayers, the analysts look brilliant, or will they never rebound? Never rebound? Never rebound? Considering that the market has been over hyped and inflated much of the industry's destiny will rely on the Asia markets. With Europe in a state of flux, there is no telling whether some of us will ever rebound. Could this be the year of the small company, and who will be gobbled up as we wonder who will fall to the way side? So as we wind down the year the question to our readers is, was this a year to lick your chops or lick your wounds? You be the boss.

NEIN X NINE = NEIN

2011-12-06T04:38:00.000-08:00

No spine nation, it's not the Godfather of Soul (may he rest in peace), neither is it that other Godfather, you know the one that ran a pizza company who basically was taken to the woodshed by his wife Gloria last weekend, neither is it memories of Adolf Hitler who liked to scream, "Nein, Nein, Nein." What Nein X Nine = Nein amounts to is the answer that the Supreme Court issued to Blackstone Medical and Orthofix with regard to their Petition for a Writ of Certiorari. The Cert Petition is a legal request to the SCOTUS whereby a defendant, in this case Blackstone and Orthofix, asks the Court to review a decision by the a lower court, in this case, Blackstone Medical Incorporated v. U.S. ex rel. Hutcheson. But before we go any further let's understand the issue at hand.

The issue in Blackstone Medical was whether a device company THAT PAID ILLEGAL KICKBACKS to prescribing physicians (we know who you are) could be liable under the False Claims Act for causing false claims to be submitted to MEDICARE. The basis for the law is that anyone submitting claims for federal monies cannot submit false or fraudulent claims. If so, the Federalis can recover large fines for each submission as well as treble damages. Treble damages is a term that indicates that a Statute permits a court to triple the amount of the actual/compensatory damages (are you listening boys). In addition to the treble damages, the whistleblower shares in the bounty. Blackstone, Orthofix and its cadre of attorneys were hoping to argue that another law for which the filer had certified compliance was being violated.

Considering that this Writ of Cert came in front of the Robert's Court and was denied is BIG. It seems that Blackstone's/Orthofix attorneys were hoping for a "Hail Mary"considering that the Roberts Court has decided five FCA cases in five terms. In addition, for those that applauded the effort of the Writ and the law firm for throwing the kitchen sink at the plaintiff, let us remember a few facts.

It is estimated that the SCOTUS usually hears 40-50 cases per term
Legally, 99% of the time, a Writ like the one filed by Blackstone/Orthofix is denied

Why? Because the SCOTUS adjudicates issues that affect and effect Constitutional Law or disputes between Circuit Courts of Appeals with the intent to create uniformity in the law. So the question is asked, will this establish a new precedent, whereby any company that knowingly and willfully is involved in kickbacks (PODS?) think twice about its business model? Will the BOYZ and Orthofix be ready to ante up more than that $50 million in escrow that has been reserved for this rainy day? Or, will their arrogance and money let them believe that they could crush the whistleblower acting like the two thousand pound gorilla that they like to think they are? The end result is that not even Darth Vader will right the ship. So like TSB likes to say, "it's game time BOYZ." This is an opportunity for the DOJ to set an example once and for all. Stop acting like the paper lion that you are perceived to be by those of us in the industry that attempt to do the right thing. Bitch slap the parties involved with the MAXIMUM, don't negotiate. Let them come to you asking for forgiveness and show them no mercy. Considering that they thumbed their noses at everyone, pay back can be a bitch. So you know what Jackson Browne use to sing;

I'm sitting down by the highway, down by the highway side
Everybody's going somewhere, riding just as fast as they can ride
I guess they have a lot to do, before they can rest assured
Their lives are justified, pray to God for me baby, He can let me slide

Cause I've been up and down this highway, far as my eyes can see
No matter how fast I run, I can never seem to get away from me
No matter where I am, I can't help feeling I'm just a day away from where I want to be
Now I'm running home baby, like a river to the see.

Seems like Blackstone and Orthofix have them Bright Baby Blues. Who knows, maybe OTW will write something in defense of the industry? The bigger question that remains is whether or when will the government proceed with criminal charges?

The Rainmaker or Is It the Rainman Is Gone

2011-12-01T13:58:00.000-08:00

As Yogi Berra use to say, "it ain't over t'ill it's over." Word coming out of Amedica is that the Rainmaker, aka Ben Shappley is no longer the CEO of Amedica. An inside source has informed TSB that Ben Shappley was greeted by two BOD members and the CFO resulting in Custard's Last Stand at Little Big Horn. No scalps were taken, but Ben was last seen being escorted from the building in a heated confrontation. As the company went on to announce Mr. Shappley's termination via a conference call, the company erupted in simultaneous cheers and applause. Free at last, Free at last, thank God Almighty, Free at last.

Could this termination be a by product of Ben's inability to take the company public? Could this termination be the result of an acquisition, US Spine, gone awry? It will be interesting to see who will take the helm of this industry darling. TSB knows that there will be plenty of candidates lining up to take a shot at the title. You know what John Lennon use to say, "instant karma is going to get you, gonna knock you off your feet, better recognize your brother, everyone you meet." TSB wants to know what are readers think?

Nine Months: A Lifetime

2011-11-21T13:05:00.000-08:00

High drama? No fellow bloggers, this wasn't Judge Judy's courtroom. Today at around 2:45 p.m. Judge Lagrome D. Davis sentenced Michael Huggins and Tom Higgins to nine months in prison with three months probation and a $100,000 fine for their roles in Synthes illegal promotion and clinical tests by spine surgeons resulting in the deaths of three patients.

Judge Davis said that Michael Huggins showed a "knowing disregard" for the safety of the patients. But one must ask the $21.3 billion dollar question, why didn't prosecutors seek any charges against one Hansjoerg Wyss? Huggins and Higgins must share responsibility for their conduct, yet, how is it that one individual named in the original legal documents as Person #7, not be held responsible for the actions of those that were employed by Sin-thes. A miscarriage of justice? Is this another case where the minions pay the price while the man pulling all the levers rides off into Big Sky country counting his billions.

Obviously there will be no joy in the Huggins or Higgins household this holiday season, but then what about the deceased families? Hopefully Wyss will have done the right thing and paid for everyone's legal fees, a small token for keeping his raggedy Swiss ass out of jail. So fellow bloggers the next time someone asks you to do anything that potentially threatens your freedom, remember that at the end of the day, it's your ass that's on the line. As for the three deceased patients, may you rest in peace, all for the love of the almighty dollar.

Spine Art?

2011-11-21T06:55:00.000-08:00

With the recent barrage of comments regarding Spine Art, TSB decided to send some of our investigative reporters into the Street to identify who is this clandestine operation. But before we could do any due diligence on this company, it was important to get security clearances for our roving eyes and ears from the CIA. We started by looking at their website, figuring that a company touting its technology as innovative would be more than happy to let the world see what this innovation is all about. What we have learned is the Spine Art is developing highly classified stealth like technology that fly's under the radar or under the C-arm. Holding a top-secret security clearance, even TSB was not able to accomplish the task at hand. What we have learned is that Spine Art has classified information that pertains to technology that will affect the national security of both Switzerland, the United States, and potentially the rest of the world. Having presence in thirty-four countries, it is obvious that this maybe more of a movement than a company, or could it be both? Actually, our reporters saw them setting up distribution networks in Zucotti Park and Berkeley. One must question motive when there are no products on display, could this be nothing more than a ruse? So we followed the bouncing ball to the K-wireless website and found a product that was an MIS system that can be utilized wireless we think, or with a wire. At one point we were wondering were we involved in a game of Where's Waldo, when in reality we were involved in a game of Where is Yoda?

So TSB must ask our readers is this a legitimate company? Do they actually have revenue? Or is this an organization that is run by a masked man, bunkered down in an Atomic Bomb shelter in the foothills of West Virginia? Could it be that the Lone Ranger rides again, Hi-O Silver!

Supersize? How about Downsize

2011-11-14T14:57:00.000-08:00

Stryker is going to focus on quality by laying off ............................1,000 people

Stryker is going to innovate by laying off........................................1,000 people

Stryker is going to control cost by laying off...................................1,000 people

Stryker is going to drive growth by laying off...................................1,000 people

As consolidation becomes the noun du jour, it is interesting to read many of our your reactions especially as companies continue to use the upcoming 2.3% medical device tax as their rationale for laying off more employees, or moving manufacturing overseas. A point in fact is the announcement by the Almighty Stryker that they will "downsize" their workforce by 5% "as part of Stryker's ongoing focus on quality, innovation, and cost, and position the company to provide strong consistent growth in a changing environment."

If you analyze the anatomy of MacMillan's quote, it reflects a perverse corporate mentality that has been prevalent for years, whereas publicly traded companies rationalize their decision to downsize its workforce to preserve growth for its shareholders. Has there ever been a CEO who had the chutzpah to tell its shareholders that they will have to tighten their belts for the sake of innovation? Now that would be out of the box, Stevie. Have you ever heard a CEO at one of these giant companies announce that they were taking a pay cut, or foregoing their stock options or bonus, because their company really isn't providing quality, innovation, or even growing the business at double digits, let alone being profitable after years in the marketplace? Let's be honest many of these companies take advantage of modified accounting rules as much as they attempt to increase revenue by buying marketshare or even occasionally launching a not so innovative, but new product. It never has anything to do with their lack of vision, it always comes down to some external force or the current boogeyman that is causing lack of growth. C'mon Stevie Wonder where is all that innovation coming from at Stryker? If the acquisition of Orthovita is innovation, I guess Stryker is really innovating. Stryker is no different than a company like Covidien, in that it is a "bean counter" driven company. Their foray into the recon medical device market was driven by their acquisition of HA technology, their jump into trauma was a by product of their acquisition of Osteo, and they acquired DIMSO to enter spine. Where is the innovation Stryker? So, here is how Stryker is going to bring quality, innovation and cost to its shareholders, by downsizing the workforce by 5%.

TSB is sure that Stevie Wonder goes to bed at night tossing and turning that he has to let 1,000 people go, but at the end of the day, its all about the shareholder, isn't it? We are sure that when the time comes to hand out those pink slips, he will send them a message on behalf of all of those at Stryker telling them how valuable their contributions have been and that Stryker will be providing outplacement service to help them find employment in an economy that is built around downsizing to begin with, but isn't that the same propaganda that has been Stryker's modus operandi for all these years? TSB could hear Stevie Wonder in the background,

I just called to say I love you, I just called to say how much I care, I just called to say I love you, and I mean it from the bottom of my heart.

One Million and Counting

2011-11-09T04:17:00.000-08:00

Spine Nation:

Those of us at TSB, would like to thank each and everyone of you for supporting our blog site. As the ticker keeps ticking, TSB has reached a new milestone. The month of November has graced us with our one millionth viewer for 2011. That's right, 1,000,000 and counting, in addition we are averaging over 60,000 unique visitors per month. Last year we had 750,000 readers, meaning that contrary to what visionary industry analysts like Mike Matson, Joanne Wuensch, or Raj Denhoy may profess, and you all know that those boys and girls never pump up the volume, TSB may just be the fastest growing spine platform in the industry, growing with laser like precision, avoiding Japanese companies at all costs, avoiding hiring relatives to write stories on behalf of our personal interests. Yes indeed, we are humbled to provide those of you in the trenches with a forum. Whether you are a sales rep, marketing director, engineer, nurse, hospital administrator, patient, surgeon, owner of a POD, delusional CEO, or had some bad plastic surgery, we love you all. You are what makes us get up in the morning and keep a watchful eye on the industry. We keep many of you entertained, get some of you angry, and keep some of you on your toes. No fellow bloggers, TSB will not be erecting any Golden Arches, there will be no Spine Technology Awards, neither will we be investing in a stem cell company, there will be no analyst luncheons, no Taj Mahals being erected to honor the Spine Gods, we'll just keep on keeping' on. You know what Billy Squier once sang,

You crave attention, you can never say no, Throw your affections any way the wind blows

You always make it, you're on top of the scene, You sell the copy like the cover of a magazine

Puttin' on the eyes, 'til there's nobody else, You never realize what you do to yourself

The things we see make the daily reviews, You never get free, Everybody wants you

So in closing, there's no need to write a review on NASS. Based on your many comments, we still feel that NASS rips off the attendees, charging, say what, how much? Whoa Baby! A G note to walk around in a drug induced stupor? Listen to Karl Rove? Is that where our money goes, shame on you NASS. Boring! It would have been more interesting listening to a crash survivor from the Uruguayan Rugby Team than another political bloviator. As one of our roving reporters stated, the model in the silver outfit with the headlamp was lame, the girl with the low cut top had fame, and walking the McCormick Center caused foot pain. The Baxano and SI-Bone booth had activity, but maybe that was more of a reflection of how boring many companies have become, rather than how innovative some of those technologies really are. It was nice to see David Paul and his sidekick Tatoo walking the floor. TSB wants to know who had the best new technology? Cervical? Lumbar? MIS? Interbody? Pain Management? Biologics? We want to know what our readers think? Did anyone had technology that was ripe for the pickings? You be the judge. Is there one company that really stands out? Who is ripe for an acquisition? Who will be subjected to an inquisition? As another year winds down, it will be interesting to see who is left standing when the dust settles. Once again, TSB wants to thank you for your support, now let's finish the year on a strong note.

NASS: A Harbinger of Things to Come

2011-11-01T15:23:00.000-07:00

Well Spine Nation, tomorrow marks the beginning of the 26th Annual North American Spine Society meeting in the Second City for exhibitors. Are there any words to express the euphoria you all must be feeling? NASS was kind enough to send TSB an invitation to drop by for some Halloween Candy, and you know what Jack Torrance said in Stanley Kubrick's infamous 1980 psychological thriller, "all work and no play makes Jack a dull boy," so maybe Wendy when least expected We may stop by and tickle your fancy.

This will be an interesting meeting, to say the least. The theme of the meeting should be called "The ShinIng." In all likelihood there will be various national media outlets attending the 2011 lovefest as a result of many stories that have found their way onto front page news for the American public to read. Yes, fellow bloggers, TSB is sure NASS will be monitoring attendance. This will amount to a mere side show in comparison to what will be going on down on the exhibition floor. The recent Medtronic Round 1 TKO over NuVasive will definitely be worth watching, in addition, many will be monitoring how the V Brothers behave in response to being named as a party to the Olympus scandal that is unfolding on a much larger scale. Will they continue to party on, or will they be less flamboyant, even Marshall Mathers from Deutsche Bank says that this deal has nothing on the real Slim Shady,"may I have your attention please."

Lately, it seems that some of the luster has been knocked off the billion dollar baby. At close yesterday, NuVasive was rapidly approaching its 52 week low of 14.81, by closing at 14.82. It will be interesting to attend NuVa's Investor luncheon on the 3rd to hear the company's strategic plan and see whom the loyalista's are that will sit on the surgeon panel. If there is any truth to Key surgeons jumping ship to the competition, could this be a sign of some fatigue beginning to set in at NUVA? For those that have criticized our reporting on NuVasive, could they have ridden XLiF into the ground? Pioneering a surgical approach is formidable, building upon these advancements is where the challenges lie. So,who will bail next? If there is any truth to surgeons jumping ship, could investors be next? If NuVa's public relations firm is ever going to earn its keep, this meeting will be a telltale sign, considering NuVa's market cap has plummeted faster than a speeding bullet. If today's market (14.03) is a barometer of things to come as Keith Jackson use to say, "whoa nelly," As for some of our fellow bloggers whom attack TSB for NuVa bashing, get over it, the company's on the hot seat and in the news, what would you write about, the Spine Technology Awards? Sometimes it's better to be humble and stealth like, rather than roar like an engine on a 757. Panache is a double edge sword.

Another company to keep one's eyes on is Zimmer. Are they poised to do something in spine,or is spine truly the bastard step child? Let's be honest, when Zimmer acquired Spine Tech, they had no clue as to what they were getting into, and neither did their then savior Ray Elliott, the acquisition was well a Clusterf#*k from the get go. Abbott Spine just exacerbated the management deficiencies that exist at this company. Dvorak massages the analysts' by telling them the patients will come back when they are no longer afraid of losing their jobs, and they are investing in their sales infrastructure. So where will the growth come from in a zero-sum market? By raiding other companies distributors? For some the lure of a signing bonus or additional commissions will be attractive, but in reality, aren't you jumping out of the Frying pan and into the fire? And, how long before your hospitals declare you persona non grata? There has to be some innovation, if not, some type of product acquisition to jump start this Edsel.

And what about the North America Spine Society, aren't they coming into this meeting with a battered and bruised reputation based on the recent publicity some of its members have received in the press. How many more front page headlines can you withstand before the organization's governing body has to assess its policies and procedures, again. It really doesn't bode well when class warfare between surgeon and sales people becomes the rule rather than the exception, considering that we are all in this together. Thanks to some well known surgeons that believe that with the advent of Skype sales people will be replaceable, your organization does nothing more than throw gasoline on a burning fire. So fellow bloggers it's another year, and it will be your turn to judge who has the best booth, who is offering the best new technology, and how much traffic you get at your booth will be dictated by how late we all stay out, hopefully we can thank each other for making it thru another year without killing each other. PS, and don't be surprised if one of our TSB models stop by your booth and give you a squeeze.

The Forecast Calls for Pain

2011-10-27T05:45:00.000-07:00

Hari Kari is defined as a ritual suicide by disembowelment practiced by the Japanese Samurai. The Samurai is looked upon as a high ranking noble, if ever there were nobles that believe they have entitlement in the upper ranks of society, this may be the story. The October 26th headline news in Reuters presents an intriguing plot for readers as to an acquisition that smells afoul.. The cast for this drama includes Stryker (the seller), Olympus (the buyer), the Viscogliosi Brothers (the original buyers and advisors), a disgraced CEO (Kikukawa), a fired CEO (Woodford) and a Japanese company that may have been sold futures when it came to their acquisition of OP-1 by a business partner/advisor.

But before we go any further, one must ask the question, what is Olympus doing in making investments and acquisitions into ventures that are totally out of the realm of their business model and expertise? Portfolio diversification? Just for historical purposes, many years ago the Almighty Stryker acquired the licensing rights to BMP-7 from a company named Curis Biomolecules for $200 plus million. After years of dumping, that's dumping, not pumping capital into this black hole of a product, the best that they could get was an HDE (human device exemption) and a delicate ass whooping from the DOJ for some company related improprieties, advocating off-label use. So why do you think Stryker was selling you OP-1 for $60 million, regardless that the original price that the VBrothers were offering was $50 million? Could it be that Stryker was looking to get rid of the proverbial Albatross from around their neck, an obvious fitting metaphor, for a product that was sucking capital and placing them under scrutiny with the USDOJ? Could this deal have evolved into an age old act of protective agreements and political marriages in order to accumulate power eventually surpassing tradition, of course that being the traditional way of doing business in the Japanese culture? Were the Japanese involved in this deal following the bushido, the moral principles to live honorably?

The plot thickens when Reuters reports that the deal may have cost Olympus 50% more, thanks to payments made to its advisors, the V Brothers. The V Brothers and Olympus are bound by a confidentiality agreement, therefore, the basis for the story is centered around a $25 million dollar loan that Olympus made to the V Brothers that carries an eight year term, with a 7% interest rate, and would be collateralized by the Viscogliosis' interest in Small Bone Innovations (SBI), and Paradigm Spine (how diluted are those companies). But here is where the deal between both parties gets interesting, the V Brothers utilized the proceeds from the loan to pay back a $30 million debt facility (loan) from Fortress Investment Group of NYC., and under the terms of their agreement Olympus agreed to forgive $2 million of the loan every year, starting in January of 2012 which would leave a balance of $22.8 million and accrued interest if the product received certain approvals by 2015 or 2018. Yet, in August, Olympus Biotech expressed concerns about the value of the collateral (surprise), it has with the V Brothers, and former CEO Michael Woodford who challenged Olympus' acquisitions and was fired in a coup by the BOD, was told that Olympus would need to write off the loan.

Reuters reports that the FBI are investigating the massive advisory fee and Woodruff himself has called upon authorities in Japan and Britain to launch investigations of their own. TSB wants to know what our readers think, is this a House of Cards, or is this a House of Blues? As Robert Cray sang,

Coffee for my breakfast, shot of whiskey on the side
It's a dark and dreary morning, with the clouds covering up the sky
The forecast calls for pain, I can hear approaching thunder
I can feel the chills run up my spine, I've seen love freeze before
And I know I'm on borrowed time, the forecast calls for pain

Crossfire

2011-10-24T12:36:00.000-07:00

Day by day, night after night
Blinded by the Neon light
Hurry here, hustlin' there
No one's got the time to spare
Money's tight and nothin's free
Won't somebody come and rescue me
I'm stranded, caught in the crossfire

Well fellow bloggers, it seems like the Spinal USA debacle won't come to rest. No it's not Carville and Buchanan, neither is it Begala or Kingsley, some individuals have taken it upon themselves to question the credibility of the Wall Street Journal, calling the article, well...... tabloid sensationalism. A sophomoric attack on the bastion of capitalist publications, you know what Tommy DeVito would say, WTF? Spinal USA's CEO, compares SUSA (no offense Synthes) to K2M and Kyphon. C'mon Jim, you can't be serious? As Clara Peller use to say, "Where's the Beef?" Granted, we all know that K2M and Kyphon had surgeon investors, but those surgeons were, well....actually designers of systems that have either set a precedent for managing VCFx's, paving the way for investment capital into other companies with VCFx technologies, or arguably, the MESA can be called the best deformity system in the industry. What is it that SUSA has in its IP pipeline that will actually make it a legitimate player in the industry? Another pedicle screw? Another cervical plate? Here is your chance to set the record straight. Prior to the this story making headline news, one must ask, where was the transparency? Today, SUSA attempts to perform damage control. After talking to various people in the industry, there were some people that didn't know this company even existed. Hmmmmm? It gets even funnier when a surgeon's wife defends the organization in the WSJ, going to the extent of defending the surgeons decision making without identifying herself as the surgeons wife, deflecting the impetus of the story on some disgruntled rep. As usual, its the reps fault, but isn't this class warfare at its best? Carreyou and McGinty must be shaking in their boots, when their credibility is questioned by the Jimmy Olsen's of the world. But let's be frank with one another, does anyone believe that the WSJ would run a story for the sake of tabloid sensationalism, unlike some other platforms that sensationalize anything and everything in the industry? Somewhere between those words a bigger story prevails as to what's been going on for years in this industry, as some people jump from one venture to another in hopes of hitting a financial windfall without any consideration as to how it effects the industry, the investors, the employees, the patients, and one's own decision making prowess. As for emerging technology or innovation, maybe SUSA will be a new entrant for the Spine Technology Awards to solicit, they could even have a new category called "best me too products." Considering that Pastena brought up K2M, TSB must ask the six million dollar question, is that company on the move?

Over the last few weeks, there has been much activity down in Leesburg,Virginia. Considering that K2M launched two new products at CNS, which were line extensions for their cervical portfolio, the Pyrennes, translational cervical plate and the Chesapeake zero-profile device now provides K2M distributors with a complimentary armamentarium. This past weekend at the Society for Minimally Invasive Spine Surgery in Viva Las Wages, K2M debuted the RAVINE lateral access system along with the ALEUTIAN lateral inter body system. The dual flat blade system should be a less invasive system for splitting the trasnspsoas. Some people will wonder why TSB is writing about K2M? Well....... considering that Spinal USA attempted to compare themselves to a company that continues to increase its product portfolio and market share on a national level attaining critical mass, let's see what new and innovative technology will come out of Jackson, MS? TSB wants to know is Spinal USA a nationally based company, or are they nothing more than a physician owned company? TSB wants to know what the court of public opinion believes?

The Silly Season

2011-10-17T12:34:00.000-07:00

Fellow bloggers, as the last vestiges of summer leave us, and we enter the spine silly season, CNS, NASS and of course the Spine Technology Awards, TSB must ask the $10 billion dollar question, where is the innovation and emerging technologies that we have been waiting for? Our correspondents that attended CNS and roamed the conference room, excuse us they meant, the exhibit hall in Washington, DC, reported that CNS must be concerned with the legitimacy of a meeting whereby attendance may have been at an all time low. With the exception of K2M, which launched some new cervical products, was there anything that truly was a game changer? The perception was that some companies hardly had any traffic. As usual, CNS strategically placed the "big boys" in the center of the exhibit hall where they erected their temples (small one's at least) so neurosurgeons would pay homage to them as they walked to the back to listen to the speakers and papers that were presented.

Interestingly, NuVasive, aka the Billion Dollar Baby, was missing from the festivities. Could they have been licking their wounds, or, was NuVasive one of the smarter companies not wasting their time and money considering that NASS is right around the corner? So what is truly happening in spine? Have we "out innovative" ourselves? The Spine Technology Awards will be a barometer of where the industry is truly headed. Who will present in the various categories for OTW? Will the judges be comprised of the "usual suspects?" Will there be anything different, or, will this be another humdrum performance? Every now and then our readers provide us with their words of wisdom regarding the state of the industry, but how does one keep their motivation and eye on the ball when some of the companies that you work for have done NADA to create that 6 degrees of separation for you to continue to grow your business and meet sales expectations? So here is your opportunity for your voice to be heard. What is it that your company is launching or selling that will provide you with the necessary ammunition to take out the competition? If anyone knows what's going down, it is always those in the infantry, regardless whether the generals admit it. Is spine the last frontier for medical devices, and has time caught up with this well insulated industry. As hospitals continue to drive down pricing, and insurance companies deny procedures, how is this affecting your ability to grow?

It will be interesting regardless whether Obama gets re-elected or not, because as more companies focus their efforts into foreign markets, they are behaving like the rest of America's titans of industry seeking new markets. The backlash from all of this will be more and more foreign made implants glutting the U.S. market, driving down the actual selling price. So TSB wants to know where is the technology and does your company have it?

Thursday Op-Ed

2011-10-13T14:11:00.000-07:00

Today, one of our surgeon readers opined about how this blog has "regressed into a dark place where former allies, reps and surgeons, hide in cloaked veils of anonymity to routinely lash out at one another. Before we elaborate on this post and the state of our industry, one must remember that it is absurd to discuss how one hides behind an anonymous post, when the individual opining is writing anonymously themselves. But let's be honest with one another, whether you like it or not, this blog has never regressed, it has always been a referendum on the state of our industry. As TSB has stated, "for years it was our dirty little secret," and contrary to what anyone thinks, it has taken some courage from some individuals, god bless you whistleblowers because sometimes it takes a woman to show a man that it takes balls to step up and call out the nefarious arrangements and greed that slowly has become the norm rather than the exception. Thank you Blackstone, you set a great example.

Contrary to our commentator's opinion, surgeons and reps have always had a mutual respect for one another, at least our generation did, unfortunately somewhere in the journey, there was a change in personal and industry related dynamics. "If my mentor could do it, why can't I? I'm just as smart, I'm just as talented. If they could start a company why can't I? Some investment bank told me my company or IP is worth gazillions." Could these individuals be part of the entitlement generation, could some people be delusional, maybe some of them are nothing more than dreamers? It is difficult to place one's hand on the pulse of how a once respected industry has become so scrutinized in the public arena (thank you Mr. Carreyou), considering that there are many hard working young sales people and surgeons that do their job in a professional manner respectful of one another everyday. Unfortunately, the current state of the industry may sadly be a reflection of what our society has become, greedy. There's just never enough. Just like Democracy is for sale, spine has taken on the persona of its masters. There is never enough, because what were once vices have now become habits. And contrary to what Gordon Gecko has said, greed is not good when there is no balance in your lives. TSB believes in capitalism, but one must understand life's priorities. Today, company's still have unrealistic expectations when it comes to growth and market penetration. 20% is a thing of the past, of course unless you are dealing in a POD or POC. Zero-sum means zero-sum, unless you have breakthrough or emerging technology, the question becomes where are you getting your growth from? Your competition? It's difficult to understand the present or the future, if you are stuck in the past.

Yes doctor, the industry is truly in a sad state, and you are correct that life can go on without a rep, just like life will go on without your existence, but before you cast light on the reps, one should look at one's own profession and accept the fact that the patient has a malignancy that has never before been seen in this industry. Maybe what some people need is a good old fashion whipple? Chemo will not cure this malaise. So, who's fault is it? Is it the sales rep who earns on average $120-$175K, covers their own expenses, has a mortgage and family to feed, just like you and your peers? Free-markets means free-markets, not a specific set of rules that only benefit me and screw everyone else. Is it the surgeons fault, who has spent countless hours educating and honing their craft with the expectation of being compensated commensurate with their expertise, only to find out that enough is not enough? The reason this insanity exists is because of the lifestyle you choose, the personal decisions you make, and that you believe that you are the straw that stirs the drink. There's only so many LeBron James' or Kobe Bryant's and then the rest of you are bench warmers. But in the end, there's no special dispensation for you just because you are a doctor. When the world suffers, you too suffer. We have become so consumed with money, that it has led people in both our profession and yours to conjure up more schemes and business models in order to make that almighty dollar.

So before you make an off the record statement, Doctor Anonymous, maybe you should look at your peers and wonder what in God's name are they doing? Believe it or not, there are many sales people that are as disgusted as you are about the current state of affairs, the question is who and how are we going to do something about it before we get back to doing the things that made us all proud to be affiliated with this industry. TSB wants to know, what will you do?

Mississippi Burning

2011-10-08T11:35:00.000-07:00

TSB can see the Wall Street Journal's John Carreyou and Tom McGinty playing the investigative role of Rupert Anderson and Alan Ward (played by Gene Hackman and Willem Dafoe) roaming the back roads of Jackson, Mississippi looking for answers to serious questions regarding a virus that has spread to epidemic proportions in the spine industry. Carreyou and McGinty can Duke it out (No pun intended John) at the Journal's office as to who plays the leading role. In the current climate, at times it still feels like 1964, a country divided with anger, finger pointing, and reckless abandon. On October 8, 2011, Messieurs Carreyou and McGinty published an article regarding their ongoing investigation into surgeons taking a double cut by manufacturing and implanting their own devices.

