Laser Spine Surgery: A Real Business or A Real Scam

Recently there has been a rash of people blogging about a controversial company called the Laser Spine Institute. TSB would be interested in knowing if anyone has had any experience with these facilities. Located in Arizona, Florida, California, and Pennsylvania this institute claims to use minimally invasive, endoscopic laser assisted procedures as a modality of treatment for various spinal maladies. Considering that during my tenure within the industry I have come to know many spine surgeons on a national basis, I am not familiar with this group. Any feedback would be welcomed by our patient readers. Once again, thank you.

Sunday Morning Op-Ed Piece

Recently, TSB was traveling with a principal of an early-growth stage company when this person exclaimed; "its amazing what we have done to ourselves as an industry." I would have loved to use the word "principle" but in all honesty, there are very few people in spine that possess the guiding sense of the requirements and obligations of right conduct. Years ago, spine was a well respected industry, one that focused on delivering innovative technologies that really made a difference in the clinical outcomes and the quality of life for those that needed it the most, the patient. With over one hundred companies, the industry is beginning to exhibit massive gridlock, where executive management teams resemble the United States Congress lacking in true leadership by bringing old values and strategies of self-preservation. The truth is that the industry is as dysfunctional as we have ever seen it. Somewhere along the way, the industry lost its moral compass by throwing aside the clinical and ethical obligations "of doing the right thing" by wanting to play in a game that few are qualified yet many long for. Based on conversations that TSB has had with colleagues held in high esteem because of their integrity and love of the industry, the belief is that the defining moments were the development and sale of Charite to DePuy and Spine Solutions, aka ProDisc, to Synthes. True innovation does not last very long.

Up until then, many companies were developing products incrementally enhancing their respective portfolios willing to build a business based on common sense and realistic financial forecasts. Suddenly, in one fell swoop, the game was on. Charite was brokered by former U.S. Surgical employees and Spine Solutions, gave us an introduction to a former Wall Street analyst turned merchant banker. With the sale of those technologies came entrepreneurial fever. The common theme heard was "if they can do it, why can't we?" Not only did this change the mind set of industry professionals and surgeons, it open the door to every private equity and venture capitalist around the world. With innovation came the craze to patent any and every idea that one could come up with. This was reinforced by the Michelson victory over Medtronic Sofamor Danek. With innovation, we were introduced to deal making. Today, our market is glutted and will be gutted because of our ability to imitate, rather than to innovate. The only true innovation comes from those companies that have the ability to come up with a better marketing spin. How does one develop another pedicle screw, another cervical plate, another zero-profile device, another cage, or biologic when it doesn't truly change the clinical outcomes? Simply, by the art of the deal.

Suddenly, everyone had to be in on the deal. Everyone had an idea. Products were churned out regardless of innovation or not. We heard the words; first generation, second generation, third generation, fourth generation. All this with no retrospective data. It was pure marketing at its best. The more capital that was taken in, the more we had to learn that nothing on Wall Street or by investors was done long-term, life became a short-term race. Today we pride ourselves as an industry that is constantly under scrutiny by the Department of Justice, an industry where we applaud a CEO who started a company by stealing his former employers IP and employees, conspiring against it. And, we applaud its success. Shameful. Many of you call it genius, I call it criminal. An industry where the leading question in an interview is, "how much revenue can you bring within a certain period of time, meaning how many surgeons do you own." Where distributors buy surgeons business by either hiring their brother-in-law, or kicking money back to the surgeons under the table. Where surgeons no longer want to be surgeons, but want to be distributors, where hospital CEO's are in bed with companies. Where an employee is no longer an asset but a commodity, treated disrespectfully because those that lead have no idea of what their doing.

It's become quite evident that we are in a race. The question is, "are we in a race with ourselves or is it a race with time, before someone has the wherewithal to put on the brakes?" Where are the Howard Beale's of the spine world that have the intestinal fortitude to stand up and yell, "we're mad as hell and we're not going to take it anymore." The fact is that we have become a see nothing, do nothing, hear nothing industry. TSB wants to know what our readers think?

Party on the West Coast, Dark Clouds on the East Coast

The timing could not have been worse. As NuVasive was getting ready to kick off their NSM this week, the market was reacting to concerns as to what is happening in the spine industry and specifically XLIF. TSB received many unusual calls from investors concerned about what was going on at the company. With a 52 week high of $45.06 and a low of $24.17 one can understand why NuVa has investors wondering.

I'm sure as all the NuVa employees were sitting anxiously awaiting the arrival of the Emcee, the old 70's song "Everything Is Beautiful" by Ray Stevens was playing in the background. It was a great year for Lukianov and his band of gypsies. There was a lot of chest pumping and high fives along with confidence that 2010 will be the year of the Purple People Eaters. PT Barnum and Barney would be proud. Revenue guidance for 2010 of 30-35% growth or $480-$500 million takes some "cohonies" considering that the guidance for the industry has been adjusted by the analysts to meet the challenging environment in the healthcare industry, let alone the economy. As "cockey" as Lukianov is, he should go to bed praying that the insurance industry doesn't further continue to sink its teeth into coverage for XLIF. We are sure that if he is as savvy as he is, NuVa is in the war room weighing every option in the event the worm turns. Potentially, a request can be made by the carriers to modify the ICD-9 and CPT Codes for this procedure. NASS has already jumped into this melee to defend its members and NuVa. Would we expect otherwise?

