The Future is Now, it goes by the name of Cortoss!

It has been reported that nearly 1.7 million vertebral compression fractures are diagnosed in the United States annually, with an estimated 13.5% that result in surgeons and radiologists performing kyphoplasty or vertebroplasty procedures on these patients. Percutaneous kypho or vertebroplasty benefits the elderly, since conservative treatment bears life-threatening risk. Since PMMA has a drawbacks due to high viscosity and poor handling characteristics in addition to potentially leading to pulmonary emboli and other complications, the time has come for the medical community to look at other alternatives.

That alternative is Cortoss! Why Cortoss? Why is the SpineBlogger promoting this product again? Because if you or I had a VCFx, Cortoss would obviate many of the potential issues associated with PMMA. A low-pressure delivery system this material is hydrophilic allowing it to support existing structure rather than displace it. Since the government, insurance companies, hospitals and physicians have made healthcare a political football, isn’t it time we start thinking about how advances in technology that has been around since 1984 can truly benefit the patient and minimize the cost of care for the elderly. Retrospective data and results confirm that Cortoss is safer and as efficacious if not more so than PMMA. I’m not some fancy analyst that gets paid to put a spin on a company or a product for Wall Street. The one thing I know is that my clinical knowledge and acumen of the industry makes me more qualified to analyze a product and a companies future, as far as the SpineBlogger can see the future is now, and it goes by the name of Cortoss. The SpineBlogger wants to know what you think?

First Kuklo, Now Polly, Who will pay the Price?

Today, Barry Meier of the NY Times reported that a second medical consultant, Dr. David W. Polly, Jr. has drawn U.S. Senate scrutiny for his relationship with Medtronic Sofamor Danek. In 2006, Dr. Polly urged a Senate panel to continue government subsidies for medical research into combat related injuries using INFUSE. What Dr Polly failed to disclose during his testimony, was that he was a Medtronic consultant, and, was billing the company $6,000 for his appearance. Without going any further, the SpineBlogger has one simple question to pose; why did the U.S. government subsidize research on behalf of Medtronic, and allow Dr. Polly, or whomever else is involved, to study and validate the product at the expense of U.S. taxpayer dollars. I know the argument, look at the outcomes, but I would argue at whose expense?

If Medtronic is under the microscope, what are these investigations saying about the type of margins that we generate within our industry, in order to pay surgeons the type of consulting fees that they earn? And you think that the federal government is not monitoring this activity? Since Dr. Polly did not acknowledge that he was representing Medtronic at the panel meeting, what does it say about his integrity? As the SpineBlogger has stated before it is these little "white lies" and "selective amnesia" that is beginning to get so many academicians in trouble, not only with the government, but also with their respective institutions. I know some other white knight thespian will take up their cause and say how unjust the people are treating these poor guys, and that the universities are not being transparent. What I have to say to those charges is nonsense. If physicians continue to exhibit this type of arrogance and behavior, there will come a time when federally funded research and grants will become a thing of the past.

Dr. Polly was quoted in the article as saying that his relationship with Medtronic has always been on the up and up. He probably meant that if he shows up, they pay up. If Dr. Polly's study cost the U.S. government nearly $500,000, then Dr.Polly should not only repay the government out of his pocket, he should be charged compounded interest. In addition, the 'evil empire" as we know it should reimburse the government. But isn't it entertaining that now Medtronic is distancing itself by saying that Dr. Polly should have disclosed that the company was paying him for his appearance and travel expenses. In every instance, Dr. Polly has acted honorably, unfortunately, he forgot to tell the government that not only was he doing this for injured military personnel, he was also doing this for Medtronic. The Spine Blogger wants to know what you think.

Is a Storm Looming on the Horizon?

The Obama Administration is attempting to redefine the United States healthcare system. The escalating cost of medical care and emerging technologies is establishing a new paradigm in the medical device industry. Whether you are a member of the Spine Cartel or a fledgling early growth stage company, the question you must ask yourself is how do you protect your marketshare and continue to grow your revenue stream in a zero-sum market? Pricing constraints are being placed on companies witnessed by procedural caps that are being initiated by various hospital buying groups. Physicians are being pressured to make concessions everyday when it comes to personal preference for products. Reimbursement is a major concern whenever new technologies are introduced in the marketplace.