What the industry, our readers, and the general public have found out is that there has always been a fine line between medical ethics, surgical treatment, and financial interests. Shhhhh! Let's fly under the radar, and just maybe, no one will notice us. To use a broad stroke and categorize all spine surgeons as unethical is reckless at best. TSB has always been a surgeon advocate, unlike those outsiders that have ingratiated themselves and continue to suck on the teat of the industry. Our credo has always been that as long as surgeons are truly working on a product development, and not getting paid for redesigning a screwdriver in return for VOLUME, more power to them, and make as much money as you can. If they're willing to pay for your expertise, all we ask is that you be transparent. Yet, one must raise one's eyebrows as you read the WSJ's expose. As Carreyou and McGinty continue to lift the sheets, kick the tires, and look under the rug of our industry, they are learning and educating the American public on just how tainted this industry has become. Three Mile Island didn't radiate with as much toxicity. Surely, there will be an outcry regarding this story. Whatever happened to the Wall Street Journal, that bastion of capitalism? The unfortunate scenario for the surgeon in question, Dr. Lewis, is that this publicity will surely tarnish his reputation in the Jackson community, considering that those of us that have been in this industry for years, know very well that having any past affiliation with Blackstone raises everyone's eyebrows. Can you say, "VOLUME, VOLUME, VOLUME." If the DOJ is out there reading our blog, and we know that you are, many of us in the industry are waiting for you to deliver the blow that shakes up the industry, especially when it comes to Blackstone. If Orthofix was smart, and it is apparent that they aren't, they would put a reasonable proposal on the table and get the DOJ off their back, because the more you piss off the DOJ or the FBI, they will dig in their heels and play hardball, just ask Geoff Yielding. TSB would love to be a fly on the wall during those board meetings, but back to the story at hand.

Spinal USA would be a great case study for the Harvard Business Review, along with some of the other illustrious fly by night distributorships that masquerade as legitimate companies. The financial cost of entry into our industry is low, especially if one reverse engineers other companies products, and finds a manufacturer who is willing to get into cahoots with you. Innovation? Emerging Technologies? Beauty is truly in the eye of the beholder. Yet, the reader must question the credibility and acumen of surgeons that take to their soap box and espouse their business skills, especially after reading this story. In the spring of 2007, the FDA assessed Spinal USA with 14 violations, including failing to maintain master records for its devices, to having no system in place to track and label them. As a spokesperson for Spinal USA stated, ahem, "rapid growth caused Spinal USA to run afoul of the FDA." You must be kidding, right? Talk about on the job training, or is this another example of the Rudy Giuliani defense, "I had no recollection or knowledge as to how that happened." Anyone running an implant company understands FDA policy and procedure, especially if they have been in this business or have ever donned a gown and gloves. TSB hasn't met a single CEO, VP of R&D, Regulatory Director (especially the nervous regulatory guy), or Operations person that welcomes that dreaded phone call from the FDA, informing them that they will be on site on Monday, leaving you 72 hours to dot your "i's" and cross your "t's."

But here's a question for our readers, if Spinal USA was looking to contain cost by eliminating salespeople and marketing cost, why were they recruiting surgeons from other states? Obviously to increase revenue, resulting in more profits. You're not going to tell us that you were doing it for the love of spine surgery. TSB can guarantee that this venture wasn't an exercise in fiscal austerity. And how about expanding into other markets? I guess people in Mississippi must be concerned in sharing the cost savings with those in Alabama. There is a fine line between fact and fiction, contrary to what some attorney will tell you. But then again, isn't it the same people that take an oath to uphold the law, the same people that tell you how you can circumvent the legal system to make a profit? As one surgeon in the article states, "I know some people in the profession don't think its ethical, but I just don't see." Of course you wouldn't see it if you are making money off of it, neither were the people that were doctoring mortgage applications for people that couldn't afford paying for them. Though the OIG has issued regulatory guidance for complying with federal anti-kickback statutes, a thorough investigation into some of these business models could uncover some interesting ways of laundering profits. Oh, and by the way TSB would like to know how many reps are making $26,000 per month, such as the good doctor who filed for personal bankruptcy in this story. By the way, Dr. Famous, how does one file for personal bankruptcy making $26,000 per month on top of what one earns from the practice of medicine?

But here is the bigger question that lies in store for the people that run NASS, AANS and CNS, what's the point of subsidizing your meetings when you can't even keep your own house in order? How many more black eyes does the industry need before someone delivers the knock out punch? If you don't think its going to happen you are in for a surprise. Maybe that's what the doctor ordered, some CEO's, or former CEO's and surgeons serving time being Bubba's Bitch, dropping the soap in some Federal penitentiary. How many times do we have to hear these stories only to be reminded that our industry has run amok? TSB wants to know what our readers think?

Tommy Can You Hear Me? I Can Hear Your Wind Blow

2011-10-04T15:03:00.000-07:00

Welcome to the camp, I guess you all know why we're here, my name is Tommy, and I became aware this year, if you want to follow me you've got to play pin ball, so put in your ear plugs, put on your eye shades, you know where to put the caulk. Unfortunately fellow bloggers, the Tommy that TSB is writing about is not the Tommy that we know and love, that deaf dumb and blind kid that sure can play a mean pinball. Kudos go out to one of our commentators that has posted the link to the Becker's Orthopedic and Spine Company article on Ortho Direct USA. If you haven’t read this article or watched the You Tube video with Tommy, you’re missing out on the latest and greatest business model to take the healthcare industry by storm.

“Reducing Selling Cost? Skyrocketing implant costs? Driving down the cost of Marketing? Retool Sales People? Taking Back the Operating Room? Virtuous Cycle? Hospitals having difficulty in negotiating better pricing? More reps equal higher implant prices? Redefine the culture in the operating room? Medicare broke? Hospital having to figure out how to make profits? Take the salesman out of the equation? Helping hospitals take back responsibility for managing their implant business? Hospitals taking ownership, versus being a renter of our services? Changing the dynamics of organizational behavior? Seasoned, experienced and tenured individuals standing next to their ORDT candidates?” How many times have we heard the continuous harangue of these echoes of love directed at sales people in the industry?

Sounds a bit like a Jim Jones and Charlie Manson cocktail, a little social engineering mixed in with a bit of the ole Aztec Two-Step. Tommy, TSB doesn't know if you have been in a hospital lately, or whatever it is that their putting in your tap water, but if you have had the opportunity to visit the OR at your local hospital, there are more barriers and cost controls than ever before. And before you go any further with that wonderful Fort Wayne marketing spiel about outsourcing your own Orthopedic Device Technicians, or that cookie cutter program that you claim that you don't offer, you need to stop urinating on our shoes and telling us its raining. It's been raining so long, that we are being deluged out in the field. Where do you get your data that substantiates irresponsible information that sales reps are making more than surgeons? We haven’t seen any surgeons jumping ship to become salespeople lately, Tommy. The current climate in the industry is pernicious at best, such that hospital administrators and their staffs view sales reps as an adversary rather than an ally. Tommy…..Tommy……Tommy, can you hear me? Tommy, so let us get this straight, the hospital is going to contract you so that you can audit their process by recruiting sales people or distributors to turn over their accounts to be part of your so-called revolution. Black Belts in Six Sigma, why Tommy you may be the next coming of Jack Welch. In addition, if you're talking about driving up the cost of delivering great products at affordable prices, let's begin with Vendomate, Status Blue, and Rep Trax that suck dollars out of companies, distributors, sales people, and other allied healthcare professionals that attempt to do their jobs on a day to day basis? We actually have to pay to play, $100 here, $150 there, $400 here, $39 over there and after a while you have a “purdy” good scam hidden behind the guise that all someone is attempt to do is protect the patient. What all the PT Barnums in the industry are attempting to do is take money out of the pockets of hard working sales people who are obviously driving up the cost of healthcare, right Tommy, it’s those God awful salespeople that have caused healthcare to become 25% of the GDP by 2012.

But Tommy, maybe you are the wake up call that many people in this industry need, and that is that salespeople must understand that they have become the enemy within, that it is always easier to pick on the weakest link in the chain, than it is to go after the Big Boys. So before we end this blog TSB must send one message to his followers and tweeters of spine nation, raise your level of professionalism, learn as much as you can so you are viewed as an asset rather than a liability, increase your clinical knowledge and commitment, and the Tommy's of the world will become extinct rather than you yourselves. TSB wants to know what our readers think?

You feel me coming, a new vibration, from afar you'll see me, Tommy's a sensation.

Take the Money Out of D.C. and Bring it Back to Main Street

2011-09-29T08:02:00.000-07:00

Spine Nation,

The word on the Street is that you as a Nation are feeling the pain of an anemic economy. Based on the your input, it is becoming evidently clear that the future is not quite as sunny as some soothsayers like to predict. Whether you are the Big Kahuna, eating that Big Kahuna Burger, or a little fish, you are being battered by your companies (lack of innovation), the surgeons (not all, but you have key detractors), the hospitals (what ever happened to free markets), its administrators and staff (let's face it they view us as the enemy), the BS companies like Vendor Rape, Status Blow, and Rep Craps, that make you jump through hoops and fire in order to earn a living. As for eating the Big Kahuna Burger, TSB's only caveat is, be wary of what happens to those that opt to eat the BKB, you are susceptible to getting a visit from Vincent Vega and Jules Winnfield. Oh yes, spine nation, we feel your angst, and things are not about to get easier.

As yesterday's news unfolded in the NY Times, that bastion of socialist and radical news reported that health insurance companies are charging "sharply" higher premiums this year, outstripping any growth in your wages and creating more uncertainty, as the government and corporations struggle to drive down the unrelenting increase in the cost to delivering quality, yet affordable care. As the economy struggles, needing a desperate InFuseon of Geritol ( a dietary supplement from yesteryear before HGH become a cocktail of choice), as the real unemployment rate hovers around 15-16%, an increase in insurance premiums is as welcomed as a case of herpes, or a visit by the DOJ to Mississippi (was that Gene Hackman and Willem DaFoe). Interestingly, both political parties are mum when it comes to attacking or criticizing their benefactors, because contrary to what some of readers believe, both Houses of Congress are bought and paid for by Big Insurance. The BS that Aetna, United Healthcare and Oxford espouse is despicable, claiming that their rate increases are simply keeping pace with increases from physicians, hospitals, and pharmacies. What increases? What they fail to tell you is that what is billed and what is reimbursed paint a highly different scenario. Of course, everyone will blame Obamacare, aka Romney Care, (you know the same guy that calls Obama an elitist, while he himself graduated from Harvard Law School), because as TSB has said in the past, Obama is the boogeyman in the room, but those of you that understand how the game is played know that the insurance industry has never decreased your premium regardless of whomever was in office? As my good friend Alex Lukianov would say, nyet, nada, nein.

What is striking about this news, is that many of you have communicated that due to the poor economy, surgeries are down. Now whether this is affecting some locally, or nationally for the long term is still playing itself out. But one thing we do know is that people are putting off surgery and visiting their doctor in order to avoid co-payments and high deductibles, or until they meet their deductibles. The fact remains that the longer one puts off an office visit, or a surgery, the higher the cost in taking care of that patient. Despite a decrease in numbers, insurance companies are defending their record profits, increase in premiums, payouts to shareholders and bonuses paid to these Greedy Bastards (yes Dylan Ratigan you are not alone in your observations). As Benjamin M. Lawsky is quoted as saying, "these increases are often hitting people who just can't afford it. But, on the other hand, we have to ensure in keeping these insurance companies healthy." How much healthy can they get? Spoken like the Superintendent whom oversees NY State's Insurance Department, and probably was once associated in some form or fashion with a Big Insurance company.

Let's face it, this is a game, whereby the only people that are benefitting from the rules are the people making the rules, or find new and creative ways to circumvent the rules. So this is your opportunity to stand up and be heard, its time to take all the money out of politics, whether you believe it or not, special interest are killing each and everyone of you, its killing your ability to earn an honest living, its BRUTALLY divided a country that calls itself the "United" States. We are no longer tolerant of one another, nor our we a compassionate society, especially when it comes to our own citizens. We have been deluged with more scams, and business models that do nothing more than tear down the moral fiber of a society and industry that once was respected. Just because Wall Street does it, doesn't mean its legal, nor is it right. The irony is that for all the people that espouse free-market principles, the only free markets that exist are the ones that specific people benefit from individually. Take the example of the commentary on our previous post that dresses down sales people, calling you spoiled, overpaid, and sucking ass, TSB would bet that was a surgeon. Here's a typical scenario, whereby someone is critiquing what market forces allow you to earn. But what is Dr. Famous' position when his earning power is threatened? How does he know whether or not his earning has been over inflated, and what outcry do we hear every time the topic of decreasing Medicare reimbursements are tabled, or Big Insurance does not increase their reimbursements? Rather than coalescing and attempting to stand up and fight, but then again, it is always easier picking on, and beating up the weakest link in any chain of events. So when you get an opportunity our good friends Dylan Ratigan and Jimmy Williams are proposing legislation to get all the money out of politics, here's your chance. TSB wants to know what you think?

1865

2011-09-22T06:23:00.000-07:00

Fellow bloggers, the last forty-eight hours have been interesting to say the least. The title of our post "1865" signifies the one day damage that Nuvasive has incurred by dropping 12% in share price upon the market's and investors reactions to losing the verdict to Big Blue for infringing upon patents that are "owned" by Medtronic. 1865 is not about the year Abraham Lincoln was assassinated, nor about the year that we as a nation abolished and prohibited slavery. Depending upon the next phase of litigation, it might be a price, that one day, investors yearn for. For those executives or other platforms that deny this blogs credibility, this is the year of living dangerously. Thank you. The reaction from those in the industry, including Alex Lukianov and his minions of analysts' was predictable. Would any of our bloggers expect otherwise? Your vigorous comments say it all. Even Dr. Gary Michelson, a blast from both the plaintiff's and defendant's past, was thrust into this melee, and was quoted as saying, "people have to be respectful of intellectual property." And if there is one individual that knows about burning the midnight oil with his cadre of IP lawyers, it is Dr. Michelson. Whether one agrees with his past, one must be respectful of his legacy.

What does this say about Nuvasive, a company that has built its reputation and mystique on the XLiF and neuro-monitoring? What does it say about Alex? Has he lost his panache? Highly unlikely. What does it say about investors? Are they gullible, believing the "hype" that analysts' profess about their favorite spine stock du jour? Where is that guy that predicted on September 2, 2011 that the stock will go up 40% over the next weeks and months? And what does it say about the analysts'? "Painful, but manageable, bloodied, but still standing." Is that all there is? How does a company predict on becoming a billion dollar baby, when they are spending tens of millions on legal fees battling an assault on their very existence? If anything this litigation is far from over, and unfortunately for Nuvasive, it is going to take a little longer than predicted on becoming that Billion Dollar Baby. This verdict was more than a bump in the road, it is a set back. Alex will tell you otherwise because his job is to be the spinemeister and he can play with house money. The verdict will be appealed with vigor, while Nuvasive anxiously awaits Medtronic's next move. TSB knows that some will respond that this is the cost of doing business in a highly competitive environment. But, does this bode well for NuVa?

A company of Nuvasive's size can be sold. But now, any buyer will have reservation until this litigation plays out. The fact is that until this litigation is resolved, why would anyone risk buying a portfolio that potentially will have royalties tied to Medtronic? Realistically, at this phase of litigation, it looks like Medtronic is in the drivers seat, at least for the time being. How long will the shareholders and investors continue to provide a vote of confidence for the leadership team at this company? These are legitimate questions. In retrospect, many have raised questions regarding Nuvasive's quest, back in June 2011, to raise $325 million through the issuance of Senior Convertible Notes. Yes fellow bloggers there is much to speculate about, but the reality is that the sun will rise and set today, and NUVA will not shut its doors, let's be realistic. But what this verdict does is create a dynamic to how this company will proceed, and whether the leadership team here has the longevity to sustain multiple blows as Phase 2 and 3 develop in MDT's quest to utilize the patent laws to its advantage. Regardless of your love or disdain for the Big Blue, let's be honest, if you were in their place what would you do? In closing, Nuvasive is lucky that there wasn't an injunction placed on the sale of the products in question. This brings back memories of the old days when a company named U.S. Surgical laid down the gauntlet and challenged J&J/Ethicon's market presence, only to be repelled like a fly on someone's ass. Sometimes, history has a way of repeating itself. So what's Alex's exit strategy if all else fails? You know, TSB once had the pleasure of meeting Lauren Hutton, and her motto was, "don't ever let them see you sweat." Good Luck and Good Night.

Copy! Copy! Copy!

2011-09-20T17:21:00.000-07:00

It's Game 7 of the Championship Series and NuVasive has the home court advantage, the anticipation is that this should be a blow out, considering that their opponent Medtronic hasn't won a game in many years. Medtronic has taken their blows. Some industry insiders began to wonder would they ever rebound, could they make the right pass, was their offense turning into an impenetrable defense. After the Michelson debacle, it seemed that Big Blue has been staggering. Even with a home crowd and the potential of some home calls, it was announced today that the NuVasive has taken it on the chin. No fellow bloggers it wasn't a Floyd Mayweather sucker punch. NuVa saw it coming.

It was announced earlier in the day, that a San Diego Jury with "laser like focus" awarded Medtronic $ 101.2 million in damages related to patent infringements by Nuvasive. Of course other publications in the industry will come to NuVa's defense claiming a wash since the jury also found that Big Blue owes NuVasive $660 thousand for infringing upon one of NuVa's patents. NuVa will now have to regroup and consider its legal option as to how to proceed with the verdict. To quote NuVa's attorney, "Nuvasive copied nothing!" A San Diego jury thought otherwise.

But some questions must be asked. How do investors continue to pour money into a company that has already lost a $60 plus million dollar trademark suit? And now, $101.2 million? It will be interesting to hear the "spin" on how "laser like" the Purple People Eaters will become as they continue their quest and journey to be a $1 Billion Dollar Company. There's no joy in Rancho Santa Fe tonight, nor do we think that anyone is drinking any Petrus. It will be interesting to see how OTW reacts and spins this verdict, considering that our boy, the oracle of the industry, loves the Big Bear. TSB wants to know how much will the markets react tomorrow to this decision?

Caveat Emptor

2011-09-20T05:26:00.001-07:00

Greetings fellow bloggers. Based on your response to our last post regarding the Scripps decision to ban PODS from their hospital system, many questions have been raised regarding the OIG's response to U.S. Senators Grassley, Hatch, and Kohl's Senate Investigation. At best, the response still has those involved looking over their shoulder, as the OIG's intent is to methodically answer many questions that need clarification. What we have learned is that the OIG has major concerns regarding the proliferation of PODS and whether the mere existence of these entities has or will have an adverse effect on Medicare and other Federal programs. Obviously, those that have leveraged their earnings and futures on the legitimacy of PODS, are keeping a watchful eye on the OIG along with the ongoing investigation by the Wall Street Journal into Mississippi and Alabama. Some readers accuse TSB bashing PODS. Contrary to some beliefs, our position has been that until there is legislation that clearly defines this business model, PODS will run rampant without any boundaries. Whether they are ethical is another issue.Due to the lack of legal guidance, the OIG challenge will be to identify if the behavior, structure, and practices that PODS present violate any Federal Anti-Kickback Statutes? TSB's observation is that if they look deep enough, they will probably unearth more schemes than one can imagine. As PODS continue to to increase, the OIG's position is that guidance, legislation, and enforcement will be required. As the government continues it's investigation, their intent is to identify the financial arrangements that have been initiated between physicians and third parties acting as an intermediary between the POD and the hospital, the transparency between these parties and the hospitals, and the services that PODS offer in addition to the type of cost saving that these entities provide.A major focus will be on how many of these PODS are operating on Medicare patients, and is the impetus for these business model merely for profit, by driving up revisions and increasing surgical procedures. One could not expect anything less than a backlash from those that have leveraged their current and future earnings on PODS, but if recent history has taught us anything, it is that as long as it is legal, everything goes, regardless whether it threatens the mere existence and livelihood of thousands of industry professionals. An observer of PODS has even raised the potential of these PODS backfiring on the same individuals that are brokering these deals. In the long run, if some of these POD surgeons have such disdain for sales reps, accusing them of driving up the cost of delivering quality healthcare, who is to say that with one fell swoop they could eliminate their brokers, whom they view as less than partners, but more like necessary evils?What TSB has heard is that PODS are running rampant in the deep south and California, threatening the mere existence of a free markets. So the question must be asked, how is it that some of our readers cry out for free markets, only to game the system? Isn't there a conflict of interest when profits are driven by self-referral? And whom are some of the companies have gone from pretenders to contenders? What will be interesting to watch will be how hospitals, its administrators, and its compliance officers respond? TSB wants to know what you think?

Ride The Lightening

2011-09-15T20:08:00.000-07:00

As Metallica rings in the background, one must ask the question, for whom does the bell toll? Screw one of our readers who constantly bitches and complains about the use of lyrics and metaphors on our blog. As James Hetfield of Metallica belts out;

For a hill men would kill, why? They do not know, stiffened wounds test their pride
Men of five still alive through the raging glow gone insane from the pain that they surely know
For whom the bell tolls, marches on....................

Well fellow bloggers, could this be the beginning of the end for POD's? As Hemingway wrote in his masterpiece "For Whom the Bell Tolls, the Scripps and Sharp's Hospital Systems have ordered the demolition of a bridge that links POD guerillas to the our own very existence? Contrary to some madman's insinuations, TSB's sense of duty clashes with those whom call out their free market principles only to contradict themselves when it comes to their own survival.

Today, it was announced at the Sharp's Hospital Systems that no longer, yes fellow bloggers, no longer will Sharp's allow anyone involved in a POD to do business with their hospitals. Just like Scripps the gauntlet has been laid down. In addition to laying out this mandate, the word on the Street is that Phygen is Persona Non Grata.

As for the Scripps and Sharps Hospital mandate, you know what Jim Morrision once said, "This is the End my Friend, Beautiful Friend."

Double Indemnity

2011-09-11T04:31:00.000-07:00

"We're both rotten!"
"Yeah, only you're a little more rotten!"

Fellow bloggers, Barbara Stanwyck's and Fred MacMurray's dialogue in the American film noir co-written by Billy Wilder and Raymond Chandler can be an appropriate description of the spine world that we live in. Life can imitate art. Potentially our moment will play itself out beginning in November of 2011. If life does imitate art, then Senator Chuck Grassley (R-IA) and Herbert Kohl (D-WI) will play the dual role of Barton Keys (Edward G. Robinson), whose job it was to find phony claims in the movie Double Indemnity.

November 2011 and the subsequent date of March 31, 2013 will usher in a new era of compliance. The Secretary of Health and Human Services shall establish policies and procedures to ensure compliance with the requirements authored into provisions within the Sunshine Act, aka the Patient Protection and Affordable Care Act of 2009, passed by the Senate on December 24, 2009, and the House on March 21, 2010. On November 1, 2011 the Secretary will begin conducting audits to determine that hospitals are also under compliance. No longer will some of our highly esteemed hospital administrators be able to look the other way when it comes to questioning some of the current concepts in spine. Hospital compliance officers will actually have to start being accountable.

If there ever was a time to accelerate the arrival of March 31, 2013, the time is now. TSB can hear the outcry, especially, from our celebrated commentator whose constant derision of our blog includes labeling us a socialist and liberal forum. Our only response is that some people wouldn't know the boogeyman if he jumped out and bit one in the derriere. If your personal freedom's are so threatened, please do not read our blog, your utter non-sense will not be missed, but then we do believe in free speech, therefore, rant on. Whether one agrees with our opinions, the reality is that once again our society needs to find balance in the individual roles we play in our lives, in our financial expectations, and the fact that maybe the illusion that we have created can no longer be translated into reality. Dr. Leary, where are you when you are needed? Change will be good, and everyone will learn how to adapt or perish. The recent outcry for less government is theater at its best. TSB can hear all those phony teabaggers, only to be contradicted by the recent events of Hurricane Irene whom invited herself into many of your lives and showered you with the wrath of Mother Nature. And you know what Michelle Bachmann says, "it's not nice to full Mother Nature." Ironically, the cry from Democratic and Republican bureaucrats on the state level in the East has been for more federal intervention, blaming the federal government for the mismanagement of their finances, and lack of action when it came to addressing the damns, rivers and streams that were never fortified in the event of a major disaster. Whatever happened to personal accountability and less government? But this isn't what this post is about.

On March 31st, 2013 and the 90th day of each calendar year beginning thereafter, any applicable manufacturer that provides a payment or other transfer of value to a covered recipient shall submit the following to the Secretary,

Name of that individual
Business Address
Amount of Payment
Date of Payment
Description of Payment
Cash or Cash Equivalent
In Kind Items or Services
Stock or Stock Options
Any Other Form of Payment or Transfer (POD)
Description
Consulting Fees
Compensation for Services other than Consulting (POD)
Honoraria
Gifts
Entertainment
Food/Travel
Education
Research
Charitable Contributions
Royalty or Licensing Fee
Current or Prospective Ownership or Investment Interest (POD)
Direct Compensation for Serving as Faculty or Speaker for Medical Education
Grants
Any Other Nature of Payment or Other Transfer of Value,

These are just a few of the guidelines that will be enforced. Hopefully the DOJ will look at every company excluding no one, especially some of the smaller companies that attempt to fly under the radar. There are plenty of lawyers, surgeons and distributors burning the midnight oil in anticipation of how to circumvent the law. Whether the law will reign in the terror that we have inflicted upon ourselves will be determined by time. Will this legislation dampen the endless schemes that are hatched by individuals in our industry whom condemn the law, yet rely on the law to find new and creative ways to circumvent the very laws that they decry? Will we see a return to innovation? Will we see the demise of POD's, and phony consulting agreements? Regardless of your role in the industry, the stench that many of you smell is the infestation of corporate dollars in buying business rather then developing newer and innovative modalities of treatment. By leveling the playing field, we can separate the contenders from the pretenders, and stop the insanity that many of us are consumed with on a day to day basis. Who knows? So in closing TSB wants to know, is the Moon in the seventh house and will Jupiter align itself within Mars, is this the dawning of the Age of Aquarius?

Let the sunshine, let the sunshine in, the Sunshine in...........................................................

Ali v. Wepner, Bring Back the Old Days

2011-09-06T15:54:00.000-07:00

This isn't the Fight of the Century, neither would one consider it the Rumble in the Jungle, one wouldn't even classify it as the Thrilla in Manilla. This lawsuit is a heavyweight going after a middle weight in a sanctioned bout reserved for a San Diego federal jury. The heavyweight is Medtronic and the middle weight is NuVasive . Could this be a Muhammed Ali/Chuck Wepner bout? The Bear is originally from NJ even though TSB highly doubts that he had Bayonne roots.

Warsaw Orthopedics, Inc., a unit of Medtronic has accused LaJolla based NuVasive of infringing three patents for implants that are capable of being inserted translaterally, a plate and screw system that can be used to stabilize vertebrae, I believe the attorneys meant "fuse" in the cervical spine, and a tissue retractor. Medtronic's attorney orated in his opening statement to the jury, that Medtronic's damages are substantial and that a financial expert will present one option for calculating lost profits at $200 million (ouch), and another that is estimated much higher. NuVasive on the other hand, contends that Medtronic infringed on its patent for a nerve monitoring system for lateral surgery. NuVa's attorney is quite eloquent in his defense of NuVa when he told the jury, "Nuvasive didn't copy nothin'."

It will be interesting to see how this bout develops, could a local jury affect the final outcome with some home cooking? Boxing fans know that scoring points is quite subjective with jabs and body shots, unless one delivers a knockout punch, or a lethal kidney punch. But what happens to NuVa if they lose this fight? And, how many more fights can they lose before the can't get off the mat? TSB wants to know whether our readers are rooting for the boys in the Blue Trunks, or the Purple Tights? TSB is taking even odds that the judges will score a homegrown decision, gotta love our industry, Rome burns while the attorneys make all the money. No wonder we can't get anything done. You know what they say, "sooner or later love is gonna getcha, TSB wants to know what our readers think?

Are We Ready to Self-Implode? Yet?

2011-09-05T21:22:00.000-07:00

As Mark Twain once said, "the reports of my death have been greatly exaggerated." As an author and humorist who grew up in Hannibal, Missouri, TSB can relate to Twain. As the summer comes to an end, and we enter the autumnal season there's only one question to ask our fellow readers, "are you ready for football?" Contrary to some observations, TSB does have a second, third, fourth, and fifth in line to succeed in the event of an attempt to subvert our organization, and contrary to a few industry platforms that would like to see our demise, the party goes on.

The past week's comments by our readers have exhibited the insanity that has come to rule the Spine World, your lives, and let alone the U.S. healthcare delivery system. In addition to our readers comments, NBC Nightly News reported that the U.S. ranks 41st globally in infant mortality, and that we spend more per capita for healthcare in the US, than any other country in the world. We would like to think that the majority of our readers are rational, we hope, and that this in itself is disconcerting, considering that five years ago we were ranked 29th, based on those facts TSB believes that we are moving in the right direction. NOT. Maybe it is time for a real Spine Summit, and not the BS Spine Technology Summit that has become a self-serving commercial venue for individual special interests, especially the person that runs it. The definition of a Summit is a meeting or conference of heads of state, conducting diplomatic negotiations or an easing of tensions. If there ever was tension in our industry, all one has to do is scroll down and read the comments on our blog site. The only easing of tension at the Spine Summit is the hand massage each one of these individuals give one another. You have a choice, patronize or boycott, and boycott seems to be more apropos.