But here is the bigger question: Will surgeons that are pressed by the insurance industry want to defend every XLIF procedure that they perform to ensure that their post-op dictation match the definition of an ALIF? TSB finds it hard to believe that no-one hasn't been denied reimbursement for XLIF when Lukianov himself stated in his conference call that this is a "local" not national issue, but that's old news and we all know that Alex can perform the aztec two-step better than anyone in the business. Regardless of the "dog and pony" act, analysts need to calm down since NuVa is not going anywhere. If they have one achilles heel, it is that XLIF has carried the burden of getting this company to where it is. And you know what my grand-daddy use to say, "you can only milk one cow for so long and then you run out of milk." If NuVa is as intelligent as we believe they are, they are looking at the option of using the Xtreme lateral approach for lumbar disc arthroplasty and how to beef up their portfolio. Let's face it, outside of XLIF what else is there?

You know what they say, "he isn't making $9 million a year because he's stupid." TSB wants to know what our readers have heard on the street? In addition, we would love to have some surgeons weigh in on the debate.

How Do You Pull a Rabbit Out of Your Hat?

On January 28th, 2010, RSB Spine LLC (aka Robert S Bray) announced that the FDA had issued clearance on the company's 510(K) filing to commercially market the InterPlate C-PS and L-PS interbody spacers.

Mike O'Neal, President of Paradigm Devices (the real Paradigm) stated that RSB now provides distributors with a full-line of modular interbody implants offering a complete array of material and mechanical loading options that are code compliant. Available in titanium and PEEK, RSB now provides independent distributors with an opportunity to compete in an ever increasing market segment. When one analyzes the Zero-P market it is obvious that many companies are moving at the speed of light. What was once a barren landscape has become promiscuous, multiplying faster than a rabbit. Bang, Bang, Bang one after another there is a glut of Zero-P products. Products like the InterPlate are rounding out the distributors product portfolio enhancing their ability to spark interest in another option for cervical and lumbar devices. As Rocky once said, "Hey Bullwinkle, you wanna see me pull a rabbit out of my hat? Presto! The RSB InterPlate. TSB wants to know what our readers think of this product.

Spine Blogger Alert

TSB Alert to our Readers:

Recently, one of our followers indicated that Blue Cross/Blue Shield has been denying coverage for spine procedures in the New England Area. Has anyone including surgeons, patients, or industry professionals experienced any denials? If you know, please let us know.

TSB

The Blame Game

OTW's Walter Eisner was able to land an interview with Dave Stassen founding manager of Split Rock Partners regarding the recent demise of Disc Dynamics. Stassen acknowledged that this was the third or fourth company in SRP's portfolio that had to cease operations because of their inability to get through the FDA. He is quoted as saying, "investors have dropped $300-$400 million" down the hole because of the FDA. Hmmmm? Sounds like sour grapes. Why?

Regardless of their size, one has to wonder who was doing the due diligence on behalf of SRP when they invested in this technology? The one thing we have learned is that just because you have made millions doesn't mean that you can beat the house. Hopefully, the VC's have learned that their lesson. VC's are very interesting people. When one looks at their backgrounds they are brilliant people holding law degrees and MBA's from pedigree schools, unfortunately, having a blue blood education is not a prelude to understanding emerging technologies and the potential challenges in bringing them to the market. I am sure SRP has made some wonderful investments, but the question must be asked, "what were they thinking when they invested in DD? A colleague of TSB's informed us that when they originally saw Steve Healy present at an investors meeting in 2006 or 2007, the skeptic light bulb immediately went off in their head about this product. I know, many of our readers will question our monday morning quarterbacking motivations, yet, hope springs eternal for many investors

Is it really a travesty that American patients won't get access to this technology? As one of our commentators stated, "could it have been that the FDA was concerned with the potential carcinogenic effect of this polymer? Mr. Stassen forgets that regardless of his financial interest, the FDA's responsibility is to regulate the safety and efficacy of medical devices. It is also of interest that Stassen claims that patients in other parts of the world "are getting outstanding results." Have any of our readers wondered why there has been an exodus of clinical trials to foreign countries where regulatory and medical guidelines are lax and patients become real-life guinea pigs. Many of our clinical meetings have become circus acts with surgeons providing the audience with pictures at an exhibition. Sometimes it reminds you of a foreign film festival

It's noble of Stassen to acknowledge that DD shares "some" of the responsibility. The only saving grace that has come out of this exercise is that there will be no bankruptcy proceedings Mr. Stassen forgot that "those who fail to plan, plan to fail." It's always easier to blame someone else than look at yourself in the mirror and just admit, it was a bad investment to begin with. TSB wants to know what our readers think?

Zero Profile Cervical Devices: Boom or Bust?

Recently, TSB was speaking with a few surgeons about their experience with the STALIF-C and it seems that this device is not as easy to implant as is claimed by Centinel Spine. Implantation of the PEEK device is not the difficult part of the procedure, its a bear getting the screws into the vertebral body. So the question must be asked, are these implants a viable option for the spine surgeon if it complicates the procedure? How much bigger does the incision have to be to accommodate screw placement? In addition, TSB has heard that surgeons have been concerned about the complexity of inserting the LDR Vertebridge ROI-C. Surgeons have reported they do not like the way it feels upon insertion and that it is destructive to the endplates.

If any of our surgeon readers or industry professionals have had any experience with these devices, TSB and our readers welcomes your feedback. It seems that everyone has jumped on the bandwagon in developing these products, yet, the reality may be that an old-fashioned cervical plate and interbody device may be the way to go. TSB wants to know what our readers think?