There will be a major shift in how medical device companies manage their relationships with physicians, providers and insurance companies. A conciliatory partnership will have to be developed with the provider (the hospital and physician) and the payor (the insurance industry or potentially a government sponsored program). Concession will not be an option. It will be a mandate. The relationship between the device industry, the insurance industry, and the provider has been adversarial at best.

Hospitals and physicians are now challenged with operating a profitable business at a time when reimbursements will be redefined. As new technologies emerge, hospitals and physicians will be confronted with making decisions whether or not to provide the patient with costly therapies. Financial barriers will have to be removed in order for both the physician and patient to have access to new technology. Unpredictable cash flow and poorly forecasted budgets have created a volatile environment in medicine. A reduction in implant cost will lift a potential barrier to quality healthcare. But, are we willing to do that? And what will physicians decide to do when medicine is no longer the cash cow that it once was. Surgeons still make an exceptional living unless obviously they think they would like to try their hand at plumbing.

The insurance industry has, and the government intends to control cost. The challenge that the medical device industry will have is educating both parties on product differentiation and outcomes. Up until this now we have done a reasonable job, yet not good enough. But reason alone is not enough to overcome controlling cost. By reaching across the aisle and offering an olive branch we have the opportunity to continue to be a viable and innovative industry. Unfortunately, many things will have to change. Companies will have to accept less profits meaning that we will have to manage our budgets with more efficiency than ever before. The companies will have to police themselves in identifying whether a potential new technology realistically will make a difference in patient outcomes. Witness the carnage in our industry that has resulted in over 500 different pedicle screws, nearly 300 cervical plates and countless TLIF, PLIF, ALIF and Cervical PEEK devices. Have all of these products really made a difference in outcomes? Our industry has come to resemble the early years of the automobile industry. Or, have these products saturated an already existing commodity market? As investors hold on to their hard earned capital there will be fewer opportunities for “me too” products to succeed. How will this shift affect the earning capabilities of the salesperson? There will be a shift in the commission structure resulting in less earnings for the distributor or direct salesperson. I know that many of you do not like reading this, but if the company’s bottom line suffers, so will your ability to sustain your earning capacity. Remember a company not only incurs cost of goods to manufacture the product, it incurs general and administrative costs and cost of sales. It all comes down to operating income and remember, any publicly traded company has to answer to the Street. Wall Street has become our own worst enemy.

Salespeople have done a poor job of being business people. Purchasing, materials management, and finance were always viewed as the enemy. But this is not the only looming problem. What happens when companies start believing that they could exist without sales people and start to model their distribution model by selling to the hospitals directly? If you don’t think that’s possible, it has already been piloted by various small companies and tabled by larger organizations. Yes, there is some liability issues involved but I am sure that a remedy could be found if it meant greater profit margins in a constrained market. So where do we go from here? I don't want to be perceived as the Dr. Doom of the Spine Industry but we will face an unpredictable future. This unpredictability will create some people to attempt to manipulate market forces that will not be able to be controlled. The companies that exhibit the wherewithal to change and think out of the box will survive and prosper and the companies that don't will wither away. The Spine Blogger wants to know what you think?

What a Cast of Characters!

Have you ever analyzed what is written in industry related press releases whenever a change in upper management occurs? As we enter the Dog Daze of August, I just put my board up for a few days to catch up on things. The first thing that is evident is that nothing really interesting is going on with the exception of Paradigm raising " $ 21.5 million, mucho dinero." Kudos Marc Viscogliosi on a job well done! I know that some other blogs that you the reader subscribe to have been talking about mergers and acquisitions, but I really don't see any existing technologies out there that would help the "Spine Cartel" in expanding revenue and marketshare. Neither do I see any prudent investors parting with hard currency in this market unless you are giving it to V3 (Tony, John and Marc), I'm trademarking that moniker. So I decided to look at archives of recent management transactions and then all of a sudden it hit me. How entertaining are some of these Press Releases are when you really have an understanding of our industry?