How is it that we initiate a blog on a specific company, technology, a rare happening, or an individual observation, and it becomes a cry for help? Don't believe it, just read the comments posted in the DTRAX blog. A.D.D., hopefully not, but then again, maybe so. The hilarious comments about the guy with $2,000 cowboy boots, Versace glasses, and canary sports jacket, we didn't know cowboys wore Versace, made us wonder what would the Duke would think if he was alive? Now there's a new definition for the rhinestone cowboy. If anyone delivered a fitting reality check for the industry, TSB can only thank Mr. August 31, 2:37 p.m.. Yet, contrary to a minority of executives and surgeons opinions, this is our industry and many of you have made it what it is with your passion, commitment, and dedication to a job well done. But getting back to our point, if our illustrious leaders happen to log on to our website, and we know you do, has it dawned upon you that you lack the leadership, the respect, verve and vision that it takes to make a difference. You have become greedy and useless as well, our readers can fill that in. You have become lackeys to your shareholders and the suck on the teat of The Street. Your arrogance belies most of our imaginations. You lack the guts to do the right thing. As one of our eyes and ears on the street reported this week, where are the IDE's, where is the investment capital, what are the CEO's doing to drive progress and innovations? Blame the R&D departments, blame marketing, blame sales. If y'all spent as much time focusing on innovation as you do on suing one another the world may be a better place.

Well the fact is that if there ever was a time to have our so-called spine "heads of state" conduct a meeting and face the music, the time is now. Our industry is a microcosm of a greater disease that afflicts the American Healthcare System. GREED. TSB wants to know are you willing to fight, or are you going to lie down? Stay tuned for our report on the NuVasive and Medtronic as they go toe to toe battling one another in the courts. Now that everyone has had their batteries recharged with a great vacation, it's time to get back to the spine world.

DTRAX: Will It Make a Difference?

2011-08-24T07:20:00.000-07:00

The word Providence is defined as a manifestation of divine care, hopefully Providence Medical Technologies will direct their universe and the affairs of spine patients in the future with wise benevolence. Some of you are wondering who is PMT, not to be mistaken for DMT, and what is it that they are hawking?

PMT is a privately held company developing percutaneous spinal therapies. If you are interested in learning more please log onto http://www.providencemt.com. No TSB does not have any vested interest in this product, nor do we know any of these individuals personally. What Providence has is a facet system called the DTRAX, no relation to every salesman's nemesis, REPTRAX. The DTRAX is a facet system for the cervical spine patients with radiculopathy. The premise is to decompress and stabilize the affected cervical level via a minimally invasive approach.

The powers to be at Providence are Art Taylor and Jeff Smith formerly of Kyphon fame who have aligned themselves with an Advisory Board comprised of Drs. Berven, Bradford, Eyster and Harvinder Sandhu. Considering some of the previous technologies that have been marketing for facet therapies, maybe these guys are on to something, but you know what TSB says, can this technology stand up to the test of time? Only time will tell. TSB wants to know, what our readers think?

Overhanging Transition? Or Just Plain 'Ol Piling On

2011-08-22T17:41:00.000-07:00

If the spine industry were the NFL, right around this time, a zebra would run out on the field and throw a penalty flag. It seems that Globus Medical, aka "when will they go public," must feel like they've been hit by several players after they've been tackled. Piling on has a new meaning. You know what the late Rosanna Rosanna Dana use to say, "it just goes to show you if it ain't one thing, it's another." It's bad enough that the Cat has nine lives, but Les Paul, I mean David and his band are starting to play some dissonant notes.

On August 22, 2011, Rachiotek, LLC and the mighty Eli of Yale University have filed suit in the United States District Court in the District of Massachusetts against you guessed it, Globus Medical, for allegedly infringing upon the "675" patent by making, using, offering for sale, and or selling devices that provide spinal stabilization. As a result of the patent infringement, Rachiotek is seeking preliminary and permanent injunctions and damages.

The case involves patent infringement, and arises under the Patent Laws of the United States, Title 35, United States Codes. The patent in question, the "675" patent (U.S. Patent No. 7,931,675) entitled, "Dynamic Stabilization Overhanging Stabilization" was issued on April 26, 2011 to Panjabi et al. The "675" patent is generally directed to spinal stabilization devices for use in stabilizing a spinal segment. In layman's terms a spinal segment between two vertebraes. The "675" patent includes dependent and independent claims that define various principles of spinal fixation that are disclosed in the patent.

Example: First and Second resilient members that cooperate to deliver a non-linear force displacement response to relative motion between the first and second attachment members or stops associated with the spinal stabilization device. One of the resilient members is an "overhanging" orientation. The Globus device in question is the Transition Dynamic Stabilization System. The Transition DSS includes first and second resilient members that deliver a non-linear force displacement response to relative motion between the first and second attachment members or stops associated with the Transition. One of the resilient members of the Transition is an "overhanging" orientation. All the usual allegations and infringements are included in the complaint.

Rachiotek LLC therefore asks for the following;

A judgement that "when will they go public" infringed upon the "675" patent
A preliminary and permanent enjoinment against Globus
Damages
A threefold increase in damages because Globus willfully infringed
Prejudgement and post judgement interest on compensatory damages
Attorney fees

And last but not least, a trial by jury. Considering that David once slew the mighty Goliath, the champion of the Philistines to show his true identity, how many more salvos can the King of Pain absorb? Remember what David said when confronting Goliath, "This day the world will deliver you into my hands, and I will strike you down, and cut off your head." How many more lawsuits will David have to fight? Maybe it would have been easier to take this onto a battlefield rather than a courtroom. You know what Louis Salinger once said, "Some times a man meets his destiny on the road he took to avoid." David don't look back now, but it seems time is beginning to catch you, karma is a bitch!

Sunday Op-Ed Piece

2011-08-21T04:41:00.000-07:00

In the summertime when the weathers high you can stretch right up and touch the sky, when the weathers fine you got women you got women on your mind, have a drink, have a drive go out and see what you can find, when the weathers fine we go fishing or go swimming in the sea, We're always happy life's for living, yeah, that's our philosophy.

Yes spineologists, every now and then its good to come up and breathe, breathe in the air. As Mungo Jerry inferred, a sabbatical is refreshing. Go fishing, jump in the ocean, hugs you chillin' and spend some time with your loved ones. Just like our readers, commentators, and the U.S. Congress, the boys and girls of TSB needed a little rest and relaxation. A five week vacation paid for by the people would have been nice, but, unlike the POTUS and the lame Congress its time to get back to work. TSB must question our readers and wants to know, has everyone had a great summer? As we approach the autumnal equinox, everyone will be gearing up for the spine silly season. So what does this mean? It means that we will be going on the road, and TSB doesn't mean Iowa or Minnesota. We will be going to CNS on October 1-6 in D.C , the Minimally Invasive meeting on October 21-23 in Las Vegas, and NASS on November 1-5 in the Windy City, topping it off with a kick flight on Southwest to CSRS on December 8-10 in Scottsdale. Who knows maybe with all the money that NASS rakes in, rather than spending it on some ridiculous guest speaker, this year they could hire the Counting Crows to entertain us. A little pay back would be great for public relations. If there is one thing TSB has learned about the investment community is that when they have a meeting, they know how to party. With all the sponsorship subsidies that probably exceed hundreds of thousands if not millions of dollars, isn't it time that NASS paid us back? Hey, let's hire another boring speaker to anesthetize the audience, or let's come in a day earlier and attend the Reverend Robin Young's annual Spine Revival. TSB thought our members were having a Houston moment attending the recent Rick Perry prayer revival, who knows and whom really cares, maybe old Rick himself will show up at the technology awards espousing the magic of stem cells. With all the recent articles on stem cells the only ones that are missing are how to increase cylindrical filaments and real whiskers.

The last week has been a roller coaster ride and a wake up call for publicly traded spine companies based on the punishment that has been doled out. Unfortunately, the disruption that some speak about is not occurring in new technologies, but in the downward spiral of stock prices. Ouch! Am I dreaming or is this really happening to me? Some of the companies that have been tossed around have been those that believe that they are shakers and movers within the industry. NuVasive has been battered to the point where they have settled at a 52 week low, while AlphaTec has resembled a Duncan Yo-Yo, while Orthofix has lost steam in light of hiring a new CEO. Where are all those prognosticators and investors when you need them? Have they lost their religion for spine? TSB bets that the shorts are having a field day. As more companies look to cut the fat, it will be interesting to see who survives in a sagging U.S. economy that will only place additional stress on the U.S. healthcare industry. This week it was reported in various publications how cuts in healthcare may undermine the role in the labor market, as hospitals and companies look to cut overhead to reduce operating cost. If you have a job, hang on because this ride is going to last longer than expected.

Though we were away, we noticed that there really wasn't much activity in the spine market, unless one considers Integra's launch of Zuma earth shattering. Was that a Sea Spine product? With a product name like that, one must wonder whether someone was hanging out in Malibu or whether they were having an ephemeral moment listening to Neil Young's and Crazy Horse's 1975 album. Hopefully, it was the latter. So as we close another summer in the chapter of our lives, its time to gear up, get those suits cleaned, buff those shoes, and bring down the suitcase, let's see who will come out of the pack this fall in a tight horse race. Will the market rebound? Will some of the companies hit by a bear market and punishing economy rebound? Or, are we truly experiencing a correction? It will be interesting to observe whether investor pessimisms cause angst and consternation at some of these companies. It's been a great time to be short. See you down the road.

Eve of Destruction or Reconstruction? You Be the Judge

2011-08-12T06:03:00.000-07:00

Interestingly, a few of our bloggers commented that rather than focus on the negative in spine, how do we change the public's perception and police the industry ourselves, especially in light of the controversy swirling around POD's and INFUSE? First a few observations. Why do bloggers attack one another with senseless insults when it comes to critiquing others strategic plans, ethics, products, and performance of specific spine companies? Does it make any sense? Where is Dr. Drew Pinsky when you need him? Defending oneself only adds credibility to one's culpability. Rather than directing your high levels of testosterone at one another, isn't it time to use some of that testosterone to call out the executive management teams at some of these companies? Don't you have any gonads boys and girls? The leadership skill of some of these executives are no different than what we are witnessing in our own government. Blame everyone else for the current state of affairs rather than being held accountable for your past actions, lack of vision and innovation. Does anyone drive looking over the horizon rather than what is in front of the hood of the car?

The constitution of this industry is a microcosm of a larger phenomena, and at present we have the opportunity to either be heard, or end up as collateral damage. We can have a generational debate, but the reality is that tenured professionals were once young, and the young eventually end up being tenured professionals. It's a cycle, we can either stand united or fall divided. You can either demand accountability or continue to drink the kool-aid. The only difference between the spine industry and Jonestown is hopefully you will live to talk about it. Forget about AdvaMed, a self-serving lame duck joke at best, forget NASS, they can't even keep their own house in order, what we need is a manifesto that outlines acceptable behavior to preserve our own existence. You can blame the Government, you can cast blame on the FDA, you can call out the insurance industry, you can call patients irresponsible, you can even call out surgeons that manipulate the environment to line their pockets with a few shekels, yet, until we change our own behavior and accept accountability for our contributions to this industry, nothing will change. If you want to do something right, do it yourselves. Think about the absurdity of our industry. Companies continue to hire the Usual Suspects with the belief that those individuals can bring some secret formula from a Medtronic, DePuy, Stryker, Synthes (RIP), Zimmer or Biomet. The industry regurgitates the same individuals over and over, and what are the results? How insane is it that companies rely on an idiotic poll or survey to determine whether an individual will succeed or fail? If ever there was a time to establish a precedent for the future, the time is now. Whatever happened to getting to know someone for who they are, for what they have accomplished and whether they have an excellent work ethic? We do love self-promoters, don't we? Are there any real leaders out there? Can anyone make a responsible decision without worrying about being fired? You would think the shareholders run our companies. Are we experiencing the death of common sense? Have we become so specialized that we have rendered ourselves insensible?

Division and uncontrolled greed is not good. It serves no purpose. Some of you will argue that greed is good, but greed is only good if it serves a greater purpose. Some will say that the end justifies the means, keep rationalizing your actions. As the heart and soul of free market enterprise, your attacks should be directed at the management teams rather than one another. So why do some comments offend some bloggers? Because your portfolio sucks? Because your R&D department has no talent? Because the new management team that was brought in from one of the giants in the industry continues to do the same thing over and over expecting different results, pirating their former employers distribution network in hopes of a major windfall? Now there's creativity at its best, or, is it insanity at its best? The fact is that we all have to earn a living, and the only way we will survive is if take our own action. How many consultants can we hire so that they can change the design of another screwdriver? So what does all this mean? How do we do create a change? Who leads? Who follows? Do we call out those organizations and surgeons that use nefarious and unhanded schemes for their own benefit, or do we idle in neutral and watch while Rome burns? Why are we supporting organizations like NASS, CNS, AAOS, and AANS if they themselves continue to do the same thing over and over again? Why don't trade industry professionals have their own forum at NASS, AAOS, CNS, or AANS, we are the foot soldiers that contribute to the temples that each company builds to pay homage to their slavish followers, or are we the slavish followers? TSB can only be your forum, as my great grandfather once said, "when a man's back is to the wall, you can either roll up your sleeves and fight, or you can roll over like a puppy dog."So TSB wants to know how do we effect change?

My blood's so mad it feels like coagulatin'
I'm sitting here just contemplatin'
I can't twist the truth, it knows no regulation
Handful of senators can't pass legislation
And marches alone can't bring integration
When human respect in disintegratin'
This whole crazy world is just too frustratin'

45 years later, and things still remain the same, insanity? You make the call.

Downgrading The Spine Market

2011-08-07T06:24:00.000-07:00

To say that it has been a tumultuous and uncertain time in spine would be an understatement. Since the beginning of the year, the industry has been making adjustments to a rapidly changing U.S. healthcare landscape. In anticipation, downsizing began with Zimmer and Medtronic announcing layoffs, only to be followed by other key players such as Biomet and Alphatec. Granted, not all layoffs pertain to spine, but the industry has had its testosterone levels dropped a notch, and there is no need for a blood or saliva test. We are the enemy. Outside of Nuvasive, many companies are experiencing a dose of reality playing in a market where surgical procedures are down, insurance denials are up, patients are afraid to have surgery because they are worried about losing their jobs, and declining ASP's are making many of the larger companies reassess their financial objectives and distribution models. In addition we have POD's threatening the existence of thousands of salespeople, blaming sales people for the high cost of delivering implants to the industry, bickering among surgeons on ethical practices, and two parallel U.S. Senate investigations. Whether you like it or not, there have been more negatives than positives when it comes to reporting growth for many of the publicly traded companies, granted some changes in accounting rules have helped certain companies save face for another day of judgement. Either you have something new, or you don't. And if you don't, sustaining market share may be more important than real growth to some of these organizations. What is killing this industry and this country is that too many companies can only think short-term because of they have been hypnotized by their drug, Wall Street. Some will argue that TSB is attacking the Street, yet even those of us that report what's been heard on the Street know that forecasts are an important metric to evaluate one's accomplishments and failure, unfortunately, we no longer think long-term. Everything is short-term. Short-term thinking is providing the industry a rude awakening. This week, the markets brought some companies back down to earth, taking some of that luster off their magic lamps. You can blame the Europeans for this week's fall from grace, but the Market's performance has been on steroids to begin with. In one fell swoop, valuations tumbled faster than you can say, "we continue to have laser like focus."

Outside of NuVasisve success, single digit growth has become the norm, unless you are one of the mid-level players in the industry. Alex we must admit, you are one hell of a salesman. Even though some analysts rave about some of the bigger companies, questions abound whether the industry is finally making the necessary adjustments as it moves into the second half of the year. The most recent quarterly earning reports are not painting a pretty picture for spine. Zimmer (3%), Biomet (10%), Orthofix (3%), Medtronic (1%), granted some of these numbers combine hardware and biologics, but spine is spine whether its hardware or software. So how does this shake out for the industry? Consolidation and annihilation continues to hover over the industry like an alien space craft. Companies that have been surviving on a revolver line are close to being placed on a ventilator, while other companies are hoping to weather the storm. Free markets are working their magic. The strong may not necessarily be left standing on two feet, but the weak will definitely perish, especially if the economy continues to flounder and your company doesn't have innovation in the pipeline. All this speculation about not investing into newer ideas and products because of the economy is short sighted. This is a marathon not a race.

So rather than dwell on all the bad things that have happened since the New Depression occurred three years ago, TSB wants to know from our readers who are some of the up and coming companies? Let's have a poll, you be the judge. Does anyone have innovation that could potentially disrupt spine as we now know it? Is there a game changer? Who will come out of the pack in the second half of the year as someone willing to go long rather than short? If there is one company that intrigues us, it is K2M. With all of this insanity, they seem to fly under the radar, not looking to bring public scrutiny to their attention. Of course before your comments come to rest, our maniacal friend will ask when will Globus go public? Get a grip on yourself, even if that company had the ability to go public, it is so diluted that you'll probably make pennies on the dollar. So in closing, just like the U.S. Government, spine has been downgraded as an industry. Until we fix our own house, it might get worse before it gets better. You know what Jackson Browne once sang.

"these days I'll sit on cornerstones and count the time in quarter tones to ten, my friend don't confront me with my failures, I have not forgotten them."

Is Technology Distracting the Art of Surgery?

2011-08-02T19:28:00.000-07:00

There's an opening scene in the documentary It Might Get Loud, where Jack White, the infamous maniacal and passionate guitarist is driving down a country road in Franklin Tennessee with l'il Jack in the back seat and states, "technology is a big destroyer of emotion and truth. Obviously it makes it easier for you to get home sooner, but it doesn't make you more creative as a person. That's the disease you have to fight in any creative field, ease of use. "

On July 31st, the Courier Journal reported that two Norton Healthcare surgeons form Louisville, Kentucky were criticized by The Spine Journal (TSJ) for allegedly under reporting or failing to mention side effects from INFUSE and Amplify. TSJ said that John Dimar II and Steven Glassman were among surgeons that under reported or failed to mention side effects including cancer, male sterility, unwanted bone growth, and nerve damage in 13 papers published between 2000 and 2010 that were sponsored by Minneapolis based Medtronic. The 13 papers in question concluded that INFUSE and Amplify were at least as safe as bone grafts.

TSJ is the official journal of the North American Spine Society (NASS). In a statement NASS concludes that, " it harms patients to have biased and corrupted research published. It harms patients to have unaccountable special interests permeate medical research, concluding that the adverse effects were 10 to 50 times greater than what was reported. Three of the thirteen papers were authored by Dimar II and Glassman, whom declined to be interviewed for the article.

The paper in question was authored in 2009 by the two Louisville spine surgeons and four co-authors regarding a 463 patient trial of Medtronic's Amplify, saying the study failed to stress a link to cancer. Granted Dimar II and Glassman were each paid royalties of $2.4 million dollars, but that was for top selling products that they had helped to develop. Several years ago Medtronic paid a fine of $40 million dollars to settle a claim that they had paid surgeons to use their products. The obvious argument will be made by some of our bloggers that this is old news. Contrary to those beliefs, one must ask the question, has innovation in technology taken away the art of surgery? Innovation and emerging technologies are important. But, where does one draw the line when it comes to a craft like surgery? Have training programs and surgeons gotten away from what made the art of surgery a great profession, the ability to transfer knowledge to one's hands and potentially enhance the patient's quality of life? Has BMP become the victim? Is BMP the really the root cause of the controversy that surrounds Medtronic and its relationships, or is it managing the behaviors inherent to our own human nature? By not being forthright in their past findings, not only are these surgeons performing a disservice to the public, they are leaving a lingering cloud hanging over their reputations? Maybe reputation really doesn't matter or does it?

All one has to do is open a copy of the original INFUSE training manual to understand the concerns that were expressed in the administration of the product. Clearly, there were caveats. Medtronic, as usual, will cooperate with the on going investigation by the Senate Finance Committee by turning over the appropriate documents in question, but in the end will they modify their behavior when a $40 million dollars fine is far less than the profits made on the commercialization of the product? Industry insiders will argue that the FDA and big government are inept at designing an acceptable pathway to commercial use, and at times arguably so, but what happens when there is intent to obfuscate the truth? TSB and its readers do not need to take sides in this ongoing debate, the exercising of orating in a public forum can be left up to those that are the gatekeepers of this profession, the surgeons. It will be interesting to assess the climate at NASS this year, who knows maybe something good will come out of this, or, maybe like Jack White says, it comes down to convenience and ease of use. TSB wants to know is INFUSE the victim or is it the culprit, you be the judge.

Regulatory Smackdown

2011-07-30T05:10:00.000-07:00

On Wednesday, July 27th, 2011, the New York Times reported that allies of the medical device industry were waging an extraordinary campaign to discredit an upcoming report by one of the country's pre-eminent scientific groups that is examining possible new regulations on the industry. As of this posting, the report was released on Friday by the Institute of Medicine (IOM). The report's recommendation is to "scrap" the current system, which elicited reactions from outright rejection by industry officials, to acceptance by patients groups and disbelief from federal regulators, who had commissioned the report. The report was commissioned by everyone's best friend the Food and Drug Administration on the heels of recent recalls pertaining to metal-on-metal hips, pumps and defibrillators.

The Institute of Medicine is part of the National Academy of Sciences, a widely respected organization. The report goes on to say that it is not immediately clear as to what impact, if any, this report will have, or if it would be adopted. Industry dissenters included Medtronic, Boston Scientific and Johnson & Johnson. The mouthpiece for the industry, AdvaMed, immediately weighed in issuing a statement from Stephen J. Ubl, that "this would be a disservice to patients and the public health." Patient groups and some doctors applauded the panels findings, urging to create a system that examined a device's benefits and harms before patients were exposed to it. On the other hand, FDA officials were caught off guard.

The study in question reviewed the 501(k) clearance process under which moderate risk products are approved by the FDA. The study DID NOT examine devices that carry the highest risk to patients if they fail. The study concluded that the 510(k) process lacks the legal basis to be a reliable pre-market screen of the safety and effectiveness of moderate risk devices. The FDA's immediate response was that it believes that the 501(k) process should not be eliminated but is open to new proposals and approaches in its responsibility as the gatekeeper for device reviews.

As an unknown observer mentioned, "the first commandment of medicine is to protect the consumer from harm." But what does this say about our value system? The companies that immediately reacted to this study, have themselves been culpable of numerous recalls. The Washington Legal Foundation, whose tag line is "Advocate for Freedom and Justice," had fired a preemptive salvo on June 28th, 2011 urging the FDA not to use any advice or recommendations provided by the IOM, claiming violation of the Federal Advisory Committee Act. The brief was filed with pro bono assistance from Robert Klepinski, an attorney from Minneapolis, Minnesota. Mr. Klepinski is an attorney who counsels pharmaceutical, medical device and biotech companies on FDA policy, in addition to once working for Medtronic as a regulatory attorney.

With the recent controversy swirling around metal-on-metal hips like the DePuy ASR and ASR XL, and the Zimmer Durom Cup, could these scenarios be another example of profits taking precedence over science and technology? Interestingly, some other industry websites even have links to law firms that are looking for patients interested in participating in class action lawsuits against some of these companies. So the complex question must be asked of our readers, how does the industry find a balance between corporate sponsorship and science? Regardless, the fact remains that without clinicians working with companies, and private investment, innovation and technological improvements cease. And what happens to the patient if government regulations are bought and paid for by corporate interests?

The medical device court of public opinion is waning. The behavior of the insurance industry, a shell game at its best, and the recent public slaughtering of the device industry in the national press has made it evident that the integrity of the U.S.healthcare and medical device industry is under siege. Whether our bloggers agree to disagree, the fact remains that those companies that are publicly traded have become slaves to their master, the Street. What does it say about the medical community when there is such a dichotomy in principles? Whom does one believe? The unfortunate aspect of this debate is that there are companies that abide by the rules, and companies that know that the risks are outweighed by the potential profits. It all comes down to a cost-benefit analysis. Could it be cheaper to incur the fine or settle a legal claim than it is to properly evaluate the safety and efficacy of a new technology? Let's be honest, we're all in this to make money, but we're also in this to make the best products that money can buy without compromising the patient's safety. The current system is not sustainable. As companies cry out for additional self-regulation, have we learned anything from the most recent crisis in the financial community? The key to our survival is finding balance and reason in the regulatory oversight process, until then, thrive to survive.

Storm Warning

2011-07-26T15:30:00.000-07:00

On June 23, 2011 the FDA issued a warning letter to Pamela Layton, CEO of Parcell Laboratories in Newton, Massachusetts regarding their methods for processing the Alphatec PureGen Osteoprogenitor Cell Allograft. The inspectional records that were reviewed were standard operating procedure by the FDA, including product summaries, instruction for use, medical and health history profiles, donor physical assesments, viral test results, fungal test results, sterility, eligible donor files, and ineligible donor files. PureGen is intended for homologous use, meaning, to repair, replace or supplement a recipient's cells or tissue with an HCT/P (Human Cellular and Tissue/Products) that performs the same basic function in the recipient as it did in the donor. PureGen is intended to be used for homologous repair, replacement, and reconstruction for musculoskeletal defects, and is not to be used systemically.

Basically what the FDA was saying was that the ELA cells do not meet the criteria in 21 CFR Part 1271 which states that the purpose of this part is to create a unified registration and listing system for establishments that manufacture human cells, tissues, and cellular and tissue based products and to establish donor eligibility, current good tissue practice, and other procedures to prevent the introduction, transmission, and spread of communicable disease by the HCT/P.

If you are an establishment that manufactures HCT/P that are regulated solely under the authority of Section 361 of the PHS Act, this part requires that you register and list your HCT/P's with the FDA's Center for Biologics Evaluation and Research and to comply with the other requirements contained in this part, whether or not the HCT/P's enters into interstate commerce. The HCT/P's that are regulated solely under the authority of Section 361 of the PHS Act.

The HCT/P's must meet the following criteria:

The HCT/P's are minimally manipulated, they are intended for homologous use, reflected by the labeling or other indications of the manufacturer's intent. The HCT/P's do not involve the combination of cells or tissues with another article, except for water, crystalloids, or a sterilizing or preserving agent, providing these agents do not raise new clinical safety concerns.

The HCT/P does not have a systemic effect and is not dependent upon the metabolic activity of living cells for its primary funcition or the HCT/P's have a systemic effect dependent upon the metabolic activity of living cells.

The HCT/P's are intended for autologous use, is for allogeneic use in 1st or 2nd degree blood relative, is for reproductive use, and if you are a domestic or foreign establishment that manufactures an HCT/P as described you must register with the FDA, you must submit to the FDA a list of each HCT/P manufactured and you must comply with other requirements. Specifically what this letter states is that the product does not meet the criterion in 21 CFR 1271.10(a)(4)(ii)(b) because the product is dependent on the metabolic activity of living cells for its primary function and is not intended for autologous use or allogenic use in a first or second degree blood relative. As a result your ELA cells are drugs under section 201(g) of the Federal Food, Drug, and Cosmetic Act (the ACt) [21 U.S.C. 321 (g)] and biological products as defined in section 351(i) of the PHS Act [42 U.S.C.262 (i)].

The letter goes on to state in order to introduce or deliver for introduction a drug that is also a biologic product into interstate commerce, there must be a valid biologics license. The license is only issued after there is a showing of safety and efficacy for the products intended use. While in the development stage, such products may be distributed for clinical use in humans only if the sponsor has an Investigational New Drug application in effect as specified by FDA regulations. PureGen OCA is not the subject of an approved biologics license application nor is there an IND in effect. Based on this information, the FDA has determined that your actions violated the ACT and the PHS Act.

Could the potential exist that the parties involved were going for an easier approval process, you be the Judge and the Jury. TSB wants to know what our bloggers think?

Synthes v. Globus (Round 2)

2011-07-25T11:17:00.000-07:00

Sooner than later, our readers are going to witness the most anticipated boxing match in the history of spine, for the heavyweight championship of the world. Are you ready? Spineblogger fans are you rrrrrrrrrrrready? With thousands of spinebloggers and millions of viewers watching in the United States of America, especially in the U.S. District Court of Delaware, "Let's get ready to rumble!" No fellow bloggers it not TSB, it's Philadelphia, Pennsylvania's favorite son, Michael Buffer standing in the ring holding the microphone with Synthes USA standing in one corner, while Globus Medical stands on the opposite side of the ring.

On Friday, July 22nd, 2011 the firm of Young, Conaway, Stargatt and Taylor LLP filed a formal complaint on behalf of Synthes USA in the U.S. District Court of Delaware against Globus Medical for infringing on Patent numbers 7,846,207, 7,862,616 and 7,875,076 also know as the "207," "616," and "076" patents which have been assigned to Synthes. This action arises under the patent laws of the U.S., 35 U.S.C., Sec 1, et seq.

The "207, 616, and 076" patents were duly and lawfully issued to Synthes by the USPTO. The Inventors of the "207 and 616" patents were Mssrs. Beat Lechmann, Dominique Burkard, Chris M.J. Cain, and Claude Mathieu, while the "076" patent was invented by Mssrs. Claude Mathier, John Cain, and Christopher Marden.

The Synthes complaints cites that Globus has directly infringed on these patents by making, using and offering for sale products that infringe on these patents. Included are the ALIF System Coalition, ACDF System and the InterContinental Place Spacer Products. The complaint states that Globus' infringement on these patents was willful. Synthes respectfully is asking the Court to enter judgement in its favor and against Globus and grant the following relief;

A judgement that Globus willfully infringed on the patents
Enjoining Globus and all persons in active concert from any further infringement
Award Synthes damages adequate to compensate for Globus' infringement
Award Synthes its attorney fees and costs
An order to recall from distribution and destroy its entire stock.

TSB wants to know who are you placing your bets on the Synthes "the Bone Crusher" USA or Globus "the Ironman" Medical? It doesn't get any better than this, these are two companies that will forever be tied to one another whether they really like it or not. Let's get ready to rumble!

Sunday Funnies

2011-07-24T11:56:00.000-07:00

Picture a man or a woman going on a journey beyond sight and sound, they have entered TSB zone. Good day Spine World, you know what the late James Brown sang, "I feel good." It's time to rock it out from Baghdad to Berkeley. It's 0800 and TSB is ready to rock, the "0" stands for OH My God, have any of you read the most recent marketing reports for the spine world? You know the reports that tell you what you already know. Let's see, these reports have been uplinked and downloaded, inputted and outsourced, upsized and downsized, downsided and upgraded, they have been interfaced with a database, and their datebase is from cyberspace, they are interactive and hyperactive and from time to time they are radioactive. With that said the market has been inspected, detected, injected, but not perfected.

So what are the sages of the industry telling us? Well before you consider spending any of those fast depreciating good old U.S. dollars on another insane marketing report that tell you where you are (we know that), where you came from (we know that), let's take a look at what their crystal balls (no pun intended, not) are telling us where they see us going. By the way, if their predications for the future are wrong, do we get a refund with interest? The last few years in spine have been a rude awakening, mercenary to say the least. We have gone from a super sized industry to one that is slowly consolidating itself whether by acquisition or failure. Industry dynamics have been affected by a sagging U.S. economy, leading companies and investors to expand into markets outside the U.S., as well as selectively investing in technologies that are considered innovative. Only a higher authority knows what will happen to our economy if the U.S. Government defaults on the debt ceiling. The failure of our elected officials in both parties to resolute the debt could result in an economic downturn that could be the death knell for some spine companies. So where do we go from here?

TSB would like to share with our bloggers some facts about 2010. Our total market output was slightly over $7 billion dollars. Revenues were a slight increase of 2.2 percent over 2009. Poor growth considering where we came from. Medtronic continues to lead the pack as the market leader with roughly a 35% marketshare. Even with the acquisition of Synthes, J&J/DePuy ( a combined 26%) still takes a back seat to the Boys in Blue, followed by Stryker at 8%, NuVa at 5%, Globus at 3% and Zimmer at 3%. Before anyone gets their panties in a knot, these are rounded figures. The rest of the industry is battling for 20% of the pie. The key players in that bracket are Alphatec and Orthofix. Word on the Street is that this could be the year of Globus, and TSB is not predicting an IPO. Rumor has it that their XLiF device will give NuVA a run for its money, and if it is as good as some clinicians have said, could this be the beginning of the end for NuVasive as the King of the XLiF. This could be trouble for the Billion Dollar Baby.

Fusion continues to dominate, as we witness more entrants into the pedicle screw, cervical plate and PEEK interbody markets and biologic markets. One must ask, but why? A premium is being placed by some companies on simplifying surgical technique with new approaches to old systems. If you already have a viable and competitive system that has MIS capabilities, why does the industry need more fusion products? Simply, because new companies or those in the 20% of the pie, are willing to cut out the middleman and make direct deals with POD's, a new breed of brokers and hospitals. What we are learning in 2011 is that the key to success has been creative and innovative selling techniques, along with attractive/aggressive commission programs to offset the increase in insurance denials and an outright attack by hospitals on driving ASP's to all time lows. Companies that have been able to pick off distributors that were collateral damage in the Apatech/ Baxter, and Stryker/Orthovita acquisitions increased their revenues. These were the outliers in the industry. The pending J&J/Synthes integration will also result in a shift in market share, the question is, who will be the lucky company or companies to capitalize on this integration? It will be impossible to keep everyone in the fold as there will be overlap in the field resulting in more industry related layoffs.

TSB believes that any company that doesn't have some type of motion preservation technology is already behind the eight ball. There are roughly 30-35 companies with a variety of cervical disc devices and 25 companies with lumbar platforms. As far as the Dynamic Stabilization market is concerned, remember that old French expression, "Le Roi est mort, Vive Le Roi." Unfortunately, TSB does not see a successor, resulting in an interregnum for Dynamic Stabilization, along with the fact that the FDA has placed greater scrutiny on this product line. Companies with ISD's could end up being the big winners in 2012 considering that they are playing in a diminishing landscape. The advantages of this procedure are a shorter surgical time, involving a minimally invasive approach that is low-risk that results in patients recovering much needed flexibility and mobility. Products like Axle, Coflex, X-Stop (the grand dame of ISD's), Superion, Flexus, In-Space, Spinos, Gel-Fix, Spinos, ISS, DynaFix, and Primalok are viable treatment modalities when it comes to Grade I spondy's with assoicated spinal stenosis. The market and surgeons will determine who are the winners and who are the losers, as usual it comes down to simplicity and instrumentation. The challenge will be to get those devices in IDE's out quickly, so that hospitals welcome them with open arms. Reimbursement is an invitation to the party.

If the future calls for an estimated annual growth of 3-5% over the next five, the companies with innovation will win the race, but it will be a marathon rather than a sprint? Will the top five companies be able to sustain their positions? Will stem cells rule the biologics marketplace? Will someone be displaced by an up and coming company. Will someone like Zimmer attempt to correct its past indiscretions in spine by making a key acquisition, or, will they be displaced by one of those companies in the 20% part of the pie? Whatever the outcome, strap yourselves in for the ride because 2012 will be the year of the dragon, one with vitality and strength. The only question that remains to be answered is will it be the U.S. market that produces vitality or markets outside the U.S. when it comes to spine? TSB wants to know what our readers think?

Pay Me Now, Pay Me Later, But Someone Has To Pay

2011-07-19T06:12:00.000-07:00

Recently one of our fellow bloggers inquired whether TSB could pen-a-post regarding the current state of the insurance industry, and how it relates to an increase in spine procedure denials. Supposedly, there has been an influx of denials in the Sunshine State. Low back pain has been one of the greatest challenges for the patient, spine surgeon and the insurance industry. It is a given fact that back pain is one of the most expensive ailments to treat. You don't need another data base to verify this fact. Considering that spinal fusions have increased dramatically over the past ten years, its a wonder why insurance companies are placing greater scrutiny on lumbar fusions, or lumbar related procedures. The question must be asked, what is reasonable and what is unreasonable when it comes to surgical intervention? The argument can be made that it is difficult to measure instability in certain clinical circumstances. As insurance companies look to push the envelop on denying coverage, a greater onus is being placed on both companies and surgeons to establish a more defined criteria. If conservative management was a panacea, why would anyone need back surgery? Physical Therapy, NSAID"s, and epidural relief are far less expensive than surgery. Is there a magic bullet in determining whether a patient will have an excellent outcome without the obvious factors that contribute to poor prognoses? Why do some patients do better than others? Because at the end of the day, isn't it really about the outcomes? Could part of the challenge be that the definition of instability is not uniform in acceptance? At best, the studies that exist have provided mixed outcomes. As insurance companies continue to scrutinize spine surgery, they have negotiated with the surgical community by allowing respective spine societies to comment on their concerns, and even influence and modify coverage, witnessed by the recent lumbar procedures taken hostage in the BCBS of North Carolina standoff with SAS, NASS, and AANS. Does this bode well for the industry?

In order to obtain more comprehensive data, spine companies will have to work closer with payers, witnessed by NuVasive's pro-active position with XLiF, and surgical societies must be willing to provide greater detail in how their outcomes are measured. Most patients present with degenerative disc disease (DDD), if the pain generator is not primary, then the challenge is to quantify the secondary and/or tertiary pain generators. If conservative therapy does not help the patient, the surgeon and patient collaborate to operate. So why do insurance companies behave the way that they do? Simply stated, it's their job. As has been stated on this blog, and at many industry related forums, the insurance industry is about risk management. Insurance companies view spine surgery as potential risk by calculating the probability of an adverse event, the surgery, they estimate the financial impact, how much will it cost and look to minimize their loss. That's why data is imperative. They are no different than Goldman Sachs or Citigroup when it comes to managing their portfolio. What most people fail to understand or accept is that medical care is more art than science, everyone cannot always have a good result. But the reality is that for many years spine was a carte blanche procedure, and it was just a matter of time before it came under attack, so in closing TSB wants to know who has seen an increase in denials, what states have been effected, and is this an anomaly or truly a growing trend?

The Spirit of Edgar Dawson, M.D..................Lives On

2011-07-14T08:24:00.000-07:00

As the INFUSE debate escalates, TSB thought it would be of interest to our bloggers to revisit a 2003 Letter to the The Spine Journal Editor by Edgar Dawson, M.D.. Dr. Dawson contributions to spine surgery was immense. An academician, Dr. Dawson's love of medicine was something to envy. In 2003, Dr. Dawson's letter addressed many of the concerns that have surrounded the recent INFUSE debate.

Dr. Dawson believed that the FDA approval of Bone Morphogenic Proteins was an important milestone in orthopaedic science, yet, he warned that it was time to pause and examine unresolved issues so as not to misuse a clinical treatment modality in "its infancy" despite over three decades of research. Contrary to some peoples opinions, Zdeblick, Burkus and Haid were not the founding founders of BMP , Dr. Mashall Urist, M.D., pioneered studies on bone induction and the identification of bone morphogenic proteins. He revolutionized the field of orthopaedic growth factors. A little history will educate some of our younger bloggers. But back to Dr. Dawson.

In the Letter to the Editor, Dr. Dawson warned that clinical results had not been as conclusive as pre-clinical results. The key to his observations were that carefully designed and well controlled trials yielded much different results than an uncontrolled environment. The preclinical and clinical studies of BMP's may not be as simple as differences in the healing potential of young healthy lab animals compared with human subjects. The key to Dawson's then letter was that "no dosing data was available from an actual clinical study." If ever there was a prophetic observation, Dawson warned that, "different indications will require not only different doses of proteins but potentially different carrier materials to obtain clinical efficacy." The argument can be made by those in the surgical community that it has been proven that the use of BMP-2 in posterolateral fusions has been efficacious, and rightfully so, but the question remains, how many post-op issues have never been reported or addressed? Just eight years ago, prior to his death, Dawson warned that "the use of BMP's are not without potential significant complications." The Marshall Urist's and Edgar Dawson's of the world were not only pioneers, they envisioned the potential side effects of a powerful therapeutic agent. They discussed the importance of containment at the site from their experience with exuberant bone formation in the soft tissues in animal studies.

One of the unknown risks that Dawson discussed was the role of antibodies that develop to BMP's in some patients post-op. Though the occurrence rate was higher for BMP-7, anti-body formation was reported to a lesser degree in patients that receive BMP-2. In 1985 Urist, Hudak, Huo, and Rasmussen published a paper entitled, "Osteoporosis: A Bone Morphogenic Protein Auto-Immune Disorder," citing increased levels of antibodies to BMP's in patients with osteoporosis, speculating that osteoporosis may be a BMP auto-immune disorder. In addition, BMP was contraindicated for pregnant women, and women were advised to use contraception for at least one year after implantation of BMP. Finally, as Dawson writes, BMP's have been isolated and identified in osteosarcomas.

Since the time of Dawson's death, the medical community has learned much more about the effects of dosing and containment, yet the cost effectiveness, the limitations, and potential complications must continue to be explored and documented in a transparent way for the safety of the patient first, and profits second. Sometimes people get those two things mixed up. But as Dawson points out, surgeons should never forget the basic principles of bone healing and biology, or as many of our bloggers know, it comes down to carpentry and craftsmanship and therein may lie the problem. The use of BMP was never intended for convenience, or as another short cut to getting great results. It all comes down to process, which includes meticulous graft site preparation and understanding how to deliver/dose this product. Too many people fail to understand process because all they care about is results. In closing, Dawson's prophecy is still with us whether we like it or not, the question is have we learned anything?

Summertime Blues

2011-07-12T10:23:00.000-07:00

The last few weeks in spine have been interesting, to say the least. Without questions surrounding INFUSE, and a bit of hoopla regarding the acquisition of Salient and PEAK by Medtronic, what would the industry really have to debate? Another story on stem cells? Another story on POD's? The same relentless blogger asking the ridiculous question, "when will Globus finally go public?" Would it be safe to say that spine has hit a wall? Or, could this be a pivotal and defining moment for the spine industry? Could the Dog Daze of Summer be lulling you the into a false sense of security? Could you be coming down with a case of the Summertime Blues? Or, has the industry continued to rear its ugly head by the way salespeople and surgeons have gone after one another, or, how The Spine Journal has now pitted surgeon against surgeon by dedicating an entire issue to INFUSE? I guess Medtronic's new CEO Ishrak is receiving his baptism under fire. The Korengal Valley rather than Minneapolis may be a better place to sequester oneself. Even Larry Biegelsen of Wells Fargo fame has weighed in with his analysis of what could potentially happen to Medtronic's Kingdom if his crystal ball allows him to look into the future. Someone recently asked TSB the question, why was this blog started? This blog was a response by a core group of people that have believed and echoed for years, the sentiment that this industry needed to develop a referendum on the way business is conducted, how scientific evidence is presented, and how unscrupulous our practices have become in a highly competitive and saturated spine marketplace. How many of you have sat in the audience during past clinical presentations on INFUSE snickering at the underlying commercialization of a product, wondering how long will the medical community tolerate this behavior until it calls out its own colleagues? Does anyone have any questions from the audience? How many times have you sat in the audience asking yourself is this a scientific presentation, or a sales pitch by Ron Popeil for the Ronco Rotisserie? Commercial interest from the podium, not in our industry, especially at an educational forum. TSB knows the actors that have the leading role in this movie. All of them are good men, but just because you have good intent, does not mean that your opinions can't be influenced by your vested or financial interest in a products success or failure. And yes fellow bloggers its okay if the authors of this paper intended to tie in one with the other, because at the end of the day human nature does play a role in science. Does anyone really believe that the intent of this paper was to bring Medtronic down? Absolutely not. Does anyone really believe that the intent of the paper was to embarrass Drs. Zdeblick, Burkus and Haid? Highly unlikely. Maybe the authors are just asking their peers and the industry for transparency. Contrary to prevailing opinions, Medtronic and INFUSE are not going away anytime soon. Is this the wake call that Medtronic desperately needed to regroup? Maybe they will realize that its not all about shareholder value, return on investment, and how many consultants can you have in your pocket? Maybe the company needs to get back to basics? Regardless, Mr. Ishrak must now deal with the fact that his company's reputation has become stale because of their arrogance.

The Spine Journal addresses the core problem of our industry, the spine community behaves like their is no systemic problem. To paraphrase an industry platform, "the spine community is reeling, even accusing the authors of tabloid sensationalism." Surgeons like Carragee, Weiner, Rothman, Bono and Ghanayem are questioning INTEGRITY, HONESTY, ETHICS, and CONFLICT OF INTEREST? Today, they ask questions that should have been asked many years ago. Unfortunately, the medical profession frowns anyone that challenges a prevailing opinion even if it pertains to the so-called new savior in spine fusion. Yes INFUSE has done wonderful things for patients, but it has also been utilized in ways that it was never intended to be utilized, and that's where the problems exist. Even Zdeblick alludes to that. Whether you like it or not, its a drug. It was developed by a pharmaceutical company, Wyeth, licensed to Medtronic and positioned as the panacea for all fusions. If surgeons are expressing their anger, they should be angry at themselves for failing to ask the necessary questions years ago when the opportunity presented itself. TSB wants to know what our readers think, will Medtronic rebound or will they take the hit from the piranha's circling the waters. Everyone knows that anyone with stem cells, or any other biologic are just chomping at the bit.

Network: 1976 Redux? Have Things Really Changed?

2011-07-07T07:27:00.000-07:00

TSB doesn't have to tell you things are bad. Everybody knows things are bad. People are out of work and scared of losing their jobs. The dollar doesn't buy you squat, spine companies have gone out of business, or have been merged, shopkeepers keep guns handy in event, spine sales people are running wild, and there's no one anywhere that knows what to do. The air is unfit to breathe, and food is unfit to eat. We sit at night watching the news and have some local newscaster tell us we had fifteen homicides and forty-one violent crimes, while the economy melts down, and Congress dicks around with the future of this country. We know things are bad, maybe worse than bad. No one wants to sell, no doctors wants to see your products, hospitals are building a moat around their complex to keep you out, insurance companies don't want to approve your surgery, and you can no longer play by the rules. Rules? What rules? Everything goes. It's like everything, everywhere is going crazy, so we don't really work that hard anymore. Just leave us alone.

Well you know what, TSB is not going to leave you alone. We want you to get mad. We don't want you to protest, you're a generation void of any social conscience, we don't want you to riot, you wouldn't be able to handle the mayhem, we don't want you to write your Congressman or Senator, because most of them are never at work. We don't know what to do about the depression, oh yes, by the way who ever came up with the "great recession," the Middle East, and crime in the streets. All we know is that it's time that you get mad. You've got to say, I'm a salesperson and I am not buying a doctors office lunch anymore. God damn it! My product has value and I am sick of feeding the herd at every surgeons office for the opportunity to genuflect, kiss the ring, and then get nothing more than lip service. We want you to get up, stop your cars, open your windows, and we want you to yell, "WE'RE MAD AS HELL AND WE'RE NOT GOING TO TAKE THIS ANYMORE." THINGS HAVE GOT TO CHANGE. There will be no more $300 dollar lunches, no feeding the herd. The doctor needs lunch? Buy him a sandwich, you're not selling to his staff. After you do that, then we'll figure out what to do with the debt ceiling, raising hedge fund managers taxes, and speculators playing with oil prices. But first you've got to say, "We're mad as hell and we're not going to take this anymore."

No fellow bloggers, it's not Howard Beale. Oh Howard, if only you were running Zimmer Spine or even Orthowreck. TSB is blogging in response to an e-mail that was received from a fellow salesperson regarding the absurdity of making a sales call and having to buy an entire office lunch for an opportunity to discuss one's product, and the potential of doing business. The result: "we have many hurdles to jump over before we can even consider using the product." WTF does that mean? Considering the price of gasoline, the cost of parking, and lunch, its a wonder that many of you are not out there making sales calls. C'mon, how many of you are really making sales calls? In all likelihood you are trying to sell between cases in the hospital where the surgeon has no time, unless of course he's your consultant, or best friend. Companies want you to sell their products and increase revenue, yet, they don't have marketing collaterals, launch products without ancillary instrumentation, and have unrealistic expectations for growth, just go and read another marketing report. The bottom line is if you really want to effect change, start out by boycotting the staff lunch. They might be nice people, but what do they have to do with buying the product, you, and the potential relationship that you may foster with a customer? If there ever was a place to start, now may be the time.

The FDA's Gift of Giving

2011-07-06T11:54:00.000-07:00

The last few weeks in spine has made it interesting to read everyone's comments regarding INFUSE. Your commentary has made TSB think about how truly gamed the system is by those spine/orthopedic companies that wield economic power in the industry. The principle behind any oligarchy is that economic power yields political clout and influence. The obvious companies come to mind, Medtronic, Johnson & Johnson/Synthes, Stryker, Zimmer, Biomet, Nuvasive (Billion Dollar Baby), Orthowreck, and Globus. Don't believe that? Just walk in a North American Spine Society Meeting. The big boys are situated right at the front entrance, while the ankle biters are hidden in the back near the restrooms, hoping that surgeons looking to relieve themselves will grace them with their presence. Our society cherishes the idea that all Americans have an equal opportunity to make money. A rich and privileged class of companies that have consistently used government relationships to enrich themselves in the best of times, and protect themselves in the worst, only to cry out for big government to stay out of their business. If one truly believes in "free-markets," one understands that our economic system was founded on the notion of fair competition in a free market. Most of these companies cry like an adolescent when it comes to being held accountable, in many respects believing that they should be treated like their Wall Street brethren, blaming the federal agencies for their inability to generate more revenue by placing restrictions and regulations on innovation, resulting in jobs being exported overseas, and crying for even more deregulation. Just like the housing market, the spine market is beginning to realize that the days of glory are gone, unless of course you are the industry's Maggie Fitzgerald and are selling futures to the analysts that your company will one day be a billion dollar baby.

So what's the gist of this post. Considering the rants regarding INFUSE, its clinical efficacy, and off-label use, no one has still answered the $1 million dollar per day question, did the FDA drop the ball on INFUSE, and were they pressured into making a decision that has potentially hurt a percentage of patients rather than make their lives better? Could someone at the FDA have been influenced by tried and true methods? Let's face facts, all we hear are the stories and papers that espouse the use of this pharmaceutical, but what about the horror stories? Many readers and platforms love to skewer the FDA, blaming them for the industry's inability to bring innovation to the marketplace, complaining that there needs to be a relaxing and restructuring of the submission process. But could this be a scenario where the FDA really failed at what its suppose to do best? Protect the public? Is the FDA looking out for our best interest? And, is it just the FDA, or, have the courts now set precedent?

In 2009, lawsuits on behalf of thousands of plaintiffs with Medtronic heart defibrillator wires, which have been known to be the "shittiest" in the industry and had been know to fracture and potentially send lethal shocks to patients, had been dismissed by U. S. District Judge Richard H. Kyle on the basis of the Preemptive Doctrine. Undoubtedly, Judge Kyle's background as a Minnesotan, nor, that his son's law firm had previously done work for Medtronic had nothing to do with his decision. The Preemptive Doctrine is based on the Supremacy Clause, which dictates that the federal government in exercising any of the powers enumerated in the Constitution, must prevail over any conflicting or inconsistent state exercise of power. Does the Preemptive Doctrine then open the door for more devices to slip through the system that are not ready for implantation? Maybe we should hook up Judge Kyle and his son to one of those defibs, just for shits and giggles to see if they like it? And then there is Wyeth. Wyeth sold the rights to BMP-2 to Medtronic. Will they be asked to testify and grace the Senate Finance chamber with their presence, knowledge, and experience on how this drug was originally intended for delivery and use? Wyeth could be the key in answering many open ended question about how this product should have been commercially brought to this market. Pure conjecture would say that Wyeth knows much more than anyone of us know.

So in closing, it will be interesting to see how long the Senate investigation will take. Will Ishrak call on his buddy Jeff Immelt to pull strings on Capitol Hill, while Medtronic continues to grease the wheels of the Congress and the Millionaires Club spending more money on lobbyists fighting their cause? And who has incurred the cost, or the wrath of the many revisions that took place due to INFUSE growing like wild fire? The taxpayer? All for the love of science and medicine, no doubt. Until then, Caveat Emptor.

The Carousel of Biologics

2011-06-28T06:35:00.000-07:00

Blogger Nation:

Now that your children have completed the school year, and your college students have come home, hopefully to a summer job, TSB hopes that each one enjoy great quality time with your family. Life is short, seize the moment, and every now and then, smell the roses. Now back to the blogging world.

On Tuesday June 28th, 2011, John (God, am I a pain in the ass to Medtronic) Fauber from the Milwaukee Journal Sentinel publish an article entitled; "Researchers Sound Alarm on Medtronic's Infuse Years Ago." A journey back in time brings the reader to 1999 when clinical reports began to surface that a new biological product had surfaced that was going to herald a new modality of treatment that would safely regenerate bone in patients that were subject to back fusions. Then something naughty happened. CT scans were starting to reveal unwanted bone formation in the spinal canal. As TSB has asked on numerous occasions, how many of us heard those stories from various surgeons? The clinical trial that was set to enroll hundreds of patients had to be stopped. Unfortunately, it would be five years before Medtronic would publish a paper on the halted study. As the results of ectopic bone formation was published, the paper downplayed the significance of this occurrence. Based on these findings the question must be asked of our bloggers; "has monetary and commercial progress skewed the medical communities ability to report clinical outcomes in a regulatory and transparent manner?"

David Malone M.D., a Tulsa, Oklahoma surgeon reported that he had two patients that had required multiple surgical revisions. One patient's biological response was so explosive that he needed a second revision because the boney ingrowth was larger than before the first revised surgery. Dr. Malone was quoted as saying that the secretaries in the clinic could even identify which patients received INFUSE by assessing the post-op x-rays. Good ol' Ronnie Pickard, a then top excutive at the Evil Empire agreed to a confidential settlement with the patient. Obviously, Mr. Pickard was unavailable for comment for the article. Dr. Malone goes on to report that in 2002 he sent a letter to the FDA making them aware of his experience with INFUSE. The FDA read the letter into the record and then gave INFUSE its stamp of approval in late 2002.

The 2004 paper has drawn much criticism from the spine community. Was there a systemic failure by the medical and scientific community by not reporting the various medical complications associated to INFUSE? As in any battle to conquer the market, collateral damage occurs. Could Medtronic and the surgeons involved have taken a mercenary attitude in the commercialization of INFUSE, accepting the fact that there would be casualties? In addition to the many questions surrounding the politics and financial implications surrounding INFUSE, one must ask the question whether ethics, good science and medical advancements take a back seat to commercial interests, especially when the potential of hundreds of millions of dollars are at stake?

Marybeth Thorsgaard, the Mouthpiece of Medtronic, issued a statement on behalf of Medtronic, stating, the patients that were enrolled in the original study, were made aware of potential adverse events related to ectopic bone formation. The article goes on to identify the usual suspects that have been involved with Medtronic over the years, Reggie Haid, Ken Burkus, and Charlie Branch. None of the aforementioned surgeons responded to e-mails from the Milwaukee paper. In closing, it looks like the INFUSE saga is just beginning to pick up some momentum. Considering that Medtronic has experienced flat growth and downsized its workforce, are they in a position to be broadsided by a potential torpedo? As INFUSE continues to get bad press, will this affect their estimated revenue stream of $1 million dollars per day for this product? And, did the FDA commit a major faux pas when they failed to acknowledge that INFUSE was a pharmaceutical and not a device? You know what Joni Mitchell once sang;

"And the seasons they go round and round, And the painted ponies they go up and down,
We're captive on the carousel of time, We can't return, we can only look behind from where we came
And go round and round and round in the circle game."

Senatorial Assault on Medtronic

2011-06-22T05:10:00.000-07:00

As a famous General once said; "we're stormin' the beaches of Normandy and you are worried about a little sand in your boots. Fight on!"

On June 22, 2011 it was reported in the NY Times that our highly esteemed Patricians of Congress, Senator Max Baucus (D-Mont), and Charles "Chuck E's in Love" Grassley (R- IA), had sent a letter to Omar (Welcome to Spine) Ishrak, the newly anointed chairman and CEO of Medtronic, seeking documents related to INFUSE. Baucus and Grassley are the equivalent of a U.S. artistocracy that intends on protecting the Plebians of our society. A noble cause if there ever was one.

As if Baucus and Grassley don't have better things to do like, worrying about the debt ceiling, helping over 15 million unemployed people have an opportunity to find a job, convincing the POTUS to draw down the troops in Iraq and Afghanistan, boy would that be a financial relief, pressure the banks to start pulling that TARP money out of securities and start INFUSING capital into the economy, or simply spend some of that lobbyist capital to stimulate the economy, the noble Senators are attempting to do everything in their power to ensure companies aren't concealing serious medical complications from patients just to increase profits. Now that has never happened before, has it?

Our good old friend at Medtronic, Mary Thorsgaard acknowledged that the Senators were seeking information on side effects related to, abnormal bone growth, now has anyone ever heard of that side effect, swelling in the neck and throat, and a form of sterility. Those of us looking for a new form of contraception might be willing to take a shot at the title with that one. But on a much more serious note, how many of our bloggers have heard of boney in-growth, in or around the spinal foramen or canal as far back as 2002 or 2003. As someone once quoted a spine surgeon to TSB, "I have had a few incidence occur, but I would never say anything considering that I am a consultant on this project." Imagine, all for the love of medicine.

A July 11th, deadline has been set, requesting all documents and communications with researchers, medical journals, the FDA, advisory board members, concerning any and all adverse effects. The good Senators are looking for e-mails that potentially could result in a smoking gun, good luck on spending more of the taxpayers money, where were you eight or nine years ago? The most entertaining aspect of the article was that Medtronic reported that it had $15.9 billion dollars in sales last year, with $3.1 billion in profits. A formidable war chest, now would be the time to start funneling money to Baucus and Grassley from your representatives on K Street. Unfortunately for the Senators, Medtronic claims it does not break out sales by products, which is the biggest crock of BS that anyone has ever read. So in closing, TSB would like to welcome Omar Ishrak to the wacky and wonderful world of spine, where there are plenty deals to be had. Hopefully, now that your buddy Immelt is on the President's advisory committee someone will finally cut your company a break, so you can get back to restructuring your organization all for the love of the shareholders profits. TSB wants to know what our readers think?

OFIX CEO RESIGNS

2011-06-18T08:38:00.000-07:00

It was announced on Friday, June 17th, 2011, a day that will live in on in Orthofix lore, that Alan Milanazzo, the current CEO, will resign effective August 1, 2011. The press release did not specify the primary reason for the resignation, but, the company lauded him as "a tireless worker and terrific leader." But it does make one wonder, with the black cloud that has followed Orthofix since the time of the Ramius’ brouhaha over Board members being replaced, the cluster f*&k over the Blackstone Medical acquisition, the DOJ penalty for bone stim improprieties and an employee exodus, could it be that with the appellate court's decision to overturn the lower court's decision in the Blackstone Medical/Orthofix whistleblower case, was this the straw that finally broke the camel’s back?

If one looks at chronological events, it seems that once things started to cascade at OFIX, it was one issue after another that led to Milanazzo’s demise. As recent as December of 2008, Ramius, LLC, a hedge fund, threatened the stability at Orthofix by calling for a special meeting of the shareholders, with the intent to overthrow, or more aptly described, to replace four of the ten then current board members. Ramius wanted to remove Milanazzo, Gero, Hewett, and Von Wartburg, replacing them with a fresh set of eyes and ears.

In March of 2009, Milanazzo was able to rebuke Ramius' attempt, publicly stating that Orthofix was headed in the right direction. Milanazzo believed that the Ramius candidates were duplicative of expertise as the current board members. What Milanazzo failed to understand or knew in hindsight was that the potential existed that Ramius did understand what was going on, and that a new set of eyes and ears were desperately needed to right the ship. In addition to this argument, Milanazzo espoused that OFIX had improved its core business of Sports Medicine, Bone Stimulators, and Orthopedics. Milanazzo was intent on defending his decision and the Boards to acquired Blackstone. Considering that everyone in the industry knew of the nefarious schemes that had been going on at Blackstone, one must ask the question, wasn’t there a better deal to be had? If one considers the unforeseen challenges of a major whistleblower case looming over Blackstone, where was the due diligence? Milanazzo and the Board's rationale for acquiring this albatross was based on price ($330M), technology (what technology) and distribution. The $50 million that was placed in escrow upon completion of the deal may not be enough to cover the potential settlement in the whistleblower litigation. In addition to these decision, Milanazzo never secured the relationship that Blackstone had with Osteocel/Osiris. As Milanazzo claimed Osteocel was less than $3 million of Blackstone's revenue prior to the acquisition. The question must then be posed, "what was OFIX paying $330 million dollars for," a house of cards? Those of us in the industry know that Blackstone had nothing more than a "ME2" portfolio. How many of our readers have argued, why does our industry love to bring industry outsiders (Boston Scientific) to run an orthopaedic operation only to have them step on their own d*#ks.