Example # 1: Back in April Scient'X Groupe, S.A., announced the appointment of Oliver Burckhardt as its President and CEO. The release stated, "OB was responsible for the Orthofix/Blackstone spine unit with revenues that exceeded $100 million in 2008. Of course part of this appointment was probably attributed to the fact that Healthpoint had to replace Mike Huggins who had some legal issues leftover from his Synthes/Norian days that have recently been adjudicated. But I'm not writing about Huggins, I am talking about OB, Scient'X and Healthpoint. If anything, OB had a brief stint at Blackstone. But was he really responsible for contributing to any of the $100 million in revenue? He was there for such a brief period that his coffee didn't have a chance to get cold. Yet, if you read the comments that were made about Huggins departure, you start to laugh, "during his tenure he strengthened the companies platform and positioned it for significant growth!" Are you kidding? If my memory serves me correctly, the guy was at Scient'X for less than a year. Just leave it to a bunch of orthopaedic investment bankers to serve up a plate of "BS" to potential investors. Question: What has Scient'X done recently? Outside of raising some capital, not much!

Example #2: Custom Spine: In January (I must be bored if I went that far back in time) CS announced the appointment of Lew Bennett as President. The company announced that "Demolition Lew" brings over 48 years of experience in the medical device industry. I didn't know there were people with that kind of longevity in our industry. The CEO stated; "We are really excited to have Lew taking the helm at Custom Spine." You've got to be kidding! Jack Sparrow has a better chance of surviving this ship wreck! The Board should be fired! The guy is an octogenarian and has left more than his share of collateral damage in the industry! Lew has consulted for over 550 orthopedic and neurological practices and universities, in addition to all the other accolades that he lists. He is legend (Will Smith look out) in his own mind. Some people need to stop living in the past. The only way he could create this much excitement would be if he was playing with his dosing of Viagra.

Example #3: Applied Spine Technology names Craig Corrance new CEO. If this guy isn't Bill Compton (the Vampire) from True Blood, I don't know who in our industry is. Will his return to the head honcho position bring some tranquility to his life? If he isn't warding off threats from a cadre of former Vampires (Altiva, Scient'x and Raymedica) I don't know who is. Didn't this guy get appointed in June of 2008 as the President of Raymedica? World class talent usually last longer than one year. Throw in the responsibilities of his newly turned fledgling Applied Spine, and it almost makes Craig yearn for the good old days of lurking in the shadows.

The Spine Blogger wants to know what some of you real people think?

Is it an Aspen or a Medical Device?

Recently, the Spine Blogger was asked by one of his readers on his opinion about the LANX Aspen Spinous Process System (ASPS). Aspen is the name of a Colorado Ski Resort Town, but the origins of the name come from the genus Populus (a tree) having leaves attached by flattened leave stalks so that they don't flutter in the wind.

But we are not talking about a device that flutters in the wind, nor does it flutter between the Spinous Process. It doesn't take a rocket scientist to see that this is a great device. The Aspen Spinous Process System is an interspinous process device that was design to address degenerative disc disease and spondylolisthesis. This is a fusion device and it is very, very slick. This product can be used in a 360 and can be inserted via a minimally invasive approach. I would assume it can also be used in a TLIF. The Spine Blogger loves the graft cylinder(that's what I call it). For those of you using the X-Stop, remember what Meatloaf sang; " Stop right there, before you go any further......., try the Aspen " I love this product, it is a winner. The SpineBlogger wants to know what our readers think.

PS: The viewing public would like to see Lanx products on their website, enough with the historical perspective on the name of towns in Colorado!

Is there a Doctor in the House?

On Wednesday night, the President addressed the country on his mandate to reform the US Healthcare System. On Thursday morning we started the process of attempting to make sense of how this will affect our personal lives and careers. Have you ever heard the saying; "Change is Good." You know, the one that CEO's in our industry love to use. Well, based on the response that we hear, change is really not good, at least for most Americans. America continues to carry the curse of our puritanical ancestors of having no flexibility and being much more conservative than we like to admit. Before discussing this new healthcare paradigm, some things need to be brought to light regardless of what side of the political spectrum the reader sits on.