In May of 2009, upon Jeff Yielding of Little Rock, Arkansas plead guilty to two counts stemming from a healthcare kickback scheme in the Dr. Chan case. Another in the long list of famous Blackstone consultants. Though OFIX was implicated in the scheme, no allegations or wrongdoing were noted by U.S. Attorney Jane Duke. But anyone that follows corporate litigation understands that where there’s smoke, there’s fire. In addition, one must wonder what ever happened to the investigation surrounding the mysterious death of Kelly Yielding? Mrs. Yielding was a distributor for OFIX Bone Stimulators and mysteriously died days before her testimony in front of a Grand Jury. One must wonder was this coincidence, and if so, what's the statistical probability of something this rare happening to someone involved in a case involving so many scandalous characters.

In December of 2010, OFIX announced on behalf of itself and Musculoskeletal Tissue Foundation that they had reached a comprehensive settlement with NuVasive and Osiris Therapeutics regarding Trinity Evolution. Though the specific terms of the settlement were confidential, one must wonder was this just another nail in the coffin for Milanazzo? In addition to the settlement, during this process, OFIX announced a major reorganization related to employee termination benefits resulting in a charge of $ 4 million in the fourth quarter of 2010, but claiming that the reorganization was expected to save the company $6-$7 million dollars per year beginning in 2011 in operating profits. One must love the pretzel logic of the accounting world, addition by subtraction all for the love of its shareholders.

In May of 2011, it was reported that OFIX had settled with the DOJ for an estimated $43 million pertaining to improprieties regarding the sale of Bone Growth Stimulators, and as reported on TSB the Appellate Court over turned a Lower Court's decision to allow the civil action in the whistleblower court to move forward. In all likelihood, whether the powers to be admit ir or not, it will probably be in their best interest to resolve this matter in an amicable way, rather than potentially test the uncertainty of the Supreme Court, would they even want to adjudicate this matter, or risk going to trial? In the end, Milanazzo was a terrific leaders and tireless worker, unfortunately, he may not have been leading and working on the things that mattered most. TSB wants to know what our bloggers think?

The New Paradigm in Selling

2011-06-14T06:53:00.000-07:00

http://finance.senate.gov/newsroom/ranking/download/?id=274abe2e-ee0d-489e-9498-6542c0476cf5

No fellow bloggers, TSB is not singling out Paradigm Spine, TSB is talking about the ongoing metamorphosis of selling medical devices in the good ol' U.S. of A healthcare system. Upon reading the pro's and con's in response to POD's, again, TSB believes that the investigation into POD's by the OIG and the U.S. Senate's eventual ruling will determine the future of all U.S. spine companies business model. As someone so aptly described, the focus on this topic has made us look foolish and divided. That's what usually happens when things begin to spin out of control. It is apparent that there has been a paradigm shift in what has been describe as our industry's revenue model. Questions abound regarding the longevity of what was, and what could truly be the future. If one believes in unfettered markets, well look no further, the spine industry is the perfect model. No rules or boundaries, minimize regulations, avoid accountability, erode science while emphasizing marketing. Hocus Pocus, we have resurrected our own three witches. Some of you will agree, while others will dissent, while some of you cry out to PLEAAAASE STOP THE INSANITY!

So what lies in store for the industry? How do we compete in an environment where the system is gamed, by our customers, and, our own peers? Will the strongest survive, while the weak perish? Has competition and free markets as once defined in America reared its ugly head? As Linda Richmond use to say, "can we talk, gather around." While we debate whether POD's are legal or illegal, surgeons attempt to paint themselves as altruistic by claiming that there only concern is to save the hospital money as the industry's "new gatekeepers," Rome burns. If profits are not the motivation behind their actions, then what is? The love of medicine, LOL!

But what about hospitals? What about these bastions of modern day healthcare? Have they helped the current environment, or, are they the culprits behind perpetuating this chaos? Explain the rationale for taking away a surgeon's ability to use whatever product he or she desire, if we truly believe in free markets? Isn't the surgeon the one that has spent endless hours and hundreds of thousands of dollars to be the gatekeeper? As hospitals BS surgeons that they must work together, they manipulate the environment to only benefit themselves. If the hospital is footing the bill for implants, isn't it their responsibility to negotiate a fair and equitable price, and not the surgeons? Or is this just another ploy to keep the surgeon's focus off of the eye of the tiger. Slowly but surely, they are becoming the hospitals slave. As Michael Corleone once said, "every time I try to get out, they pull me back in." How many times have you sat across from a hospital administrator that has informed you that regardless what Dr. Famous would like to use, you are not a preferred vendor? WTF does that mean? TSB wants to know what MBA, CPA, JD, or MD came up with that BS description? How many times have you been told that in order to get your product into the facility, you will have to meet with the Product Evaluation Committee (PEC), only to find out that the next meeting will take place in four weeks, if you are lucky? How about the facility that informs you that you will have to wait until the end of the year to submit an application for preferred vendor status. WTF is that all about? If there is one thing that we have learned is that PEC's only exist to stonewall a potential vendor from getting into the facility. What happens if you really had something that was truly innovative or clinically advantageous to the patient's care, would any of us want to wait if it was our health at question? What happens if you can offer comparable technology with added cost savings to the facility? If price containment is the impetus behind POD's, and surgeons are willing to use a product that saves the hospital money, does it really matter what product one uses, as long as they are comparable? How many times have we heard that a screw is a screw, a cervical plate is a cervical plate, etc., etc., and so on? A bit of a paradox. The apathy that exists at hospitals is a study unto itself. Can anyone make a simple decision? Brain surgery isn't this complex. Are we experiencing the death of common sense?

As hospitals squeeze us on pricing, they continue to reap the benefits. Ever sell a pedicle screw for $800 dollars, only to find out that the hospital billed the carrier $ 8,000 per screw. What other industry can do that? Ever sell BMP for $5,000 -7,500 only to find out that the facility billed the carrier $22,000 and an additional $8,000 for some TCP sponge? Let's face facts, medicine is no longer based on care, it is based on profits. And that my friends is why whether one believes it or not, or agrees with it or not, the system will eventually evolve into a one payor system. The current system cannot sustain itself, and the faster we come to grips with reality, the faster we can move on. It won't be called socialism, it won't be Obamacare, it will be called survival. As healthcare delivery consumes 25% of the GDP, does anyone truly believe that it happened in the last two years? As Arnold use to say, "listen to me now, or hear me lader."

Global consolidation has changed the rules of engagement. Commentators that have eulogized those bloggers that have objected to POD's are only adding fuel to the Senate inquiry or an OIG investigation into the legality of this model. Exhibiting one's hubris has been known to come back and bite you in the ass, if you don't believe it, ask Anthony Weiner. So in closing, what will the new model evolve into? Will forecasts be realigned to meet the markets structure, or will we continue to live in the past? How does one continue to grow in a stagflated market? As a commentator to our blog love's to espouse, "you sales people are living in the past," maybe, that individual is only half right. Maybe its the executive management teams at these companies that are living in the past, creating the illusion that all one has to do is keep the status quo and things will be alright. But then again, maybe its the same people that have created this monster, that are now attempting to figure out how to survive. Two years, three years and its on to the next scam. You can throw all the marketing studies and procedural databases out the window, there's a new paradigm shift in selling, and if don't believe it, you won't survive.

First I was afraid I was petrified, thinking I could never live without you by my side
But I spent so many nights thinking how you did me wrong, I grew strong, I learned how to carry on
And so you're back from outer space, I just walked in to find you here, with that sad look on your face
I should have changed that stupid lock, I should have made you leave your key
If I'd known for just one second that you would be back to bother me...... I will survive.

POD Surgeons To Be Probed by U.S. Senate

2011-06-09T09:10:00.000-07:00

If you have ever had a physical when all is well, it can be an exhilarating experience. Unfortunately, being probed can be a real pain, especially when you are on the receiving end. Surgeons involved in POD's are about to get a check up from the U.S.Senate Committee on Finance led by no other than Senator Orrin Hatch, (R-Utah).

WSJ Article Link

For those of you that haven't read today's Wall Street Journal, sleuth reporter John Carreyrou reported that the Senate Finance Committee will launch an investigation into the legality of Physician Owned Distributorships. As per the article, it is estimated that POD's exist in at least 20 states with as many as 40 in the state of California. Rumor has it that the East Bay of San Francisco is ground zero, the breeding ground for POD's.

It will be interesting to hear our readers reactions,as the potential for a legal battle ensues. On one side you have Hooper & Lundy, a California bases law firm that has provided legal guidance for POD's, on the other side, the people, hopefully properly represented by the Senate Finance Committee that intends on shedding some light on this issue. Will this pit industry insiders against one another? Will Dr.Steinmann and his band of renown make a guest appearance on the Hill? How soon before this escalates into a free for all, as cynics of the government frown upon one group of corrupt officials setting out to investigate another group, whom claim that their intentions are sincere and that they are doing this to save the hospital money. Regardless of whom you side with, pull up a chair, grab some popcorn, and fasten your seat belts because the shows about to start.

Condolences to The Guyer Family

2011-06-08T07:23:00.000-07:00

Dear Dr. Guyer:

It is with deepest sympathy that those of us at TSB send you and your family our sincerest condolences on the loss of your son. By the sound of Jeff's blog, and the many nice things said about him, he must have been a great young man. To lose a parent or a spouse is painful, but nothing compares to the pain that we experience when losing a child. TSB can understand. Though the pain never goes away, keep his memory in your heart and no matter how bad things get remember that great smile and the warmth and love that he brought into each of your lives. God Bless You and Jeff's loved ones. May his soul rest in peace.

The Verdict

2011-06-07T04:33:00.000-07:00

A cadre of attorneys sat amongst the defendants. How much time, money, and energy has gone into a trial and a sentencing hearing? For what? As the sentencing hearing for three current and one former Synthes employees unfolded, one must ask oneself, what provokes us to act this way, and in the end, was it really worth it? Regardless of Judge Davis' decision to incarcerate or not, Norian was sold to Kensey Nash for $22 million dollars, a wash, considering Synthes was slapped with a $23.6 million dollar fine for its complicity in this debacle. These four men and their families stand to have their lives altered, forever, by actions that could have been and should have been averted. But as one looks at these four individuals, what about the victims? The fact remains that three innocent people died, their families lives changed forever.

The attorney for Tom Higgins, Adam Hoffinger, argued that the evidence of intent was insufficient. Unfortunately, the conspirators were complicit in a cover-up. With the exception of one local attorney, the attorneys surrounding the convicted were from high powered Washington, D.C. law firms. Attorneys would like Judge Davis to utilize a strict definition of the "Responsible Corporate Officer doctrine." The RCO doctrine are legal principles that typically shield corporate officers and its shareholders from direct possible liability for legal violations by the company, consistent with what has been argued that a corporation has a distinct and separate legal liability. Yet, based on recent activity in the media and by the government, authorities may be planning a more aggressive use of this doctrine. Will Judge Davis' decision to incarcerate establish a new precedent?

TSB spoke to a few attorneys regarding this trial, and the common theme seems to be that whenever a death occurs, judges seems to be less lenient. Judge Davis even reprimanded one of the attorneys for attempting to introduce evidence during the hearing. But then one must ask oneself, will Justice succumb to corporate influence and philanthropy? Synthes and Hansjoerg Wyss are known as pillars in the Philadelphia area. As one of our bloggers posted on Monday, if corporations want campaign finance reform, Citizens United v. Federal Election Committee, changing the rules of money in politics, providing the corporation with the equivalent of free speech as an individual, the time has come that they be treated like individuals when it comes to accountability and culpability in breaking the laws, especially when death is a by product of greed.

In closing, the tension and anxiety that Huggins, Higgins, Boehner and Walsh are experiencing must be agonizing at best, yet, one must still ask oneself, was it really worth it? The sweet smell of freedom is worth more than $22 million dollars. The freedom of a cold beer on a hot summers day, watching your children smile, or just smelling the roses is priceless. In the end maybe we will all learn something, unfortunately, TSB finds that hard to believe, because as Einstein once said the definition of insanity is doing the same thing over and over expecting different results.

Weekend Op-Ed Piece

2011-06-04T04:54:00.000-07:00

It is no doubt true that there are many cases in which the criminal could not have known that he was breaking the law, but to admit excuse at all would be to encourage ignorance where the law maker has determined to make men know and obey, and justice to the individual is rightly outweighed by the larger interests on the other side of the scales.

Oliver Wendall Holmes

One doesn't need to be a good man to perceive what's lawful, but with that said, what would a week in spine be without more tabloid sensationalism? BNET, the CBS interactive business network reported on Friday, June 3, 2011 that a federal appeals court ruled that the trial judges from the First District Court in Boston have applied the false-claims and anti-kickback statute too strictly. The appellate court's ruling follows a string of seven federal court decisions which had required that conspirators "expressly" acknowledge they are breaking the law when fraudulently applying for reimbursement from the government for medical expenses. Medicare, insurers and healthcare providers would have to find a written confession in order to demonstrate that they were being ripped off.

The ruling in question pertains to a qui tam case involving two former industry employees and Blackstone Medical. The whistleblowers allege that Blackstone Medical, its corporate officers and management team paid spine surgeons between $1,666 and $8,000 per month to ensure that they use Blackstone implants on their patients. The defendants argued that the payments were officially used to recruit surgeons for Blackstone's Medical Advisory Board. The case hinges on proving that these payments were made in return for surgical volume. All surgeon contracts were signed by Blackstone President Matt Lyons. The smoking gun in the case seems to be e-mails that were sent between a former regional manager, and Vice President of Sales.

The e-mail between the aforementioned manager and VP related to padding more hours for a surgeon advisor. Unless there is a pre-trial settlement, this suit could pit former managers against the executive management team, resulting in choice. Will the parties agree to cooperate or protect a former employer? Ignorance is no excuse for a lack of jurisprudence. In order to be vindicated of any culpability the parties in question will have to prove that they didn't know that what they were doing was wrong, or, that the law didn't apply to them. The potential of jail time looms large. The defense of "I was just doing my job" just doesn't cut it. As for the government, it has acted as an amicus curiae, an advisor, a friend of the court. But could there be more than meets the eye?

This week may turn out to be the week that CEO's in the medical device industry, pharma, and nursing homes wake up to the fact that jail time may be awaiting them when their companies are involved in Medicare and Medicaid Fraud. One could hear the outcry from our bloggers. "That damn government is at it again, meddling in places that they shouldn't be meddling in." The double standard that exist within the business world is sheer insanity. CEO's and top executives are usually in the position of leadership for the simple fact that they are supposed to lead. Numerous books have been written on this subject. Leadership means taking ownership and responsibility. It means integrity, transparency and honesty, knowing your employees, to name a few traits. So the question must be asked, how does someone whom is supposed to lead and guide an organization be so unaccountable when things go astray? There are obvious exceptions to the rule. Usually when a company develops a reputation for questionable business practices one must wonder is it in their DNA, and, who ultimately pays for these transgressions? Is this a victimless crime? "Ignorantia juris non excusa, Ignorance of the law excuses no one." As William Jennings Bryan once said, "destiny is no matter of chance, it is a matter of choice." There is a fundamental imbalance in the judicial system when someone robbing a gas station for $50 receives a 10 year sentence while some executive goes on to his next venture just because the company can pull out its check book and write a check with many zeros. Save us the outcry, because contrary to popular belief, their are some exceptional CEO's in this industry, unfortunately, it takes a minority to tarnish the reputation of the majority. Defense attorneys will argue that an individual cannot be held criminally accountable, or lose their jobs simply by the virtue of their status. Not when there is a smoking gun.

As people complain of government spending, the escalating cost of entitlement programs like medicare, social security, and unemployment, it is the alleged actions as mentioned that contribute to the fiscal burden that is placed on the U.S. credit card. The defense that a corporation is a legal entity having its own liabilities and privileges can be argued. Though not a person, someone must be held accountable for the actions of the corporation. Without people and their actions would the corporation thrive? Is justice served when a company pays a $46 million dollar fine when it probably earned 10X in profits? Just look at the current healthcare environment, there have been some companies that have been caught not once, but multiple times. Some have submitted false claims, marketed drugs that have not been properly tested for their safety and clinical efficacy, and paid kickbacks to doctors. The usually response by a CEO is that they had were not cognizant of what was going on. Unfortunately, when your signature or signatures are on specific documents, ignorance is no excuse for lack of jurisprudence. Why would any individual be responsible for running a company if they did not understand the law?

Before everyone starts blaming the government, or the POTUS, or TSB, or the whistleblowers in this case, scrutiny of the spine industry is being driven by those in the rank of file. People are tired of the games that those on top seem to continue getting away with, while some reap the rewards and discard the collateral damage, as business as usual. People are not a commodity where you chew them up, and spit them out. It's tough enough getting up every morning, it is even tougher when barriers and obstacles are placed at every step. So as another door closes, another chapter begins. Someone is going to pay the price for some past indiscretions. This time, maybe $50 million in escrow will not be enough to bail someone out of doing some time, yet, justice must be served, until then, the party continues.

So in the end, maybe there is a lesson to learn in all or this. It takes less energy to be nice to people, than it does to be a prick. If you treat your fellow man with an ounce of dignity and respect, rather than arrogance and disdain, one of these days the big dog is not going to come back and bite you in the ass. Karma is a bitch.

Hot Fun in the Summer Time

2011-06-02T03:33:00.000-07:00

End of the Spring and here she comes back
Hi, HI, Hi, there
Them summer days, those summer days

That's when I had most of my fun, back
high, high, high, high there
Those summer days, those summer days

On cloud nine when I want to, Out of school, yeah
County Fair in the country sun, and everything it's true, ooh yeah
Hot Fun in the Summertime

Yes, fellow bloggers to quote Sly & the Family Stone, as the spring winds down, another summer of hot fun lies around the corner. It will be interesting to see what a new season will bring the industry. Yesterday's announcement that Mike Mogul has taken the CEO position at DJO is another sign that one should expect the unexpected. After a stellar twenty-two years at his beloved Stryker, Mike has decided to move on. One of the good guys in the industry, Mogul has survived more changes than Lady Gaga. But what does it say about this chameleon? Could this mean that there will be additions by subtraction at Stryker? Who'd thunk it that M2 would ever leave Stryker? His replacement, spit shined and polished right out of the J&J playbook. One doesn't need to hear Les Cross sing Mike's praises. One company's loss is another company's gain.

On a much lighter note, let's monitor how the Integra and Sea Spine acquisition and merger unfolds. Bloggers have to be entertained when an "effusive" Stu Essig is quoted as saying "Sea Spine is an ideal strategic fit for Integra, as the combination brings two well-respected innovators in the spinal fusion market." C'mon Stu, you may be able to soft-shoe your friends on the Street with your Aztec-Two Step, but let's get serious, those in the industry are not some gullible analyst. If innovation equates acquiring two companies known for commodity products, TSB must admit, you definitely epitomize innovation. Essentially, you hopefully bought into a market. Word on the Street in Vegas was that you couldn't give the product away in the City that could never pass up a fusion that they didn't like. Name one product in your portfolio that would equate to being best in class? By the way, whatever happened to that tortured baboon?

Now onto something more serious. Readers have wanted a discussion on Interspinous Process Devices. The current crop of products come in all shapes and sizes. So which products have the optimal design? Which system has the exceptional instrumentation? Is Lanx and Medtronic leading the pack when it comes to market share? So here they are, and if there are any that we have missed our apologies, but we're sure someone will inform us of a potential faux pas.

Lanx - Aspen
Medtronic - XStop
Globus - Flexus
Paradigm - Coflex
X-Spine - AXLE
Life Spine - (Updating the website would help)
Vertiflex - Superion (What happened to Moti)
Osteomed - PrimaLOK SP

Fiscal Austerity in Spine

2011-05-28T04:54:00.000-07:00

"As I lay dying, the woman with the dog's eyes would not close my eyes as I descended into Hades."

One of the many uncertainties in writing or blogging is that one never knows what the publics reaction will be to your post. That is evident when people attack the messenger rather than read the message. But that is to be expected. If one believed otherwise, one should not attempt this exercise. The fact remains that most of us formulate our own impressions based on our life's experiences and interests. Just look at any other blogger, journalist, or writer. Whether you are attacking Goldman Sachs, questioning the clinical efficacy of a surgical procedure or business model, defending or accusing Lance Armstrong of using performance enhancing drugs, there are those that will side with you, and those who believe that you have some hidden ulterior motive. None of that could be further from the truth. It's the story that counts. It's about getting the information into the public domain so that you the reader and or blogger can make your own decision on what is right, what is wrong, what is fact, and what is fiction. And let's face facts, most of these topics are out there in the public domain. All TSB does is provide you with a forum.

An economic upheaval is unpredictable, its riddled with anxiety, distrust, anger, and plenty of rationalization. TSB has been through a few of these experiences. As unwelcome and uncertain as they may be, one learns to survive and move on, hopefully, never looking back. Hopefully, making you a smarter individual. Whether it has been the economy readjusting itself, a company being acquired, integration and downsizing, or even personal challenges, hopefully life imparts some wisdom, maturity and dignity. Reality has a way of leaving a bitter taste in everyones palate, witnessed by the many comments that have been directed at people in the last two posts, or even TSB. Its human nature to defend oneself, but its also human nature to stretch the rules. Whether its performing a study, attempting to manipulate stock, justify a POD, run a company, or defend one's ability to earn a livelihood, it's human nature to stretch the rules. No need to reason since history has a way of substantiating our point. As this industry adjusts to an unwelcome harshness, things must change. Not because we want it, they have to, if we are to survive.

20% growth is a thing of the past. Those days will truly be remembered as the golden years. Yes, there are companies out there that report 30-40% growth in their press releases, but look at the size and scope of those ventures. Perspective has its own honesty. Turmoil usually brings division, and chaos ensues. This division couldn't be any greater than what currently plays out each day on this blog and in our industry. As the the industry has matured, we evolved from true innovation, to duplication, to saturation, to commoditization, and are heading to extermination. The companies that have an inability to innovate, let alone adapt, will die a slow death. If you don't believe it, look around. Modern technology has given man the ability to shape and move markets with incredible speed. The unfortunate aspect of this gift is that balance is an art that our industry finds difficult. We are an industry of extremes, but then, maybe we are nothing more than a by product of a large phenomenon. Think of an innovative product, not necessarily unique, but different. By the time that product has picked up momentum and is generating new revenue, there are 5-7 products like it within months or maybe a year. Market data and analysts create unrealistic expectations, because numbers may not lie, they just don't have a human element to them. If you don't believe, go back and read the original JP Morgan report on the future of artificial disc market, or think about other so-called market makers in our industry and their predictions. Just like reconstructive orthopedics had its day of atonement with pricing, spine is still in the initial phase or readjustment. As insurance companies squeeze the life out of procedures, as surgeons perform less surgeries, as our business distribution model evolves we are squeezing the life out of the industry. Don't be too upset with the surgeons because, their day will also arrive. Fiscal austerity has become everyone's tag line. There are those few that proselytize in hope of attracting more investment capital using demographics. Unfortunately, the government, the economy and the realities of the market place have an entirely different plan.

Everyone is going to have to tighten their belts. Judgement day is coming, the uncertainty will be where do we stand when it finally arrives. No TSB is not talking about the end of the world, the religious right gave us a reprieve by reloading the date in their virtual calendar for sometime in August. Even Nostradamus wasn't given this many passes. As Prince once sang, this gives us all a little more time to party like its 1999. What we are finding out is that if one looks at evidence based medicine, change is not merely a thought, it is a reality. A recent study found that Medicare spends a fortune each year on procedures that have no proven benefit. Included in this study was two recent randomized trials finding that patients receiving kyphoplasty and vertebroplasty experienced no more relief than those receiving a sham procedure. Granted, if the studies in question were those sponsored by the government, one must wonder whether those studies were skewed. This would be no different than questioning the outcomes of a study when a group of surgeons are on a company's payroll. Nevertheless, if it costs Medicare an estimated $1 billion dollars a year to manage vertebral compression fractures and the outcomes are not that much better, are we heading in the direction of evidence based medicine? If dynamic stabilization was proven to be "as effective" as fusion, did we expect the insurance industry to welcome it with open arms? The extent to which Medicare pays for a procedure like kyphoplasty or vertebroplasty with questionable benefits must be quantified. Maybe evidence based medicine will provide us with better information as to how we manage an America where everyone wants to prolong their youth, and its unacceptable to have arthritic pain, or pain in general. No one likes pain, but the cold hard facts are that some will have to learn to live with it whether they like it or not.

So as you prepare for this Memorial Day weekend, break open a cold one, go to the beach, drink some good wine, go play a round of golf, throw some shrimp on the bar-be, and spend some quality time with your family, 'cause no matter what you may believe you work to live, and not live to work.

Let The Games Begin

2011-05-25T19:29:00.000-07:00

The Martin Memorial Health Systems in the State of Florida issued a memorandum dated May 6th, 2011 to all of its providers of medical devices and supplies. The reference on the memo was regarding PODS. Here is a reprint of the Memo as provided to TSB by one of our bloggers.

Martin Memorial and its affiliates believe that the growing influence of physician owned intermediaries in the medical device and supply industry is inconsistent with the spirit and intent of the federal anti-kickback statute, creating what the OIG has characterized as a "strong potential for improper inducement between and among physician investors, the entities, device vendors, and device purchasers. The OIG has stated that these ventures should be closely scrutinized under the fraud and abuse laws.

PODS are beginning to appear in hospital supply chains as middle man entities, typically organized as a product distributor or a group purchasing organization, that gives physician investors an opportunity to receive profits from the sale of certain medical products or supplies to hospitals in which the physician investors provide professional services. After reviewing various recent publications and legal opinions on this subject, Martin Memorial has concluded that it shall be its policy to refrain from entering into business relationship with supply chains that involved physician owned intermediaries. A snapshot of five bullet points follow;

1. Martin Memorial prohibits purchasing items or services for use in patient care including but not limited to pharmaceuticals, implants, instruments and other medical devices from any supply chain that involves a physician owned intermediary with which any affiliated physician or immediate family member has a financial relationship or which otherwise involves physician ownership in excess of 5%. Exceptions to this rule may only be approved only by the Martin Memorial Audit Committee, in consultation with the CEO, the Chief Legal Officer, and Chief Compliance Officer.

2. No Martin Memorial entity will enter into any agreement for the purchase of medical devices, supplies, pharmaceuticals, or any other item or service if it determines that the transaction is intended to influence the referral pattern from a physician who has, directly or indirectly, a financial interest in the utilization of the item purchased.

3. Where relationships with physician owned intermediaries is necessary, the relationship must be consistent with fair market value and satisfy all other applicable legal standards.

4. Vendors of all medical devices and supplies shall be contractually required to disclose to Martin Memorial all financial relationships, whether directly or indirectly, involving physicians who are either employed by Martin Memorial or who serve on the medical staff of Martin Memorial. Such disclosure shall include non-monetary benefits if the value exceeds $350 annually. In, addition, contracts with vendors shall contain an ongoing obligation to disclose such future financial relationships, and shall contain provisions for the prompt termination of the business relationship in the event of a failure to disclose or the disclosure of a prohibited financial relationship. The provisions of this section shall also apply to financial relationships with such physicians' immediate family members. For the purpose of this policy, the term "immediate family member" shall be defined in the same manner as it is defined in federal regulations related to the anti-kickback statute.

5. This policy shall be broadly construed such that whenever possible business relationships are avoided where supply chains for medical devices and supplies involve a potential conflict of interest of any kind. If Martin Memorial concludes that any vendor has engaged in an effort to circumvent the spirit and intent of this policy, Martin Memorial may in its sole and absolute discretion, elect to exclude such vendor from doing business with Martin Memorial or take such other corrective action as it deems appropriate under the circumstances.

Medtronic's Endless Headache

2011-05-25T05:27:00.000-07:00

As Medtronic prepares to head into a new fiscal calendar, the potential for additional challenges lie ahead for the once known jewel of the industry. Essentially, growth for the Goliath of the spine industry has been flat across the board. Wild Bill reported that Medtronic had seen steady growth across most of their businesses and geographies, which was offset by challenging dynamics in the U.S. ICD and spinal markets. As Wild Bill prepares to hand off the reign of the Evil Empire to Omar Ishrak, oh Omar if only you knew what you were really getting into, the NYT's reported this morning that a new study links spine product, INFUSE, to risk of sterility in men.

The study in question was released Wednesday suggesting that INFUSE poses a risk of male sterility. This finding is in stark contrast to earlier research by doctors paid by Medtronic who found no connection between the product and a condition that causes sterility. Now before everyone starts jumping down each others throats, let's get all the facts before the name calling starts. INFUSE has been widely used and advocated by the surgeon community in spinal surgery since around 2002. The labeling on this product does note that sterility related complications may be a side effect, but the controversy lies in that Medtronic sponsored researchers published reports attributing the complication to surgical technique and not the product itself.

A study posted Wednesday, on the web site of The Spine Journal by Dr. Eugene J. Carragee urges doctors to counsel men about INFUSE'S risks. Dr. Carragee based his study on 240 patients that he treated with INFUSE several years ago. The spinal fusion in question is the ALIF. The sterility complications at issue in Carragee's study affects only men and not women.

The two surgeons who were involved in the original INFUSE trial defended their findings to statements saying that not enough of men had experienced sterility-related complications in their study to statistically link the problem to INFUSE. The two surgeons that spearheaded this study were Dr. Thomas A. Zdeblick and Dr. J. Kenneth Burkus. In his web article, Dr. Caragee questioned why Zdeblick and Burkus had not broken out the patients in their study between those who had received INFUSE and those who had not, a method htat he said was a standard way to present a clinical trial result.

In response to Carragee, Zdeblick said the Caragee study was of limited value because it reflected the results of a retrospective look at patients rather than a clinical trial. Such reports "are notorious for being misleading." This new study will only add more fire as the intensity and debate surrounding INFUSE continues over having industry financed researchers present study findings in ways that favor the interests of corporate sponsors. But the question must be asked, IS THERE A BETTER WAY? How does one subsidize a study, if not by the company that is looking to validate its product's efficacy in the surgical arena? Whom else does one use, if not those individuals that have the most experience with the product? If there were "total transparency," would we look at these outcomes with a different lens?

TSB is not going to pass judgement on Zdeblic and Burkus' findings, but one must wonder, does human nature play a role in enhancing ones outcomes? Other surgeons have come out with opinions regarding the clinical utilization and efficacy of INFUSE, so is there a rational explanation for these differences? So in closing fellow bloggers the INFUSE saga continues do we believe the Zdeblicks and Burkus' of the world, or, do we believe the Carragee's, somewhere in between these three parties lies the truth. Omar welcome to the spine industry, where the show never ends.

Who's Next?

2011-05-24T04:50:00.000-07:00

We'll be fighting in the streets, with our children at our feet
And the morals that they worship will be gone
And the men who spurred us on, Sit in judgement of all wrong
They decide and the shotgun sings the song

I tip my hat to the new constitution, take a bow for the new revolution
Smile and grin at the change all around me, pick up my guitar and play
Just like yesterday, and I'll get on my knees and pray
We don't get fooled again, don't get fooled again

The change it had to come, we knew it all along............................

Yes fellow bloggers, some of you would love to imitate The Who and urinate on a monolithic slab while singing we won't get fooled again. The last couple of weeks have established a precedent in spine, whereas, more acquisitions are coming. Protecting and solidifying market share is the primary concerns of the Medtronics, DePuys, Strykers, Biomets, Zimmers and Smith and Nephew. These are the companies that hold the key to the Emerald City. DePuys acquisition was a diversification strategy, adding strength across the board, rather than just focusing on spine. Double D and the BOD at Zimmer must do something or be laughed out of spine. Smith and Nephew needs to flex its muscle and finally pull the trigger on a spine company. All talk and no action makes for a bad reputation. Stryker not only enhanced its portfolio with the recent acquisition of Orthovita, Vitagel and Cortoss will add more leverage in negotiating deals with its customers. So, Who's Next? Who will be the next company to be acquired? All of these companies have cash reserves that allows each one of them to pull the trigger. Why? Because contrary to popular belief, they know that a change is coming to the way healthcare will be delivered in the next ten years.

Will it be Globus? Will it be Nuvasive? Will it be K2? If the price is right, TSB believes that someone like Stryker will pull the trigger on another company, unfortunately, TSB does not believe it will be Nuvasive because the Purple People Eaters believe their stock is worth upwards of $50 per share, and contrary to the accusations directed at TSB, Nuva still has the best lateral device in the industry, and until they are unseated, it's good to be king. So why Stryker? Because they almost pulled the trigger on Globus once before. Because there is too much uncertainty and anxiety exhibited by many people in the industry. No one is sure whether they will have a long-term job until there is some stability, and that will only happen when all the deals are done. TSB wants to know what our bloggers think, Who's Next?

Remember what Roger Daltry sang; I'll move myself and my family aside, if we happen to be left half alive, I'll get all my papers and smile at the sky for I know that the hypnotized never lie...... meet the new boss same as the old boss.

Sunday Funnies

2011-05-22T09:37:00.000-07:00

On May 18th, one of our bloggers posted a reprint from an analyst from a small cap network regarding Aphatec. The commentary was that " when a stock climbs up in share valuation on revenues and growth, month after month, quarter after quarter, it's something that I love to see in the markets." For a stock that has yo-yo'd more than a Duncan Yo-Yo, the Yo-Yo of all Yo-Yo's, one has to wonder what this individual was talking about. Granted the stock has had an uptick that some would interpret as a surge, but let's face facts, this stock has had a 52 weeks high of $5.82 and an all-time low of $1.85. To give the impression that all's well that end's well is debatable.

Analysts love to promote a companies stock by emitting optimism. Their hope is to make the public believe that a stock is on the rise, or that it will continue to increase in value. The dissenting opinion usually comes from the short sellers, who are pessimistic because they are skeptics, knowing that management is notorious at self-promoting to extremes. This skepticism is a natural reaction to how a company shows growth when concern is expressed in the public domain. An example would be understanding how modified accounting rules can alter and infuse some life into revenue. An example would be Enron, who inflated their number by using "mark to market" to inflate their valuation, or "revenue sharing," the practice of sharing operating profits with a company's employees, or of sharing the revenues resulting between companies in an alliance.

Many analysts that promote companies in the spine industry have little more than anecdotal knowledge, basing their forecasts on their trust and relationships with a company's management team. Or, they may have heavily invested in this stock themselves. At best these proclamations are intended to generate enthusiasms for the investor. But what if hypothetically a publicly traded company had increased its revenue stream by going to a POD model, knowing that there are many questions left unanswered whether this is truly a legal business model. Would an investor feel that they were being deceived by the company and their management team if they were not informed? What if a law was enacted that declared all POD's illegal, would the stock and revenue plummet? Would the corporation have had represented itself in good faith by being honest, sound and efficient with its investors?

So in closing, before one blogs about one's greatness, with the intent of going long, one has to wonder whether this individual has any clue to the dynamics of a specific company, the market, let alone the management team. You know what TSB is says;

Nibblin' on sponge cake, watchin' the sun bake
All of those tourists covered with oil, strummin' by six string
On my front porch swing, smell those shrimp they're beginning to boil
Wastin' away in Margaritaville...................

Farewell to Arms

2011-05-20T06:27:00.000-07:00

How do you think we're going to get along, without you when you're gone
You took me for the $50 mil that we had and kicked us out on our own
Are you happy, are you satisfied, how long can you stand our heat
Out of the doorway the bullets rip to the sound of the beat
ba ra... ba. ba. ba. another one bites the dust

The last decade has provided us with some precious moments in spine. There have been (some) winners, yet, many losers. The winners sell their respective technology or company, while the losers rationalize why they were never able to execute the game plan. Some will argue that it was better to have loved and lost, than to never have loved at all. But one has to question whether there was true passion and love in some of these failures. Monday morning quarterbacking is America's favorite past time. Reasons for failure can be predictable. Usually, a higher force was the impetus, we ran out of money, market dynamics, the FDA (our favorite), and reimbursement to name a few. These are just a few of the eulogies and epithets we have heard and read. What's so interesting is that never, in all the years that TSB has been in the business have we had an admission of failure, "we mismanaged our capital (a big one), we had a poor strategy and failed to execute, we hired the wrong executive management team (commonplace), we started this venture because we thought we could flip this stat, we move too fast, too soon, we should have never bought that dawg." Just ask some of the companies that either acquired some of these ventures (Zimmer) or have failed. The challenge in running any business is a true balancing act. Success lies in developing an equilibrium between sales and product development. Moving too fast too can be detrimental in the long run. What we've learned over the years is that investors and management have a difficult time in pacing themselves, especially when you're running a marathon, and not a sprint.

Lack of accountability exists at epic proportions in this industry. But then look around us, it has become acceptable to blame someone else, or some higher force when it comes to failure. Ever think that your idea wasn't really that great of an idea? Ever think that all you had was, wishful thinking? Maybe it was more about fantasy than reality? So why is TSB posting on those that have been sold and those that just went cold? On Thursday, May 19th, 2011 Premia Spine, an Israeli based company (whatever happened to Expanding Orthopedics) announced that it had acquired the assets, including 16 patents owned by Impliant. The flagship product was known as TOPS technology. TSB believes that the acronym TOPS stood for Typical Of Products in Spine. After $50 million and a minimum of five years in development one would think that investors would have recouped some of their capital. TSB bets the house that this was a fire sale, pennies on the dollar. Buying IP or someone's assets is a nice way of putting someone to rest, and at times IP is only worth the paper it is written on. TOPS had a mediocre run in the U.S. after the initial hype. So as the consolidation continues one has to wonder who will be next? If it wasn't for POD's, how many more companies would go under in a heartbeat? So as Dion once sang, "Anybody here seen my old friend Robin, can you tell me where they've all gone, you hyped a lot of companies and it seems they all die young, you know I look around and their gone."

Abbott Spine (Sold)
Altiva (Sold)
Applied Spine (RIP)
Archus (RIP)
Blackstone (Sold)
Disc Dynamics (RIP)
Disc Motion (RIP)
Endius (Sold)
Facet Solutions (Sold)
Harvest Technologies (Sold)
Hydrocision (RIP)
Impliant (RIP)
Inion (RIP)
Innovative Spine (RIP)
Mekanika (RIP)
N-Spine (Sold/RIP)
Orthovita (Sold)
Scient'x (Sold)
Spinemedica (RIP)
Synthes (Sold)
Surgical Dynamics (Sold/RIP)
Theken (Sold)
Vertebron (Sold/RIP)

Consolidation Nation? You be the judge?

Anybody Hear????????

2011-05-19T14:46:00.000-07:00

Recently, a few of our avid bloggers inquired whether TSB would cover some other areas of our industry besides POD's, and the state of the union in healthcare. So in the spirit of debate, who are the companies that are doing something innovative? And, why? Are these products game changers? Are they line extensions? Who are the contenders? Or, are there only pretenders? The past two years have brought us a few technologies that would be considered innovative, but is there truly something out there that is going to change clinical outcomes? And for you Nuvasive bashers, please, don't attempt to legitimize products like XLiF, it's been around for years and its shoulders are starting to get tired. Like an old sage once espoused, Is it new, Is it true and Is it really making a difference? Or, are we entering an era of downsizing and consolidation. In closing, your answers to this post would be appreciated before you open up the bottle of Milagro Anejo.

Me Too? Says Who

2011-05-17T07:13:00.000-07:00

Recently Medtronic made a unilateral decision to terminate two group purchasing contracts with Novation and Premier. This decision has precipitated an investigation by the Senate Finance Committee headed up by Senators Baucus (D-Montana), and Grassley (R-Iowa) questioning whether the Evil Empire's actions could result in increasing cost while reducing price transparency.

As in any free market, Medtronic opted to terminate this contract so it can negotiate on an individual basis with those facilities that fall under the umbrella of Novation and Premier. One of the potential downfalls with GPO's is that these facilities have the ability to compare pricing unless there are confidentiality clauses in their contracts with the vendor. The GPO's contend that the impetus and rationale for Medtronic's decision was based on increasing the cost of their spinal and cardiac implants. Senator Baucus' concern is that Medtronic's decision could play a role in undermining the government's efforts in delivering medical care to Medicare patients at the best price. Whether one agrees with Baucus' assertions, those of us that work in this industry know that transparency in pricing has always been a major issue, especially when it comes to negotiating with a hospital. Since it has become trendy to call out the government as the boogeyman, (of course until some terrorist threatens your mere existence), the GAO has determined that the overuse of cardiac and spine implants has contributed to driving up Medicare spending.

Considering that the majority of these products are "me too" what's the big deal in providing transparency especially when one is dealing with the volume that one must assume Novation and Premier purchase? Companies have unusual karma. The powers to be believe that by keeping pricing opaque that they will have the upper hand in a negotiation. Pretzel logic at best. Everyone knows that if you have good sales people, their redeeming quality is keeping their hand on the pulse of their competition and territory. Baucus continues to question whether there has been collusive activity between Medtronic and other companies in the industry. Medtronic's justification for canceling their contract was to cut expenses. In addition, Hawkins believed that the cancelled contracts were not adding to market growth.

So June 6th is the date that Wild Bill will have to deliver his response to the Senate, fall on the sword and swear Mea Culpa, Mea Culpa. Until then, the beat goes on.

Monday Bloody Monday

2011-05-16T16:30:00.000-07:00

The silicon chip inside our head gets switched to overload

And nobody's going to work today, we're all going to stay at home

And daddy doesn't understand it, they always said we were good as gold

And we can see no reason, cause there are no reasons

What reason do you need to be shown

I don't like Monday's I want to shoot the whole day down

It's one of those Monday's fellow bloggers. A tough day for the Orthovita sales force, a jubilant day for Stryker. On Monday, May 16th, the Almighty Stryker announced that it had acquired Orthovita for $316 million in cash or $3.85 per share. A far cry from the days that "La Vita Loca" was hovering over $6. Some analysts may believe that this was a responsive deal to what's been going on in the industry. Fortunately for Stryker, they not only acquired Vitoss, but at the same time enhanced their portfolio with Vitagel a surgical hemostat, and Cortoss. The need for an orthobiologic was desperately needed considering Stryker screwed the pooch on OP-1 to the tune of a few hundred million dollars at best, and their distributors have lost, or have been losing access to Actifuse, contrary to what many skeptics said wouldn't happen, when Baxter acquired Apatech. It will only be a matter of time before many of the sales reps from Orthovita will be pounding the concrete down on 125th Street looking for employment. Like any major deal, there will be collateral damage. A nice way of saying prepare for your walking papers.

Kudos must go out to the brain trust at "La Vita." Koblish, Marx and Smith were not only able to bring some good products to the marketplace, they were able to execute their objective. Hopefully there weren't titanium fanged dogs thrown in with the deal. If anything, maybe, just maybe, some of the wannabe companies in the industry will learn that the race doesn't necessarily go to the swiftest. About a year ago, many industry professionals knew that there were deals to be had. This could be the start of something beautiful as we gain consolidation momentum. Good for some, unfortunate for others. But remember what TSB always says, when one door closes, another one opens. So in closing, TSB wants to know what our bloggers think, and how does this effect the industry and does solo flying biologic companies?

PS: Our apologies for not getting this post out this a.m.... blogspot has been behaving like crapspot lately with technical difficulties, maybe it's time to initiate our own website.

Weekend Op-Ed Piece

2011-05-15T08:00:00.000-07:00

As TSB bloggers attempt to legitimize, question, and expose POD's, the debate rages regarding the legality or illegality of this business model. Proponents of PODS that have sought a legal opinion argue that the law and free markets substantiate the pursuit of this model, while those that dissent argue that not only is this illegal, it is a blatant attack on the industry, and your ability to earn a livelihood. Regardless whether you agree with POD's or are adversarial, eventually, the validity of POD's will be tested in a court of law. What does not bode well for POD's is that this is no longer a local, or regional business model, this business model is becoming viral, and as it picks up momentum, the national press, OIG and DOJ is paying close attention to how business is done in the spine industry. The battle lines have been drawn.

If one looks at the evolution of the industry, there were many surgeon champions that had been the impetus for today's emerging technologies that have enhanced the publics quality of life. These individuals were pioneers, scientists, and artists. Somewhere around the mid nineties, things began to change. It was a changing of the guard. It was a generational change. Surgeon no longer viewed themselves as clinicians, they wanted more, they began viewing themselves as entrepreneurs. Surgeons were beginning to question why there wasn't additional financial incentives in their collaboration with corporations. Of course, corporate America obliged. Sofamor Danek, DePuy/Acromed, Synthes, Stryker/Osteonics, Biomet, Smith and Nephew/Richards, and Howmedica. These companies were the breeding ground for the evolutionary change that has transpired. They all had their own footprint as to how business would be conducted. Let's help surgeons market their practice, let's provide them with educational grants, let's hire them as an educational instructor. Inducements whether one acknowledges it or not. Welcome consulting hysteria. Overnight, TSB remembers sales people and distributors changing their sales tactic. No longer were you selling on features and benefits, you began selling on futures, and surgeons loved it. Royalties existed, and rightfully so, but were never used as a means to an end as it was made famous by Blackstone and by today's denizens. How many of you heard this famous line, "Doc, if you use our product for 30-60 days and are happy with it, we will tender you a consulting agreement." How many surgeons business was bought by feedback on a screw or instrument modification? A by product of this behavior are the convoluted relationships that make this industry a breeding ground for greed. And unlike Gordon Gekko, or Mad Money Cramer, greed is not so good. It breeds contempt for rules, and the laws of nature.

Those advocating the legitimacy of POD's argue from a Darwinian point of view, believing that this is laissez-faire capitalism at its best, where all parties are free from state or federal intervention, restrictions, regulations, and enforcement. It can also be a Machiavellian philosophy where the ends (profits) justify the means (PODS), even though TSB must question whether some of these people even know who Machiavelli was? In defense of those individuals involved in POD's, they really don't worry about what is right or wrong, all they worry about is whether they are profitable. A sociopathic behavior? TSB will leave it to the masses to be the judge. Winning at any cost can, and most of the time, does come back and bite you in the arse, just ask Charlie Sheen.

So as sales people and surgeons battle amongst themselves, the powers to be, corporations, its executives, hospitals, hospital administrators, Wall Street and most of all the insurance industry are laughing all the way to the bank. Suckers! As you fight amongst yourselves, you perpetuate and condone the aberrant behavior and greed that the aforementioned parties exhibit. That is where the real power lies. It's not free markets economics that drives a POD, it's an inherent arrogance that makes someone believe that they can do it better, that you can actually effect change. As the insurance industry barrels into its third straight year of record profits, as hospitals continue to prosper, as CEO's continue to manipulate markets, you are getting into a street fight amongst yourselves. As hospital admissions decrease, insurance premiums increase, and physician reimbursements continue to decrease. Some of these players are showing their ineptitude, their lack of fight, a lack of vision, blaming some sales rep for driving up the cost of healthcare. As Clara Peller once said, "where's the beef?" Whom do you think is paying for those $500 dollar bottles of wine that Lukianov drinks? Whom do you think is paying for the Cohiba's and Cristal that you smoke and drink at the Viscogliosi Brothers soirees? Whom do you think is paying for your lap dance? As a student of great civilization, one of TSB's favorite lines is, "Die religion....ist das opium des volkes." Unfortunately, greed is the religion, it comforts you, it gives you a higher purpose, it's like a drug that makes one feel good. So in closing remember what the great John and June Carter Cash sang;

We got married in a fever, hotter than a pepper sprout, We've been talkin' 'bout Jackson ever since the fire went out, we're going to Jackson, we're gonna dig around, we're going to Jackson, look out Jackson town.

So at the end of the day as the delivery of healthcare approaches 22-24% of the GDP, it will be interesting to see how the POD phenomenon plays out.

Spine Blogger Disclaimer

2011-05-14T03:48:00.000-07:00

As a public service announcement to our readers and bloggers, TSB has been barraged with inquiries regarding missing comments. Sometime on Thursday, May 12th, Blogspot started experiencing some technical difficulties regarding your comments. Unfortunately, this was out of The Spine Bloggers control. Hopefully Sergey Brin, Larry Page, and Eric Schmidt could spend less time in litigation with the government, and more time beating the help mercilessly at Google. There were many of you that sent e-mails or wrote posts, asking, "what happened to all the comments?" For those of you whose post vanished into the dark void of the internet galaxy, a sincere apology. As for those that question whether TSB deleted those comments, we will once again state unequivocally, unless your comment is directed in a disparaging way at an individual's family members, or materialize into Dennis Miller like rant, no one individual's comments are ever deleted, this is your blog regardless whether the powers to be within the industry believe that we are, or we like what you say. Once again, thank you for your support.

"Knowledge is Power, and Power comes from Truth." Let Your voice be heard.

TSB

Weekly Update

2011-05-10T05:55:00.000-07:00

The last four to six weeks has been a crazy period in spine, indicative of the activity and many stories that have surfaced. The posts that we have published have played like a broken record. For those of you that don't know what a record is, it was made out of vinyl and played on a turntable, think Grand Master Flash. As many of you know, the medical device industry spends billions of dollars annually in marketing to physicians. To paraphrase a well known crusader for POD's, "Surgeons are disenchanted with the amount of money spent on sales, marketing, and distribution of acquiring implants, placing the hospitals and the surgeons at a great disadvantage economically. Oh, really? Don't surgeons have enough of things on their plate to have to worry about this? A number of surgeons believe that they can and could distribute and sell implants far better than the current business model. Would we expect otherwise? These surgeons claim market forces cannot work in this environment, and that the POD model allows them to do their job more efficiently with less cost to the hospital. Yet the question must be asked, how does one know that the surgeon is offering the best implant for their patient, at the cheapest price possible to the hospital? Isn't any decision making process subjective? As Dr. Steinmann, the Rupert Pipkin of all POD's has stated, "Surgeons are most qualified to be at the center of the hub to make these decisions," obviously because they know quality, their case load, and can hire their own product representative. Yet, doesn't the hospital have greater negotiating power by leveraging volume in comparison to any one surgeon owned POD? By developing and implementing this business model the question must be asked, "is the surgeon acting as an independent sales representative on behalf of the companies that participate in this model? This is a question that Orthopedics This Week's Robin Young failed to ask Steinmann during their nine minute You Tube interview in December of 2010. Would anyone expect otherwise? Many industry professionals thought they were watching Matt Lauer lob soft-ball questions on the Today show. "Compelling business model," pleaaaaasssse, give us a break. Why wasn't Steinmann asked whether he believed that a POD was a shell entity strictly for the purpose of directing remuneration to the physician, cutting out the sales representative? Tough question, huh Robin? We would never want you to compromise your integrity, what integrity, or, challenge a surgeon for the love of orthopedics, would we? The potential exists that they wouldn't subscribe to OTW, not attend one of your meetings, or use stem cells. Why wasn't Steinmann asked whether he believed that by having a financial stake in the distribution of product, does the potential exist to distort his and his colleagues decison making process? There is a fundamental flaw in a business model that allows the surgeon to become a partner, or owner, in a medical distributorship. Hasn't there always been an issue regarding surgeon's getting paid a dividend? Isn't this the reason that surgeon investors have never taken a dividend, on their capital investment into a start-up spine company? Isn't a POD another way of redirecting and remunerating a surgeon for their ability to control selection of implants sold through this business model? Regardless whether the POD is saving the hospital money, isn't the POD model redirecting profits to the POD?

The OIG an the DOJ have expressed serious concerns, unfortunately, the government's bark is always louder than its bite when it comes to punishing a potential white collar crime. Isn't this model providing physicians another method to earn an economic benefit in exchange for ordering their own implants? By participating in this model, isn't the surgeon nothing more than a paid sales representative? Based on the anti-kickback statutes, it can be argued that an investment by a surgeon into a POD is an inducement for the investing surgeon to order specific implants for their patients. How noble for the Rupert Pipkin's of the industry to argue that they are only concerned with saving the hospital money. But isn't the real intent of the POD to increase the participating surgeon's profitability? State of mind, Rupert, state of mind, in addition to intent. Let's face it, POD's have questionable motives and features at best. If surgeons are disgruntled and believe that the cost of implants continue to escalate while their reimbursements decrease, why don't they go after the hand that feeds them, large corporations? Because it compromises their ability to leverage their skills in exchange for another method of making money off of the industry. If surgeons are so concerned about the escalating cost of delivering healthcare, why don't they send out an olive branch and agree to take a cut in their fees for service? Regardless whether our readers agree to disagree, socialized medicine is only a stone's throw away, and it won't matter whether it is a Democrat or Republican in the the Big House.

On another note, NuVasive reported 14% growth for the quarter. Now TSB understands that there are some NuVa minions that accuse TSB of being a NuVa basher, actually, TSB likes the people at NuVasive. Just because the powers to be are a bit delusional makes it all the more enjoyable in poking fun at them. We love all those buzz words like, "speed, laser like focus, a prolific product innovator, etc.." TSB has to wonder, if one backed out the benefit that NuVa received in the modifications to the accounting rules for how they account for their loaner sets, what would real growth look like? Contrary to what the oracles of Wall Street say about the stock, it is rather disingenuous to talk about growth when one does not define what is real and what is make believe. Many of our bloggers have discussed the potential of NuVa being acquire, unfortunately, Alex believes that the stock is worth $50 per share, hopefully, he doesn't believe in the tooth fairy. If NuVa was going to be acquired, IT WOULD HAVE ALREADY HAPPENED. So as we start another day, get out there and sell something, because you never know when a POD is going to be coming to your town.

It's a Sin to Tell A Lie

2011-05-04T11:21:00.000-07:00

Just be sure, it's true, when you say I love you

It's a sin to tell a lie, millions of hearts have been broken

Just because these words were spoken,

I love you, yes I do, I love you, If you break my heart I'll die

So be sure that it's true, when you say I love you, it's a sin to tell a lie.

On Wednesday, May 3rd, 2011, it was reported by the New Jersey State Board of Medical Examiners that Thomas J. Errico, M.D., Richard A. Balderston, M.D., and Jeffrey A. Goldstein, M.D., three prominent orthopaedic spine surgeons in the metropolitan New York, New Jersey area were fined for failing to disclose to their respective research institutions the financial interest that they held in the ProDisc spinal disc device. As Gomer Pyle use to say, Surprise, Surprise, Surprise!

Errico and Goldstein were fined and all three blind mice must now complete an ethics course, LOL! Errico agreed to pay $60,000 in civil penalties (pocket change), and $17,500 to reimbuse investigative cost (gas money for the boat), while Goldstein agreed to pay $30,000 in civil penalties and $10,000 in cost.

Attorney General Paula Dow admonished see no evil, hear no evil, and speak no evil by stating that, "undisclosed confiicts of interest on the part of these three doctors undercuts public trust in the medical profession." But here's an interesting question for our readers, based on the fact that these fine surgeons had a financial stake in the the outcome for this product, how much of their findings were influenced by money? Another question that needs to be asked is, what would provoke Errico to have to obfuscate his involvement in the study? Is it his use of the Rudy Giuliani defense, "to the best of my recollection, I cannot remember being involved in a study for the ProDisc," or, did he use the Jeff Wang defense, "I forgot to report it." Was he hiding something? Either way, for someone as successful and intelligent as Errico, based on his humble background, his role as President of SAS, his success as a surgeon, and his war chest of IP, did he actually believe that he was beyond reproach? Money does breed a certain arrogance, but you know what Joe South once sang;

Oh the games people play now, every night and every day now
Never meaning what they say now, never saying what they mean
And they wile away the hours, in their ivory towers,
T'ill they're covered up with flowers, in the back of a black limousine

Oh we make one another cry, break a heart and then we say good bye,
Cross our hearts and we hope to die, that the other was to blame

Yes fellow bloggers, it is another chapter in the great spine saga, and the hits just keep on comin'!

Wednesday Op-Ed Piece.

2011-05-04T06:00:00.000-07:00

Spine Nation:

As the administrator of this blog site, the past few years has been an interesting journey, to say the least. Our goal has been and always will be a search for the truth (Scully and Mulder where are you when we need you). Regardless, whether our bloggers agree or not. In a democracy, you as the reader, have the "free will" to determine whether what is posted has substance, or is merely hearsay. Unlike other platforms that vie for your readership, TSB never intended to be a blog that is a slavish follower, I believe the word would be lackey, of the status quo. We are not interested in reporting how many cases has Company X performed with Brand Y, we want to know whether the product is good and is it enhancing the patient's quality of life. We would like to believe that this is what makes our readers return to this site each day. When an individual continually fails and still gets hired for an integral position, we call them out on the carpet, regardless, whether they like it or not. TSB provides the venue, while you become the jury. Hopefully, the blog has been informative to many of you that have tenure in this industry, and sheds some much needed wisdom to those that are still "wet behind the ears." Youth brings out the bravado, while age brings out reason. The blog has provided many of you, including TSB, with a snapshot into how this industry has evolved during the last decade. What we have learned is, that the many good things that we do, are often overshadowed by our behavior. But then, TSB wouldn't expect otherwise considering that words like morality and ethics are not taught in business school (lip service at best), whereas greed and avarice are promulgated indicative of the behavior that is exhibited by many. Spine is just a microcosm of a much bigger happening. But like every great dynasty, eventually, there is a moral and ethical decay. History has taught us that. So what's the point of this Op-Ed piece?

Based on the many comments that have been elicited over the past week, due to the angst and anxiety over the announcement of J&J acquiring Synthes, one has to wonder whether some of your comments have anything to do with what was posted on the blog? Specifically, how does a post on SAS, Globus "when will they go public" Medical, and Centinel Spine digress into name calling about individuals that do not have anything to do with the topic? As TSB has always stated, "this is your blog." And, you as a blogger have every right to call anyone out on the carpet, TSB included. You have every right to voice your opinion, but when it does not pertain to a specific post, one has to wonder whether our readers are drinking grain alcohol rather than absinthe? Outside of your own intentions, do you believe that any of us really care? If anything it exposes your vulnerabilities. This behavior confirms that those that are divided are always manipulated by those that are united. How can you influence change or control your own destiny if you are fighting amongst yourselves? So for those of you that are tenured industry professionals, remember, we have only ourselves to blame for we have coddled and created a generation of sales reps that are part of the entitlement generation. Twenty years ago, we never heard of something called, "a cover rep." Companies actually spent time and money on educating sales people. You had to actually sell features and benefits to your peers before you were let off your leash. Long-term viability took precedence over short-term profitability. Unfortunately, the industry drank Wall Street's kook aid (I meant kook aid) a long time ago. No longer are we builders, we have become dealers, and we are proud of it. Some of you may take this as a verbal spanking by TSB, it's a dirty job and someone's got to do it. Now go out and sell something today!

That Was The Week That Was

2011-05-03T14:11:00.000-07:00

That was the week that was, let it go, it's over
That was the week that was, it started way on top and it finished way below
That was the week that was, let it slide
That was the week that was, I took him at his word, he took me for a ride
Like Tuesday we met up at Vegas you know, it was SAS and we all had to go
Globus was there attempting to make a big scene, a new copectomy device a secret that's keen
Don't have an invitation, can't see our creation, that was the week that was.......