Whether you liked what the President had to say or not, 46 million Americans do not have healthcare insurance. I am not going to argue about what category these uninsured people fall into, 46 million is 46 million. (I'll leave that debate to the spin doctor analysts). The U.S. spends more dollars on healthcare than any other advanced nation without better outcomes. Why? Is it because our doctors are poorly trained? No! Is it because we don't have state of the art technology available to us? No! Is it because our hospitals are not managed properly? Yes! Is it because insurance companies are publicly traded and driven by Wall Street's insanity? Yes! Is it because Americans in general don't take care of themselves? Yes! Or, is it because we have become a litigious society?

Just look at our industry, lawyers love medicine, healthcare and the medical device industry. When the President stated that a fee-for-service system creates an incentive for physicians to run more tests and perform additional operations, whether these procedures actually help the patient, misses the point. Yes, there are physicians that know how to manipulate the reimbursement system, but why does the government choose to place a "bullseye" on their back when there are others that need to be held accountable.

Until the Congress and Mr. Obama (a Harvard lawyer by education) comprehend the magnitude of Tort Reform, nothing will be resolved. The fact remains that many physicians are an open target for potential litigation when they do not "CTA" by ordering more tests and potentially not operating. But before we castigate Mr. Obama, let's not forget what Mr. Bush did when he was in office. He claimed to be against excessive government expenditures and did absolutely nothing to rein in the single largest contributor to the federal deficit, Medicare. In addition, "W" was irresponsible when it came to the plight of the uninsured or the concern regarding the cost of healthcare when he stated; "People have access to healthcare, all they have to do is go to an emergency room." But I'm not writing to make a pitch for Obama nor to bury Bush. I'm writing because we need to figure out how to provide healthcare for an estimated 15 million illegal immigrants (do we deport them if they don't become citizens), millions of unemployed college graduates (why isn't Wall Street and Corporate America doing something to help these kids), and people who have fallen through the cracks whether they are between jobs or not.

The potential backlash of not hammering out a realistic public plan could potentially have greater collateral damage than imaginable. Unfortunately, no one likes change, nor does everyone involved want to make concessions. The fact remains that if there is an overhaul of the current healthcare model our industry will pay a price. Why isn't the AMA, the Orthopedic and Neuro lobbying groups, and our own industry addressing the socioeconomic benefit to providing state of the art healthcare to Americans? There has to be a reason why our outcomes aren't better. Could it be that Americans in general don't take good care of themselves? Why don't these lobbyist talk about how the insurance industries main objective has always been to make doctors employees or wards of the state? Why would you take the incentive (fee for service) away from a free-market healthcare system? The bottom line is we're on the clock and if our industry along with its physician allies don't step up, it will be too late once a plan is enacted. The Spine Blogger wants to know what you Cowboys and Cowgirls think?

Fool Me Once, Shame on Me! Fool Me Twice Shame on You!

Late this afternoon, it was reported in the WSJ that Jeffrey Wang has lost his position as executive director at the UCLA Spine Center. In addition to this action, he is being investigated by the school for allegedly failing to disclose that he was paid by various companies (Medtronic, Paradigm, FzioMed, Facet Solutions, and DePuy Spine) whose products he was working on.

In a 6-7 year period, Dr. Wang failed to notify the state and the medical school that he was receiving consulting payments, stock options and royalties from the five aforementioned companies. Whether Dr. Wang is entitled to compensation is not an issue. The failure to report these relationships is a violation of university guidelines. Therein "lies" the problem.

The SpineBlogger has raised this question in a previous blogs, how does an intelligent and successful surgeon continue to exhibit a pattern of failing to abide by the disclosure rules of the state and university. One can argue that in a free-market Dr. Wang is entitled to earn whatever the industry affords him for his services. Unfortunately, as an employee of UCLA he is held to a different standard as an employee of the University. The bottom line is that as an employee the University owns his mind. At this juncture the University is considering other sanctions.

Dr. Wang has established a stellar reputation in our industry. Maybe, its time he start thinking about private practice. Maybe now some people are beginning to understand why our industry is being scrutinized under the watchful eye of the DOJ, the SpineBlogger wants to know what you think?