No fellow bloggers, TSB is not singing the opening song to the 60's satirical television show hosted by David Frost. It was another ho-hum meeting at SAS, or is it now called IsASS? It seems that Globus "when are they going public" Medical, was attempting to one up the meeting by launching a highly classified device by invitation only. TSB was impressed that they hired some mercenaries from Xe, formerly known as Blackwater. As Peggy Lee once sang, "is that all there is David Paul?"

In addition, rumor was circulating that Centinel Spine was facing some liquidity problems...again...
only to be informed that John Viscogliosi is back on the Bar-B-Q Trail in Memphis,Tennessee from May 12-14th in a World Championship competition, and on May 29th-30th, he'll be at the Rock City Rib Fest in Rochester, NY. On June 11-12th you are all invited to the Big Apple Bar-B-Q Party. Will the Purple Pork Master bring his sidekick Sancho Panza? You know what they say about the color purple, it is continually associated with suffering and pain.

The J&J acquisition of Synthes has led Larry Biegelsen, an analyst for Wells Fargo to state that this acquisition would lead to some disruptions in the spine market that could benefit Zimmer. You know what the great Jimmy Durante once said, "everybody wants to get into the act." Come on Larry, we know you get paid by Wells Fargo to make these observations, but can you get serious, there isn't anything in Zimmer's spine portfolio that would be worth maximizing on.

With Medtronic initiating layoffs, its only a matter of time before the Synthes and DePuy sales force is faced with the reality that two's a crowd and three's a party. Regardless of what the powers to be are telling you, there will be collateral damage. It's management's job to feed you propaganda (everybody is safe, at least for the time being) in an attempt to preempt any moves that you may be thinking about. TSB's advice, start shopping your relationships around, the only loyalty you have is to your customer and yourselves. If you're not looking at your options, there's no time like the present to begin your search. You know what Arnold use to say "listen to me now, or hear me later."

Anatomy of a Merger

2011-04-28T02:23:00.000-07:00

Now comes the fun part. As many of you know, with the acquisition of Synthes, Johnson & Johnson will be challenged with the daunting task of integrating Synthes into their organization. Analysis paralysis is already setting in. Having an integral role in acquisitions and mergers has taught many a valuable lesson. The first lesson is that just because you have money to buy something, doesn't necessarily mean you are going to be any good at merging a company.  Unfortunately, wealth should never be equated with intelligence or competance.  It just means you are wealthy. Neither does it mean that hiring a consultant is going to make your life any easier.

The biggest challenge for J&J will be the integration of trauma and spine, where there is tremendous overlap.  Contrary to what some analysts are saying, the worst that can happen would be allowing the trauma and spine business units to continue independently while corporate attempts to figure out how to assimilate the busiess units.  Identify the plan and move swiftly, if not, you will create confusion in the marketplace. Honesty and transparency are important even if you have to hurt some people's feelings. Communicate with your customers. Regardless whether you believe it or not, a business as usual attitude will come back to haunt you. Deciding on whether you will continue to sell via distributors or direct sales people will alleviate the trepidation and anxiety that alredy exists in your respective business models.  Today, your sales people are confused and distracted as to what awaits their futures. By identifying the plan and implementing it, you will establish continuity while transitioning.

The cultural differences will be exasperating.  J&J has always exhibited a stiff collar mentality, while Synthes has been more of a gunslinger.  The posse will learn quickly that there is a new sheriff in town and that some of the old mores and values will not be tolerated. It is interesting to read outsiders opinions of how different these two organizations are. Contrary to what is said, selling is selling regardless whether you work for one or the other organization. Synthes salespeople have one of the best educational sales training platforms in the industry. Unfortunately, there will be collateral damage in the rank and file, as well as in middle management. Like TSB said, this will be a golden opportunity to get rid of the dead wood in management across the board. Don't make the mistake that companies like Biomet and Stryker made by allowing total joint reps have access to trauma products and trauma selling recon. This will diminish your salespeoples focus. In addition, trauma salespeople are more Type A personalities in comparision to recon salesmen. It's evitable that there will be people that are on the chopping block, if you haven't begun looking for a new job, now may be the time to polish one's resume. The bad news is that the market sucks and unless you can flip immediate revenue, good luck in finding a new job in this economy.

So in the spirit of debate, TSB wants to know, will this be easy or is Johnson & Johnson heading into the perfect storm?

HAPPY TOGETHER

2011-04-27T08:23:00.000-07:00

Spine Nation and Fellow Musculoskeletalvites, if you"ve never been to a Flo and Eddie Concert follow the bouncing ball;

"Imagine me and you, I do, I think about you every night it"s only right to think about the girl you love and hold her tight, so happy together......I can"t keep from loving nobody but you, you"re on my mind, when the wind blows baby the skies will be blue for all my life...."

Well fellow bloggers a deal is a deal. In the world of high finance Synthes offered her honor and J&J honored her offer and the rest is history. It was announced today the J&J will acquire Synthes in a cash and stock deal, by offering $21.3 billion or $181.30 per share. Unlike the Wall Street Journal who called him Dr. Wyss, having worked with Hansjoerg Wyss it was time for the Wyssmeister to hang up the old spurs and move on out, he"s on the clock and desires to add to his legacy and life"s work. Mr. Wyss owns 47% of Synthes and will be worth an estimated $10 billion when all the papers are signed. Both companies boards have unanimously approved the transaction. Now that it"s done TSB would like to send an open letter to William Weldon at J&J.

Dear Mr. Weldon:

Congratulations on winning the Irish Sweepstakes. J&J/DePuy has a golden opportunity to continue the legacy of a great company. If you really want this transition to succeed, don"t just think about the challenges that await you in integrating two companies of this size, start thinking how you will replace the dead wood that exists on both sides of the management aisle at both trauma companies. If there ever was an opportunity for a cultural cleanse, now is the time. Not only will you be considered a player in trauma, you will have an immediate impact on spine, maxillofacial and power equipment. Many readers frowned upon the probability of this acquisition two weeks ago, today it is a reality. In addition to the aforementioned products you will have inherited the greatest marketing tool that the industry has ever seen, the AO/ASIF surgeon and ORP trainng/educational programs. Who ever said you needed a marketing department? If you don"t believe it has great value, imitation has always been the greatest form of flattery, that is why companies like MSD and NuVasive have succeeded, they realized that knowledge is power. For those that had doubt regarding this deal, any company that controls its manufacturing cost with a just in time model and carries minimal debt for a company the size of Synthes is a deal made in heaven. Once again the Great Vampire Squid prevails, you know what Bogie once said, "here"s lookin" at you sweetheart."

What's Going On

2011-04-23T05:07:00.000-07:00

Over the last few months, the criticism of spine reps has intensified. Is the spine industry a mirror image of a larger epidemic effecting America? We have become our own worst enemy, a divided society, no less a divided industry. Us against them, rich against poor, business against government, the unregulated against regulation, red against blue, right against wrong. Whether our readers agree or not, there has been a blatant assault on the sales rep. Some of it is justified. Some of it is not justified. Some of it attributed to good old A1, red, white and blue greed. So in an effort to set the record straight for our readers, here are the facts.

Whether management, surgeons, or hospital personnel believe it, your hard work is what makes this industry thrive. You are the stimulus that pumps life into a company. Whether TSB has been in sales or in management, the bottom line is the infantry gets the job done. A visit into the Korengal Valley would expose that there aren't too many generals waiting for a firefight. The publics perception is that you are all making $250K per year, drinking Bordeaux, smoking Cohiba's, and investing in Broadway musicals, and we all know whom we can thank for that. People believe that most of you have banking hours, are overpaid, and are the primary reason for the escalating cost of delivering healthcare in the U.S.. Just because you did not go to medical school doesn't make you any less valuable in the food chain. As baby boomers enter their golden years, they have been programmed demanding the fountain of youth. They want bionic knees, hips, ankles, and spines, demanding a return to normalcy after all is said and done. Insanity at its best. We may be a civil society, but based on what is going on around us, not a very intelligent one.

Unlike salaried employees, sales reps are solely responsible for what they earn. Essentially, you are no different than a stock broker in that you eat what you kill. You deal with a pernicious, apathetic, and selfish healthcare environment. Did I miss any other adjectives? You are stonewalled by hospitals, operating rooms, nurses, doctors, and hospital administrators whom frown upon you as a necessary evil until they need something, and then they want you to drop everything you're doing to help them out, and you do it. When did this assault begin, and whom do some of these people think they are in contributing to the escalating cost of healthcare (Do you hear me Dr. Steinmann)? Hospitals complain about cost, yet continue to expand and build newer, bigger and better facilities. There are new cardiac centers, children's centers, women health centers, cancer centers, and parking garages, yet no one seems to be questioning and demanding accountability on their part. There is no excuse for the behavior that is exhibited by these people. Unfortunately, courses in professional behavior is not taught in med school or grad school. 80% of your business comes from 20% of your accounts, because your days are spent brokering rather than selling. Thank you corporate America and Dr. Famous for your contribution to our day. When you do have something innovative or clinically beneficial for the patient, you have to move mountains to motivate a surgeon to try it. During the interim, the patient suffers. On average you spend $100-$125 per week on gas (thank you speculators), in addition to tolls and parking (someone needs to pay for the construction) and you are obligated to buy a prospective customer lunch if you have any chance of getting their attention, whom no less has no problem telling you that there will be 10-15 employees attending. TSB usually tells the nurse that I will be glad to meet the surgeon one on one and buy him a sandwich. Some even have the audacity to tell you where they would like it catered from. (that's my favorite). A shameless society. Besides these expenses, hospitals want you to register with various vendor management services to protect the patient, a bogus rationalization. What about your protection? It's bad enough that hospitals are squeezing you for every penny on the dollar, but some want you to pay to play in their facility. Aren't these people embarrassed? And then you have to deal with management at your respective company. So in an effort to set the record straight, here are the facts.

Management is in denial when it comes to market dynamics. Some still believe the party is going on. Publicly traded companies continue to push you to your limits by promising their Master, Wall Street, that they will continue to grow in spite of all the barriers that you face everyday in growing your business, no less the ones that you cannot control like insurances denying surgeries (can't wait for NuVasive's analyst call). Attrition has become a norm in sales. You're on the clock. If you can't increase revenue in a short period of time, you're gone. Just look at some of the companies out there. Management is more concerned about share holders value than whether they have delivered the necessary tools so that you may be successful. How many empty promises have been made to you? How many product development timelines have been missed? Yet, the game continues by increasing your quotas and demanding results. Some companies can't even provide you with samples and marketing collaterals. Your middle managers have grandiose expectations. They accept whatever is spoon fed to them by the senior management team and never question the validity of any strategy let alone revenue expectations, because they cower for their jobs. They're great at giving you a quota when they have no clue as to the demographics of your territory, or the obstacles that you are confronted with on a daily basis. Product evaluation committees (what free market), preferred vendor lists (discrimination), vendor certifications (violation of your rights), surgeons protecting other companies turf and their own consulting agreements, if that isn't the decline of the empire, what is? TSB wants to what's going on? You know what Marvin Gaye once sang;

"Picket lines, and picket signs, don't punish me with your brutality, talk to me so we can see, what's going on, what's going on, what's going on, we've got to find a way to bring some understanding today."

As a side bar to our discussion, TSB hopes our Jewish and Gentile brethren had and have a wonderful holiday season! L'Chaim!

Spine Uprising

2011-04-20T17:56:00.000-07:00

Paranoia is in bloom
The PR transmission will resume
They'll try to push drugs that keep us all dumbed down
And hope that we will never see the truth around, So come on!
Another promise, another scene
Another packaged lie to keep us in greed,
And all the green belts wrapped around our minds,
And endless red tape to keep the truth confined, so come on

-MUSE-

So come on fellow bloggers, the federalis spent the other day touring the office of Dr. Sanjoy Sundaresan at the Texoma Spine Center. By the sounds of it, Dr. S may have some unexpected legal issues with the Federal Government. Leaving with boxes of evidence, potentially a little more than the practice of medicine was going on at the TSC.

A little pain, a little dream
A potent elixir another scheme
A frequent visit to my dealer
Pharma grade from my healer

"They give me injections because my lower lumbar is tore," Obviously one of Texas finest,. Ironically, people don't even know what they are being injected with. Shocking no less. If it makes you feel good, go for it. Nothing what a l'il ol morphine will do for you. So as Dr. Sundaresan makes the news, he now joins Dr. Makker as a one hit wonder, and the hits keep coming.

Going Once! Going Twice! ............................Sold

2011-04-16T10:51:00.000-07:00

Friday's late report on the potential acquisition of Synthes by Johnson & Johnson has raised numerous questions and analyses about the magnitude of such a deal, and, how it would affect the spine, trauma, and maxillofacial markets. If an acquisition would occur, integration of these two companies could be a logistical nightmare. Those that are liabilities on one side or the other, would become collateral damage. Yet, the mere fact that Hansjoerg Wyss would entertain an offers does not bode well for Synthes employees. The current management team is old and tired, and still using the same old tricks of the trade that has been their modus operandi for years. The ride has been good. As TSB stated in the April 15th post, when hasn't Hansjoerg entertained an offer? It has always made his ego feel good, and rightfully so. Everyone knows that J&J has the financial leverage to consummate this deal, just like Medtronic. The only question this time is whether Hansjoerg intends on pulling the trigger? Regardless whether our bloggers like Synthes or not, one must respect Synthes for what they have accomplished. At one time Synthes was a near trauma monopoly. Synthes has lost some market share due to pricing and a steady decline in a culture that once was the jewel of the industry. Yet, the company continues to develop and market quality trauma products unlike the lap dogs Zimmer, Richards, Biomet and DePuy offer. Imitation is the highest form of flattery. Like their spine division, Zimmer Trauma could mess up a wet dream, while companies like Biomet and DePuy have been mere contenders. Richards could be a threat but any implant company run by ex-GE gnomes has no vision. In addition, Synthes Trauma would be a tremendous boost to the DePuy trauma portfolio, which is mediocre at best. Outside of the 2006 acquisition of Hand Innovations, DePuy has never been a "real" player in trauma, contrary to what their highly esteemed management team will tell you. Visionary is not a word that comes to mind, when one thinks of DePuy Trauma. If there ever was a time for Synthes to be sold, now would be the time. Why?

In due time, Hansjoerg will be an octogenarian. At this juncture in life, his days are consumed with the Wilderness Society, the Grand Canyon Trust, Rails to Trails, and the Southern Utah Wilderness Alliance in addition to his 900 acre Halter Ranch, and other philanthropic ventures like his beloved Harvard University. Knowing Wyss, he would rather be hiking, cross country skiing, playing tennis or flying in his Lear Jet to his next exotic destination than listening to the non-sense that his lieutenants are up to. The biggest factor is that Hansjoerg has always been ahead of the curve and knows that the industry has changed, and that now may be the time to get out while the going is good. Yet, before he does, it behooves him to play the market to see whom else has the fire power to buy Synthes. For all we know, Wyss may be posturing to see if J&J is willing to up the ante. If J&J can entice Wyss, the company stands to increase immediate market share in trauma, spine, maxillofacial, and power tools. Many bloggers fail to realize that Synthes has a great presence in other global markets. This will only increase J&J's presence in other markets.

So in closing, many of our bloggers are compelled to talk about Zimmer buying NuVasive (Dvorak doesn't have the Boards backing), about NuVasive buying Trans1 (wishful thinking), and whether Lukianov wants to exit spine for the entertainment industry, but those are not the story. The question is whether Woody has a woody for expanding his kingdom and whether Wyss is ready to ride off into the horizon looking for more innovative and challenging things to do? You be the judge, As the great Lowell George once sang; "time loves a hero."

Is Synthes on the Block?

2011-04-15T14:41:00.000-07:00

It was reported on today's wire services that Johnson & Johnson has been sniffing around the arbeitsgemeinschaft osteosynthesfragen in a potential blockbuster deal, that if it was to go down, would be an estimated $20 billion dollar acquisition. If capable of executing a deal of this magnitude, how would this swing the pendulum for Johnson & Johnson when it comes to their trauma and spine business units? For years now various companies have courted Synthes, only to be jilted by the girl they covet. Years ago, Zimmer sniffed the Holy Grail to no avail. Then Stryker had delusions of acquiring Synthes prior to acquiring Howmedica only to be laughed at by this smug starlet. Yes fellow bloggers John Brown and Dave Simpson thought they had an inside track, too stiff to play that riff. Johnson & Johnson attempted to get to the alter, only to be jilted. Unfortunately, they just didn't exude the love and affection that the Wyssmeister was seeking back then. Even though there is some skepticism regarding this deal, one must admit as healthy as Wyss has been, it might be time to sell Synthes and ride off into the sunset so that he could spend whatever time he has on this earth in Big Sky country, riding the range and smelling the sagebrush. So the question must be asked, will this be the blockbuster deal that everyone expected, or, is Wyss up to his old tricks in hope of driving up the price between Johnson & Johnson and whomever else is lurking in the brush. There comes a time when every cowboy must ride off into the sunset, either on his horse or lear jet, and drink the fruits of his labor at the Halter Ranch.

You know what Poco sang many years ago;

"you and I counting desert stars and lovers, one by one
While mandolins and steel guitars help our love song along
who could show you, ever know you, fall into my dream
Turn around and, then you are in cowboy boots and faded jeans

TSB wants to know DEAL or NO DEAL?

Open Letter to NASS

2011-04-15T05:25:00.000-07:00

Dear NASS:

TSB wanted to write an open letter to your organization commending it for the wonderful job that you continue to do as a medical society. Your organization is dedicated to promulgating the professions highest standard of evidence based and quality spine care. Unfortunately, the past few weeks have cast an image on your profession that leaves many believing that the foxes are guarding the hen house. Those of you that are members of NASS' executive committee must feel slightly embarrassed by last week's and this week's Wall Street Journal expose on Dr. Makker. Maintaining and preserving your professions integrity with America's public must be your top priority. It must be concerning to each of you that the actions of a few, is casting a black eye on the many spine surgeons that really do care. Words like honor and trust in your disclosure policy have no meaning if one does not live up to those standards.

The general public doesn't truly understand the importance of having collaboration with physicians in developing new modalities of treatment, assessing the potential of an idea, or simply providing their clinical expertise, all which result in enhancing the patient's quality of life. This synergy is vital for our mutual existence. What is concerning is that there a fundamental breakdown between doctor and patient when the patient is viewed as a profit center. And it should be a concern. Recently, TSB reviewed the program for the 2011 AANS meeting, granted another organization whose many members perform spine surgery. There were over twelve pages dedicated to disclosure along with five pages of surgeons that are not affiliated with any company. Many of those surgeons were from foreign countries. If a spine surgeon is working with five or eight companies on projects, how could this individual really focus on the task at hand? Undoubtably, we live in America and no one has the right to tell another person how he or she can pursue one's livelihood, yet, when outside financial interests and bias influence a surgeons decision making process, this behavior is damaging not only to the profession, but also to the patient.

With all the negative press that the Wall Street Journal and New York Times have published regarding the Dr. Makker's, Kuklo's, Polly's and Wang's, just to name a few, is there no concern that only one surgeon had the nerve to stand up, identify himself, and be heard in a public forum? What does this say about our industry and your profession? Contrary to what NASS believes, there are many surgeons that still fail to disclose the many side deals that they have initiated for their own financial gains. If disclosure is important to your organization then you need to expand the scope of the types of financial relationships that your members partake in. Unfortunately, past members of NASS have set a poor example of how to conduct oneself both professionally and financially by creating an atmosphere of gaming the system, and for those tenured in this business, we know who they are. How many of your members are investors in companies and have failed to disclose? How many are actively involved in POD's that have failed to disclose? How many are owners of Physician Owned Hospitals, and have failed to disclose?

The bylaws that you espouse can be interpreted as nothing more than lame duck principles in a futile attempt to create an image that you are a governing body for an organization that has no legal authority to police or monitor its own members. Hopefully, this will be a wake up call.

Thursday Op-Ed Piece

2011-04-14T06:13:00.000-07:00

In the wake of Monday's (4/11/11) Wall Street Journal article, TSB has been deluged with information regarding nefarious business models that have been potentially designed to shift profits that threaten the industry's future. Some readers have accused the Journal of sensational tabloid journalism. Many people in the industry couldn't be any happier that people like John Carreyrou and Tom McGinty of the WSJ, and Barry Meier of the NY Times continue to shine a light on spine companies and spine surgeons in the news. Those individuals and companies that are directly, or indirectly involved, will argue that this business model is legitimate, based on various legal opinions. Some bloggers question whether it is politically correct and financially beneficial to attack our customers? In all likelihood, individuals involved in these schemes rationalize their existence by calling themselves "stronger," "bigger," and "smarter," than those that attempt to earn an honest living. Based on various complaints in public records, Dr. Makker probably believed that he was smarter, stronger, bigger, and beating the system. Dr. Makker will be afforded due process under the U.S. judicial system. Unfortunately, the only people that have suffered are those that put their faith and health in a system that has countlessly failed at policing their own. Where was the hospital administration and hospital board the entire time? If TSB was counsel for the plaintiffs, not only would Dr. Makker be sued, but Providence Portland Medical Center would be sued for failing to provide oversight . NASS, AANS, AAOS and AdvaMed are lame duck organization. Rarely if ever has the industry disciplined one of its own. Even the OIG and the DOJ have failed the public. To this day, industry people ask, will the FBI and the DOJ ever prosecute the former Blackstone Medical executives? Answering that question is the equivalent to answering the meaning of life.

Surgeons rationalize the POD model by saying that this model does not lead to over utilization. Maybe some are sincere with their intent. Yet, when one looks at the 25% dividend that was supposedly paid to an L.A. Spine surgeon totaling over $500,000, one must admit that this lends a new definition to paying dividends on investment. If surgeons are "disenchanted" with the amount of money spent on sales, marketing and distribution of product, maybe some introspective due diligence should be paid to what corporations pay in surgeon consulting fees. TSB would argue that general administrative costs are dwarfed by consulting agreements. All one has to do is take a tour of Medtronic's, Stryker's, Zimmer's, Biomet's and DePuy's websites. TSB guarantees that this information is incomplete since full disclosure is not mandated for a few more years. How do small companies rise like a meteor, claiming 20%, 30%, 40%, 50% growth at a time that the market is essentially flat? Is it their innovation? Is it their technology? Most of us know that we continue to compete in a zero-sum market, so what's the incentive?

Surgeons are quoted as saying, "that they feel that they could do this much better, if afforded the opportunity to be the intermediary with the hospital." Have any of us ever met a surgeon that didn't think he could do something better? If the intent is to save the hospital money, and drive down the cost of delivering healthcare, then why not just open the process to closed bidding? Modern technology and product saturation has leveled the playing field. If surgeons know design preferences, have an ability to forecast volume, and understand product quality then let's eliminate the preferred vendor list that minimize free market competition.

But the bigger question that must be asked is, if the rationale for physician owned distributorships is to drive down the cost of delivering quality care, then physicians shouldn't complain when the government or the insurance industry looks to decrease their reimbursements. Isn't this just another avenue to driving down the cost of delivering healthcare. POD's, POC's, POH's are nothing more than an attempt at manipulating the system to increase one's own profits. In closing, Dr. Makker may have done the industry a favor. If found guilty will the legal system punish him? Or, will they slap him on the wrist only to find out he surfaced in another state practicing medicine?

Tip of the Iceberg

2011-04-12T19:24:00.000-07:00

As the AANS comes to a close, it's highly unlikely that the Academy of Neurosurgeons will be celebrating a Rocky Mountain High in Colorado. With one day left, another black eye has been cast upon the spine industry as the Wall Street Journal continues to pull back the skin on the onion when it comes to Dr. Makker and his potential involvement with Omega Solutions. Could this investigation be the body blow that finally initiates a federal investigation into POD's? One has to wonder, how much more will be exposed regarding additional backdoor machinations that exist in this industry? For starters, we haven't even started investigating workers' comp schemes that involve distributors' and workers' comp attorneys. How many of these attorneys are in bed with surgeons, whereas they drive up the cost of patient care with the intent of increasing the settlement, and then reap the profits? And what does it say about the supposed esteemed field of law? Attorneys will tell you what you want to hear, especially when you are paying them $275-$450 an hour? For those of you unaware of what goes on in workers' comp, this does not receive anywhere near the attention that POD's receive. Like TSB says, this could be the tip of the iceberg.

After reviewing page 2 of the Omega marketing document one has to wonder, what in God's name were these people thinking of? If the language in this document isn't an inducement, what is? If this isn't motive, what is? If this isn't looking to create an incentive for a prospective surgeon, what is? "Our Medical Buying group opportunity has been in existence for over 25 years and has attracted the attention of many surgeons due to its generous dividend return of 25%" Looks like Hooper, Bookman and Lundy are going to have to do a bit of explaining to their clients regarding their contributions to advance the field of healthcare and changing the shape of healthcare in the state of California and surrounding states. What's even funnier is that Omega provides an example of the potential income a surgeon can generate if one buys into the program.

Foolus Cleared by the FDA

2011-04-12T14:40:00.000-07:00

Fellow bloggers, one of TSB favorite quotes is " the difference between truth and fiction is, fiction only has to make sense." Especially, when you are pandering to potential investors weaknesses. For a company whose stock dropped from an all time high of $7.62 and today hovers around $2.95 there's a sense of urgency at AlphaWreck. On April 11th, the FDA, you know, better known as the spine industry's boogie man, approved the Solus. Now there's marketing ingenuity at its best, an original name, if ever used in our industry. Solus means to stand alone, so does this mean that the Solus will be a stand alone device? In addition, this device is touted as a innovative interbody. As the Family Guy would say, WTF? But it gets funnier when one scrolls down through the article posted on OTW. This device has counter rotating blades, ooooooh!

But here's the kicker, Dirk Kuyper is quoted as saying, "in order to optimize the success of this REVOLUTIONARY PRODUCT, the controlled launch will be a tiered release with emphasis on both clinician and sales training." You aren't serious? Surgeons and sales reps will need to be trained on how to activate rotating blades. TSB would think that at this juncture most surgeons understand how to approach the disc space, or course unless you're one of the surgeons that spends more time in litigation than in operation, or you can't read an MRI, CT or X-Ray. So in closing, TSB wants to know what our fellow bloggers believe, is this new, is this true and will this make a difference?

You know what the Maestro Eric Clapton once sang;

If I could reach the stars, pull one down for you
Shine it on my heart, so you could see the truth
That this love I have inside, is everything it seems
As for revolutionary innovation, it's all in your dreams
That I could change the world, I would be the solus in your universe....

Spine Blogger Survey

2011-04-08T05:15:00.000-07:00

Is Dr. Steinmann's, aka patient zero, POD model just the tip of the ICEBERG? How many companies are utilizing this model? How many surgeons are involved in these ventures? In terms of dollars, how big are some of these entities? TSB and a colleague were discussing the rise of Physician Owned Distributorships and how it is affecting everyone's ability to earn a living. Contrary to others opinions, many industry people believe that what we are witnessing is a fundamental breakdown in competitive boundaries in business principles. Is this just the beginning of the end? Do Medtronic, Stryker, Zimmer, Synthes, K2M, DePuy, and NuVasive truly condone hinging their futures on this model? And if so, does this bode well for investors? How badly are the POD's cutting into some companies margins? Are some of these POD's really saving the hospital's money, or are they just shifting the profits from the companies into the pockets of the surgeons? Are the big boys succumbing to pressures from smaller companies? Has this industry become the poster child for an "anything goes industry?" Will there be a decline in the need for sales people, and have we evolved into a "coverboy or covergirl" model? Some will think that these observations are esoteric, yet, the by product of the spine boom in the early part of the turn of the century has made this industry look like more like teenage wasteland than ever before.

As TSB was interviewing some former Blackstone employees, those employees were reminiscing about the good old days when the Three Amigos were cutting deals with surgeons and mandating that distributor principals agree to 50/50 consulting agreements. Unbeknownst to some distributors, the Amigos would come into their territory in the dead of night, meet with the surgeon du jour, and then inform the distributor that a deal was done. The result, you pay 50% of the consulting and I pay 50% of the consulting fee. Some argue that this model still exists, the only difference is that after years of consulting with attorneys specializing in Stark, the language and compliance protocol has been refined to smooth over the edges.

How does this model really help the patient? Slowly, many layers of veneer have been peeled off the healthcare industry. What we have today, is a cross between a dystopia and a grifter society. Dysfunctional truly doesn't define the industry? Does the industry have no one to blame but itself for what we have evolved into? We behave no different than the former Mayor of Chicago, who under sold off the parking meters in the City of Chicago to a foreign entity, no different than the former Governor of Pennsylvania who attempted to sell off the Pennsylvania Turnpike to an Arab consortium.When you read stories about surgeons like Dr. Makker and research all of the lawsuits filed against him, one has to wonder, how many of these procedures were influenced by greed, or by clinical necessity? And what about the patient? So in closing, TSB wants to know who are these POD's, which companies are building their futures on this model, and will the carousel of life continue to spin round and round like the painted ponies that go up and down?

Raiders of the Lost Ark

2011-04-06T04:29:00.000-07:00

Indiana Jones would be proud. As many of our bloggers reported, Stryker is suing Zimmer Spine after the new Indiana Jones of the spine industry, Paul Graveline allegedly poached their sales force. Thank you fellow bloggers. Just like Indy, Graveline was probably hired to excavate the spine world's Ark of the Covenant, immediate gratification, instantaneous revenue, a real shining star, a feather in his brown Stetson Fedora. The most entertaining aspect of the suit is that Stryker alleges that it stands to lose millions of dollars of sales as a result. But here's the irony of this action.

Many years ago Stryker set the precedent for this type of activity, by raiding the employment ranks of Smith and Nephew, Howmedica, Synthes, and Biomet. But the plot thickens as one reads that Stryker is accusing Zimmer of "willfully and maliciously" targeting Stryker employees to establish a spine related products division, (does Zimmer have a spine division, or at least an imitation of one?) without expending any effort to build it. So look at whom is calling the kettle black? Stryker infamous for its twenty percent growth, the darlings of the Street, known for increasing its market share in their orthopaedic and spine divisions by acquiring other company's people and technology is now going to sue Zimmer.

As for claiming that these former employees will be stealing confidential and proprietary information to unfairly compete is ludicrous at best. What's so proprietary about Stryker's spine portfolio. They rarely if ever have created a product from concept, and when they did they couldn't even file it properly. They acquired Dimso to catapult themselves into the spine arena, they acquired the licensing rights to OP-1 from Curis, they acquired Surgical Dynamics and the rights to Theken's products, only to screw the pooch on that deal, in addition to other acquisitions that took place in reconstruction and trauma. What proprietary secrets?

As for targeting Stryker customers, let's get serious. For all the spouting off on this blogs site that it comes down to relationships, weren't these relationships fostered by the distributors/sales people? The only reason doc's get involved in any company's venture is because they are interested in getting paid for their intellectual property, i.e. their knowledge. Most of them cannot stand the stiff suits. To accuse Zimmer of devising a scheme to create an instantly successful spine division is laughable at best. Even with this raid, Zimmer is a spine company operating with one hand tied behind their back. As for a corporation stating that these employees breached their fiduciary duty to the company, that's laughable at best, considering there isn't a company in spine that operates in a respectful manner. You're a piece of meat, and once you become expendable you're gone.

Graveline does bring a "fresh new approach" to Zimmer, one that Zimmer never really tried before. He is using the same old tricks that were taught to him by his mentor, Stryker, offering huge signing bonuses and guarantees at least for a short period of time. So in closing fellow bloggers, remember the old expression, misery loves company. Yes, Stryker will flex its financial and legal muscle against Zimmer, and, it will be interesting to see the Zimmer Board of Directors reaction in the long run if this little plot doesn't unfold as planned. The bigger question is, if Stryker wins the suit, could this be Double D's death knell? Yes, fellow bloggers, this is how we build revenue in a zero-sum market. No longer do company's create innovative technologies, today, the trend is to identify distributors and sales people that can bring immediate revenue wishing for the a shooting star, a meteor as it enters the spine atmosphere only to burn out before it hits the ground. If there ever was a self-immolating industry, look no further, you work in it.

How Could Love So Wright, Turn Out to Be So Wrong

2011-04-05T11:24:00.000-07:00

It was reported today that Wright Medical announced that it had accepted the resignation of CEO Gary Henley and terminated its CTO Frank Bono. The resignation of Gary Henley comes at a time that the company's compliance program is being reviewed. As for Frank Bono, well it seems that Mr. Bono, no relation to the famous Irish Rocker, was terminated for failing to exhibit the appropriate regard for Wright's ongoing compliance program with the Department of Justice.

Wright has named David D. Stevens as the interim president. Wright Medical had paid the U.S. government $7.9 million to settle false claims allegations and entered into a Deferred Protection Agreement with the DOJ in the fourth quarter in 2010 pertaining to allegations of improper consulting agreements from 2002-2007. The DPA is contingent on updating company compliance policies and completing a 1 year monitoring program. You know what Bono sang;

"Early morning, April 4th shots ring out in the Memphis sky, free at last they took your life, they could not take your pride............"

On a colder front, it was reported a few weeks back that an Orchard Park man admitted to stealing medical supplies and equipment from a local hospital and the company he worked for Synthes. Joseph Raymond, 39, pleaded guilty to grand larceny and other charges before the Honorable Michael Petruszka of Erie County.

Mr. Raymond admitted to taking nearly $2 million worth of items from both South Mercy Hospital and Synthes where he worked as a sales rep. The thefts took place between 2002 and 2010. In addition, Mr. Raymond failed to report income from the thefts, the result, Judge Petruszka could sentence Raymond to 26 years in the slammer. One has to wonder what type of oversight exists at hospitals when someone has the ability to steal at least $250K worth of implants without anyone picking up on it? If Mr. Raymond did this on his own volition, he will pay the price, but if he knows otherwise, now may be the time to start singing like Luciano Pavarotti, I'm sure there are a few nervous people out there. Mr. Raymond will have plenty of time to sing everyday,

"As I went down to the river to pray, studying about that good old way, and who shall wear that starry crown, Good Lord show me the way."

Bloggers Poll

2011-04-05T08:29:00.000-07:00

There have been many rumors regarding the potential acquisition of NuVasive, TSB wants to know what do our bloggers think. Is this company ripe to be acquired? And, do industry insiders believe that Orthofix is seriously looking at this acquisition. Speculation runs rampant, and, product overlap exists. Yet, in today's competitve environment does it really matter when it comes down to marketshare? So do you believe its time for the Czar to sell this baby, or does he really believe he will still be at the helm when and if NuVa becomes a billion dollar baby?

Tipping the Odds, or Plain 'Ol Stacking the Deck

2011-04-03T08:43:00.000-07:00

On Sunday, April 3rd, Barry Meier published an expose entitled, "Tipping the Odds for a Maker of Heart Devices." Mr. Meier has been known to report on the potential nefarious backdoor dealings in the medical device industry. Potential is the only word that TSB can use based on the Department of Justice track record, a little more later on the DOJ in this post. Yet, this story takes the reader back to our favorite city, the City of Sin, the city whose commercials should feature Elvis singing Viva Lost Wages, the city that is proud to promote, "what goes on in Vegas, stays in Vegas." Vegas is homogeneous. Americans walking around in their shorts, a cigarette dangling from their mouth, white socks pulled up to their knees, some ridiculous looking tee shirt and their belly hanging over their belts, and TSB is just describing the women. A picture tells a story, don't it? Americans practice paganism paying homage to false gods like Snooki, and the Jersey Shore crowd, the Housewives of Orange County. And then we wonder why there is an outright dumbing down of America.

But this isn't about middle and lower income America. This story is about the magnetic field that surrounds Vegas when it comes to physician and company consulting agreements. Read the following excerpts and one begins to see that wheeling and dealing has become a standard in the medical device industry. Within the last few years a little known German company by the name Biotronik has taken Vegas by storm, and cornered the market on defibrillators and pacemakers at UMC Hospital. Prior to 2008, Biotroniks implants were not used at this facility. So how did Biotronik end up getting 95% of UMC's business last year? You guessed it, the old fashion way. TSB can hear most of you screaming "Consulting Agreement." With consulting fees reaching as high as $5,000 per month, it seems that l'il 'ol Biotronik went from being a nobody to being a somebody in the Vegas market. Today, a federal investigation is examining Biotronik's sales and marketing practices.

Many of you know that in recent years compensation to physicians have come under intense scrutiny. How intense is left up to the imagination. What is utterly ridiculous is how the government once again fails to monitor this practice. The most recent federal law mandates that companies will have to provide full disclosure by 2013 for any payments to doctors for consulting, and other services. Of course, the primary culprit in this activity is the salesperson whom Mr. Meier reports find ways to flatter surgeons or fatten their wallets. The interesting aspect about this expose is some of the comments that are made regarding the salesperson/surgeon relationship.

"One sales person was said to hold a great influence over a doctor." A svengali or dominatrix? "He loves his white wine and being entertained." Never have heard that one before? The most entertaining aspect of this story is that Biotronik officials were quoted as saying,"that Biotronik adhered to an industry wide code of ethics." Of course, it depends upon which code one adheres to. Does Biotronik adhere to the written code, or the unwritten code? There is a difference. So how does a little 'ol company like Biotronic take on the likes of a Boston Scientific, a Medtronic, a St. Jude? Probably the same exact way that many companies in the spine industry do, by maintaining a culture of compliance and ethics. With an ASP of $35,000, and commissions of 25% TSB has to wonder, what the hell are we doing selling in the spine industry? There's gold in 'em hills!

There are many parallels between this story and our industry. A salesperson or distributor becomes successful with a product, the company begins to feel threatened or starts playing games with the distributors commissions, a new company comes along, the distributor is unhappy, and next thing you know the distributor is working for a new company leveraging their relationships in one's quest for the holiest of holy. But contrary to what many perceive about TSB, our opinion is that this behavior is not generated by greed, it is provoked by a lack of respect by corporations in general. TSB is not going to get into the central cast of characters in this investigation but what is interesting is that the Department of Justice continues behaving like a paper lion. In January, St. Jude paid a $16 million dollar fine settling federal charges of giving kick backs to doctors so that they would participate in medical studies, only St. Jude's did not admit to any wrong doing. TSB must admit that is my favorite aspect of all of these settlements. You are fined, but do not admit to doing anything wrong. Incredible.

The plot thickens when Biotronik makes claims that "entrenched relationships between the bigger producers, implant specialists and hospitals have stymied the company's sales growth." But wait a minute, maybe Biotronik has a point. Maybe there is a correlation. As hospitals have become insulated from allowing free market enterprise, ever hear of the Preferred Vendor List (LOL), companies and sales people have become much more creative in how they go about entering and preserving their marketshare and livelihood. Physician's who once had freedom of choice to use their vendor of choice, have become vassals and serfs to their lords, the hospital adminitrator. If the reader doesn't believe it, spare me a minute. Last week, while showing a surgeon a product that clinically had therapeutic value over what he was using, the doctor said, "I want to use this on my next patient, unfortunately, if you are not a preferred vendor, you will have to go through the product evaluation committee and get approval in purchasing." At minimum a three month process. And then we wonder why the U.S. healthcare industry is totally out of control.

Once again, the focus of what is wrong with the system is solely placed on the shoulders of the sales representative. This article talks about sales people earning up to $300,000 per year, playing a variety of roles like technical expert, entertainer, and recruiter. What's disturbing is that the public's and surgeons perceptions of what most sales people earn is immediately tainted with one stroke of a brush. Keeping a doctor happy is no different than keeping a consumer happy whether you sell cars, stereos, build homes, or run a hotel. Unfortunately, once this relationship becomes a dependency, the positive is sometimes outweighed by negative behavior. But Mr. Meier is behind the curve in reporting on old news. Those of us that work within the industry have known of many of these scenarios. Maybe, its time that the media focus on the newest business model that is beginning to take healthcare by storm. The Physician Owned Distributorship. So in closing, TSB wants to know who are the companies that are mastering POD's and how is it effecting your ability to do business in your territory.

The Gift of Cutting

2011-04-02T06:30:00.000-07:00

After a year long analysis of Medicare records, the Wall Street Journal reported on March 29th , 2011 revealing a troubling pattern of multiple surgeries performed by Portland, Oregon based neurosurgeon V. James Makker, M.D.. The red flag was that Dr. Makker's rate of additional spinal fusion operations was 39 for every 100 procedures that he had performed in 2008 and 2009.

According to this report, Dr. Makker has been sued eight times in nine years of practice, compared to the average norm of one suit every two years for U.S. neurosurgeons. The disconcerting aspect of this report focuses on patient Ronald Johnson whom Dr. Makker has operated on six (6) times in less than two years. Mr. Johnson says that he felt progressively worse after each procedure, eventually notifying Dr. Makker that he was done with having surgery.

What seems to be concerning is that upon being notified, Dr. Makker took a second look at Mr. Johnson's x-rays and was quoted as saying "actually, you're going to be alright, adding that Dr. Makker had been looking at the films wrong."

Based on TSB's findings, the only public records in the Circuit Court of the State of Oregon for the County of Mutilnomah relate to the case of Dawn D. Johnson and Shane E. Johnson v. V. James Makker, M.D., Frank J. McKowne, M.D., and Northwest Permanente, P.C., an Oregon corporation. The plaintiffs were/are seeking a jury trial for damages claimed for $ 2,382,935,77. Yet, based on the names, this seems to be an entirely different case involving surgeries that were performed on the incorrect level of thoracic spine by the defendant. You know what TSB says, "one bad apple can spoil the whole bunch girl."

Street Beat

2011-03-31T06:42:00.000-07:00

Recently, one of our bloggers posted a comment describing one of those precious moments in spine. While meeting with a California hospital purchasing manager, this particular blogger was informed that there were three distributors selling X-Spine's cervical plate with three different ASP's. If someone attempted to make this up, it wouldn't be possible. But what does it say about an organization, would that even be an appropriate word, and our industry? How many company's are building their business models on this platform, and, is this really a business model? Even Wal Mart and Target has limitations. It's a wonder why some of these company's can't get out of their own way. Does this bode well for any organization? Would anyone really be interested in doing business with, or investing in this type of company? For the record, TSB is not signaling out X-Spine, because the fact remains that many companies in our industry rely on this type of, ahem, disorganization. Historically, companies that succeed have had focus, solid technology, organizational structure, managed its capital CONSERVATIVELY, and most important, had someone at the helm that knew how to lead. And what does it say about the people the run these companies?

Rumors have been swirling that there are a few spine companies ripe for the picking. Why? Because these companies are in a financial quagmire. Five, six, seven years into their venture and they just can't increase their revenue. But why? Because many of these companies have no cohesiveness, nor continuity. It's a game of musical chairs, indicative of the many new hirees and the number of companies that they have bounced around with, not on their own accord. In this industry, ego's are larger than appendages, and many people have ears of stone. These individuals and companies will tell you otherwise. They will tell you that they are victims of a bad economy. If there ever was an industry were hundreds of millions of dollars have been flushed down the tubes, it is spine. Companies like Archus, Applied Spine, Innovative Spine, Inion, Disc Motion, Pegasus, Vertebron, Facet Solutions have squandered hundreds of millions of investors dollars. Some have been sold for pennies. Our industry is a breeding ground for those afflicted with attention deficit disorder, running in ten different directions, hoping something will stick. Keep your eyes and ears open, there are deals to be had. Could it be a Bacterin, a Phygen, a Customs Spine, a Captiva Spine, an Eminent Spine, a Spine 360 (do they even exist), and would some of these companies really be worth anything, outside of some regional or surgeon investor sales? And would those investor surgeons even continue to use the product after they were paid off?

On the financial front, Amedica/U.S. Spine is gearing up to give its best shot at taking their venture public with Creation Capital offering a pre-IPO Convertible Bond to potential investors. Upon completing $30 million which consisted of $15 million in private equity and $15 million in debt financing it looks like investors are seeking to capitalize on this opportunity. But the question must be asked, is silicon nitride really a game changer in spine? TSB is not going to elaborate on the reconstruction market, but when it comes to spine, will this material really improve the fusion rates? And when it comes down to manufacturing, how much does utilizing this material on implants increase the cost of the product? At a time when hospitals are squeezing vendors for every nickel they can get, looks like this might be a great venture to invest in. TSB wants to know what do our bloggers think?

Cervical Arthroplasty: The Future is Now

2011-03-29T05:36:00.000-07:00

As start-up and early growth stage companies continue to build their portfolios on "me too" technologies, TSB envisions a day where a large percentage of cervical procedures will give way to cervical arthroplasty. No fellow bloggers, fusion is not going to go away, so don't panic and throw your cervical plates, inter-body devices and biologics away. But if I were running your companies, I would place a greater emphasis on cervical arthroplasty, and quick, like yesterday. If there ever was a segment of the spinal column that lends itself to this device, the C-Spine is where its at.

Most of you would agree that key features in a disc design is the center of rotation, the stability of the product and the material used. We're just beginning to capture the retrospective data in a manner that provides surgeons with the clarity necessary to make these procedures successful. Over the years we have been introduced to metal-on-metal, ceramic-on-ceramic, metal-on-poly, poly-on-poly, and ceramic-on-poly. Legitimate arguments can be made as to the pro's and con's of each design.

So the question must be asked of our readers, what is the optimal design? In terms of motion, cervical discs can be classified as unconstrained, constrained, semi-constrained, and disc that mimic movement. Yet, questions still remain as to the effect this procedure has on disc height and facet joints. Time and retrospective data is providing the industry with a better understanding of how altering the natural biomechanics of the spine can result in success and or failures of these procedures. As much as we have learned in the 45 years since the first disc was created and implanted, there is still work to be done.

Unconstrained devices allow for translation which theoretically mimics normal motion, yet may increase shear and torsional loads on the facets. In addition, a greater emphasis is placed on surround soft tissues and the PLL for stability. Constrained devices are known to minimize loads through the facets but have a fixed axis and required accurate placement. How many of our bloggers marvel at the claims that many of the players in this arena have made regarding their devices. Some have called it first gen, some called it second gen, some claimed in was third gen, all without any long-term retrospective data. The industry was bombarded with marketing at its best, or its worst.

We have been told that some materials provide better wear resistance (ceramics), some have a higher wear rate but low stiffness (polymers), we've been exposed to keels, teeth, and coatings, yet, the critical feature is the device's axis of rotation and whether it matches the physiological center of rotation. The challenge is identifying the center of rotation on a level by level basis. So who has the optimal design?

Is it the Synthes ProDisc C, is it LDR's Mobi-C, is it Spinal Motion's Kineflex-C, is it Globus' Secure-C, is it Stykers metal-on-metal CerviCore-C, is it NuVa's CerPass, is it Medtronic's Prestige, these are just a few of the prominent players in the market, in addition how big will this market truly be? When one analyzes the analysts forecasts, one can only shake one's head in amazement. Some have estimated that this will be a $400-$500 million dollar, but those people are smoking something that many of us have never smoked, or at least you didn't inhale. Contrary to popular opinion, TSB sees this at max as a $200 million dollar marketplace, as long as the insurance industry and the government don't "fubar" this procedure. In addition, this is a young person's procedure, (sorry grandma), especially at these prices. So in the spirit of debate, who has the best design, how big will this market truly be, and is this a procedure for one or for all? TSB wants to know what our bloggers think?

Breaking News: No News Is Good News

2011-03-28T07:39:00.000-07:00

As of Friday, March 25th, 2011, word on the Street is that Disc Motion Technology officially closed its doors in Boca Raton, Florida. A valiant effort to keep this company a float during these trying times, unfortunately, when you start believing your own press releases, one is doomed for failure. So the question is, Who's Next?

Meet the New Boss, Same as the Old Boss, We Won't Get Fooled Again!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Sunday's Funnies

2011-03-27T17:54:00.000-07:00

Fellow Bloggers, before you take the time to read tonight's Sunday's Funnies, I encourage you to visit the following website www.gmrfchildren.org. If there ever was a cause that TSB would encourage you to make a charitable contribution, I implore you to consider donating to this organization. Considering that TSB has never asked any of our readers for a single dollar, please take the time to visit this website, every dollar will help. Remember, even the smallest of donations helps, now on to the funnies.

On Friday, the San Francisco Chronicle, reported that Aetna was suing six NJ physicians over medical bills that it called "unconscionable" including $56,980 for a bedside consultation, TSB hopes that at least the patient got a back rub and foot massage, and $59,490 for an ultrasound that usually costs $74. Yet, before the media and general public pass judgement on these fellers, some clarity must be placed on this alleged chicanery. The usually public demonization of doctors has already started, David Lansky, the president of the SF based Pacific Business Group on Health has already been quoted as saying, "if these charges are accurate, consumers and purchasers should be outraged!" Really Mr. Lansky?

Whether the public believes it or not, the fact remains that physicians have been able to flex their pricing muscles for years when it comes to out-of network benefits. And if what Arthur Lebowitz, Chief Medical Officer of Health Advocate Incorporated, an advisor to the insurance industry states is true, "that out-of-network physicians can charge what they want, and rightfully so, and that the challenge is coming up with an agreeable and acceptable customary rate is an accepted practice in the industry, what is the big deal?

But before the public castigate these physician culprits, let's take a look at Aetna's history in the Garden State. In 2007, the company attempted to impose caps on out-of-network payments resulting in a fine of $2.5 million (chicken scratch) because the consumer was being forced to pay balances other than co-pays. In 2009, Aetna, Wellpoint, Cigna and the United Health Group were accused of underpaying out of network physicians BY MANIPULATING THE DATABASE USED TO CALCULATE PAYMENTS, and paid a total of $90 million in fines to the Empire State without admitting any wrong doing (that's TSB's favorite part of all these settlements). Of course the insurance industry is crying wolf, because they rarely make any money providing insurance for their subscribers. The fact remains that AETNA's revenue for 2010 was $34 billion, a decrease of 2% over the prior year, yet, THEIR NET INCOME ROSE TO 38% to $1.77 billion. What other industry can accomplish this? Maybe if CEO's at these companies weren't so greedy, the lovefest between insurer and provider could come to a resolve? Does William McGuire earning $124.8 million dollars and backdating stock bring back any memories in the CalPERS law suit, whereas ol' Billy Boy had to pay back $30 million.

Public records indicate that Aetna's CEO Ron Williams took a 6% pay cut in 2009 and still earned more than $18 million dollars, making his package $5 million dollars more than Wellpoint's Angela Bray, whose compensation in 2009 was a 51% increase. In 2008, Williams earned $24,300,112 in total compensation with more than half coming in option awards. Isn't something fundamentally wrong with this picture? But then this poses a larger question, isn't the insurance industry making the rules for the game that physicians play in? Before the general public expresses its outrage, maybe its time to take the insurance industry to task. As premiums continue to soar, and people are denied coverage for pre-existing conditions maybe its time that the physicians and the public coalesce and fight the fight together. Until patients comprehend that they have the right to challenge any denial and threaten public scrutiny of these practices, things will continue as usual.

And what does this say about the POTUS? Didn't he cut a deal with the insurance industry mandating that Americans have insurance coverage utilizing tax dollars to subsidize their premiums? Isn't this socialized medicine with a different twist, and the only difference being that tax payer dollars are being funneled directly to the insurance industry? The fact remains that there aren't too many other industries where someone like Mr. Williams can earn a free-market salary while using the government to corral subscribers and the taxing power of the government to pay for your premiums? But you know what TSB says, when executives earn more in a day than most teachers do in a year, something is fundamentally wrong with the system? Considering that physicians are not provided a cost of living increase and are only allowed inflationary adjustments, maybe the time has come to challenge the insurance industry? But then this will be a challenge considering that most state insurance commissioners are former employees of the insurance industry themselves. So in closing TSB wants to know what our fellow surgeon bloggers think, is it time to stick it to the insurance industry or is this just a strategic plan to force litigation in order to arrive at an acceptable and agreed upon reimbursement for out of network services?

Stay of Execution, Or Just a Reprieve

2011-03-24T05:09:00.000-07:00

Looks like there will be a Stay of Execution Party being held around the pool next week in Duck Key, Florida. No fellow bloggers, the Governor of Connecticut did not step up to stay the inevitable execution of Applied Spine Technologies. A holding company by the name of Rachiotek, LLC has stepped in and acquired whatever assets, meaning the intellectual property, for the Stabilimax. Hopefully Oxford BioSciences, BioVentures Investors, Investor Growth Capital, DeNovo, MB Ventures, and InterWest Partners will take their pennies on the dollar and run. Run as fast as you can and don't look back. The unfortunate aspect of this venture was that a great guy like Dr. Panjabi, the preeminent authority on spine biomechanics, was doomed for failure from the get go. If there ever was someone that you would "pull for" it would be Panjabi.

The one aspect about the former management team at Applied Spine was that they did a wonderful job of spending money in addition to the cost of running an IDE. This company never had any internal continuity outside of Terry Brennan. If anything it was a management team of musical chairs. Yet, there must be some inherent value to this IP, but many question remain unanswered. With declining reimbursements due to an uncertain healthcare environment in the the U.S., and additional questions about the clinical efficacy of this technology, will this ever be the market that many expected it to be? The challenge with most of these ventures is that the inventor entrusted their child (the IP) to a group of people that did not understand the magnitude of commitment to this project. A nanny cam would have served the investors well in keeping tabs on the day to day operations at AST. Outside of the few people that remain from the original cast, most of these people were like rats on a ship. Every engineer that TSB spoke with frowned upon the potential success of this product, and those were product development engineers that were being honest about their evaluations. As one designer commented, "there is a distinction between hope and reality." How quickly have we forgotten about other products that were marketed, and destined for success in the dynamic stabilization market? And, how much money went to naught? Up until a few years ago, companies were investing time and money, or had high hopes of introducing a new dynamic stabilization system to the market, only to close the doors on their future?

So TSB must ask our readers, is there any hope for this technology? Did Rachiotek really get a deal, or did they buy some technology that truly is a dead man walking? TSB wants to know what our bloggers think?

Looking For A Job - Here's A Real Opportunity

2011-03-21T07:20:00.000-07:00

Recently, TSB received an e-mail from our all time favorite platform Stinkedin, oops I mean Linkedin. Sometimes one must wonder whether the power of the internet is omnipotent that everyone is willing to drink the koolaid. I mean even the President is gullible enough to believe that Silicon Valley is going to produce more jobs in the U.S.. No doubt, that TSB is guilty by delivering a platform called The Spine Blogger on a weekly basis. What we don't believe in doing is sharing information, pictures, and other personal information. Do any of you really give a "rats derriere" whether someone you really don't know, was in Brazil this weekend partying with Barack Obama? In addition, I disabled my Facebook account when I started getting all these weird e-mails from people that claimed they were my friends. Truthfully and no offense, TSB doesn't even know whom some of you are. If one looks up the definition of the word "friends," it means a person attached to another by feelings or affection. My all time favorite was when someone I really didn't know sent me a picture of himself and his wife, whom of course was exhibiting her decolletage, and TSB is being generous with our choice of words. Can we talk? I guess he was proud to show off his trophy wife. But this isn't really what this post is about.

This morning TSB received an e-mail from someone on Linkedin that was announcing that Life Spine was looking for Regional Sales Mangers Nationwide. Is this company even in existence? Hasn't this company gone through more managers than Imelda Marcos went through shoes? Even Hannibal Lecter would tell you that, "people don't always tell you what they're thinking, they just see to it that you don't advance in life." Granted, many people believe that their baby is beautiful, but beauty is in the eye of the beholder. So if anyone is looking for a job, this is a golden opportunity to be tormented like Agent Starling. By the way, whatever happened to Chris Cochran? You know what Rick Blaine said in Casablanca, "Louis, this could be the start of a beautiful friendship." So if you're looking for work, crank up that typewriter and get your resume out there, opportunities like this come once in a lifetime. TSB wants to know what our bloggers think?

Sunday Op-Ed Piece

2011-03-20T07:23:00.000-07:00

Since most of our readers acknowledge that they follow TSB not only for the content, but primarily for the passionate discourse exhibited by many of our bloggers, we thought it would be interesting to get your take on what has made some spine companies successful and why have some companies floundered in what now seems to be eternal misery? We all know that IP is one of the most important ingredients in developing a successful start-up. Without innovation and a targeted market, raising capital in today's economy is a moot point. In addition to the aforementioned, assembling an "empowered" and knowledgeable management team may be the most important ingredient in defining ones success or failures. Ever work for someone that had what TSB calls the "ADD Spine Business Plan?" Ritalin and Lovaza would probably not help. Getting a group of people to understand a plan/objective and remaining focused maybe the most underrated aspect of any business. Yet, without acknowledging the market and competitive realities, any new venture may be doomed for failure. So again, TSB asks the question, why have some companies failed while others succeed, sometimes in spite of themselves.

How do ventures that have raised millions have gone on to fail in our market? Whether our readers agree or not, "process" may be the most important element rather than results. Unfortunately, for the better part, many investors along with the people that steer a start-up fail to grasp that concept. Most successful ventures, and by successful TSB means those that actually effected their strategy, reveal two important patterns. Useful change tends to be a multistep process that creates power and motivation to overwhelm all sources of inertia, and the process is never employed effectively unless it is driven by "high quality" leadership, not just a great management team.

Regardless whether costs are high, products are mediocre, or customers are exhibiting shifting requirements, progress and process may be paralyzed by egotistical leaders, bureaucracy, parochial politics (an all-time favorite), a low-level of trust (ever work for one of these people), lack of teamwork, a lack of focus. In our haste for the Holy Grail, many CEO's and their boards have derailed many a companies by their petty insecurities. Do companies like Vertebron, IST or Applied Spine bring back memories? And what does it say about the leadership and business acumen of many a CEO when one looks at the attrition rate within the industry. Some will obviously argue that market forces are things that companies and its management team cannot control, yet, TSB differs with that opinion. It is precisely for this reason that many of these companies have failed, a leader is like a great conductor of a symphony being able to guide his or her orchestra through the process which usually ends in a great result. By paying attention to the details, the whole is greater than the sum of its parts.

How many of you have worked for a company that has developed a decent product only to fail for its own inadequacies? Their inability to respond in a timely manner, their inability to address system short-comings? Could you think of a few? Today's business environment demands more large-scale change whether it be vis-a-vis a new strategy, restructuring, mergers or acquisitions, and new product development. Some of these decisions need to be made quicker in a less than economic environment requiring sacrifice. Unfortunately, many of these companies have failed to take a conciliatory approach, nor are we a very sacrificing society, but that's what awaits many of us including the companies, hospitals, surgeons, and sales reps.

Reality has brought many companies back down to earth. The days of 40% commissions are over, the days of 20% growth will be far less, unless you are buying products from one of the many companies that have been started by former distributors and/or their physician colleagues. Realistically, TSB sees a trend in the field, whereas more and more of these small companies are surviving by utilizing every legal resource available to them. Namely POD's, for the obvious reasons. And if the big boys are predicting below average expectations, how do some of these smaller ventures continue to show growth, considering that we do play in a zero-sum marketplace? How many of these ventures were originally positioned to be flipped, only to hear their CEO's now claim that their objective all along was to grow a company and organization, while they move along at a snails pace? The people that run these companies will argue that their organizations can succeed with incremental change. A 2% improvement here, a 3% reduction somewhere else and you are growing. In the short-term that may be true, but how long will it take to get where some of these people claim they are going?

What we are witnessing today is change in the internal structure in many of these companies, surviving on fewer rules and employees. So in closing TSB wants to know what our bloggers think, have many of these companies failed because of their inability to be risk tolerant, transparent, too slow to make decisions, a failure to empower and trust their employees or as TSB likes to say, were the market conditions bigger than the both of us?