Category: management

The lean medical device startup compensation policy

Part of the funding for the Spirit of St. Loui...
Image via Wikipedia

A great coder with a great idea can start an amazing web 2.0 business. In the web startup world, college dropouts create billion dollar businesses by their mid-20’s. In the medical device industry though, experience counts. You’ll need a VP Regulatory Affairs that has several FDA approvals in the last 10 years. Your head of product development should have driven several products successfully to market. Your head of marketing should be a creative product launch veteran. I hope your manufacturing team has built many medical device products before.

“Ramen profitable” doesn’t work for medical device companies.  Medical device companies need experienced talent. Experienced talent deserves fair compensation.

What’s the right compensation policy?

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A Tale of Two Specialties

X-ray image of hip, with orthopedic implant
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If you haven’t already heard the big news from last week, Johnson and Johnson’s Cordis subsidiary announced its withdrawal from the drug-eluting (DES) stent market, a momentous event for the firm that launched the first DES and created a new multi-billion-dollar medical device sector. Cordis is also shutting down its Conor MedSystems DES business, which it acquired for $1.4 billion in 2007. My reaction: Wow!

Meanwhile, the same week, the NY Times reported that metal-on-metal hip implants may become “the largest product liability cases of this decade.”  The FDA website states that “on May 6, 2011 the FDA issued orders for postmarket surveillance studies to manufacturers of metal-on-metal hip systems. The FDA sent 145 orders to 21 manufacturers.”

Two long-term implants. Two medical device sectors. One critical difference.

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The Looming Impact of Healthcare Service Consolidation

St. James' and Murray Hospitals, Butte (1915)
Image by Butte-Silver Bow Public Library via Flickr

Last week, the Boston Globe reported that Lahey Clinic and Beth Israel Deaconess Medical Center held early discussions on a possible merger.

Last November, Cereberus Capital, a private equity firm, bought Caritas Christi, a group of six hospitals in the Boston area.  In December the newly named Steward Health Care System bought two more hospitals in the region.  This April, Steward added its ninth local hospital.  In June, Steward offered to purchase Landmark Medical Center in Rhode Island. More acquisitions are planned.

In January, Northeast Hospital Corp (owner of Beverly Hospital, Addison Gilbert Hospital in Gloucester, BayRidge psychiatric hospital in Lynn, and a Danvers outpatient clinic) began exploring a merger or sale to a larger regional player. By June, Lahey Clinic, Beth Israel Deaconess, Steward Health Care System, and Vanguard Health Systems had all made offers to buy.

In April, Beth Israel Deaconess Medical Center and Milton Hospital announced plans to merge in six months.

Provider consolidation isn’t just a Boston phenomenon. Healthcare services M&A is heating up all across the US. What’s going on, and what does consolidation mean for medical device companies?

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Caution: Physician-Owned Distributorships Ahead

Payments to physicians always raise conflict-of-interest issues for medical device companies (see my post on When Is It Okay to Pay Physicians?). These issues never go away. Today, the Wall Street Journal reported that five US Senators have requested an investigation into the legality of Physician-Owned Distributorships (PODs).

Not being in the spinal implant business, this is the first I’ve ever heard of PODs. What are PODs and what are the implications for medical device companies?

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“The Dwindling Allure of Building Factories Offshore”

Interior of the 3m Co.(Minnesota Mining and Ma...
Image by The U.S. National Archives via Flickr

A recent article in The Economist describes “The dwindling allure of building factories offshore.” The article concludes that “Increasingly, it makes sense to make things in a variety of places, including America.”

I agree. Medical device companies face the same global opportunities and challenges as other manufacturers. While moving medical device manufacturing to a low-wage location sounds like a no-brainer, it takes real skill and experience to make it work well. Sometimes it makes sense, and sometimes it doesn’t.

How do you decide?

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The Medical Device Matrix

Medical imaging systems have been talking to PACS systems for years, saving costs and improving care. I’m always impressed that my children’s doctors can access current and historical x-rays and MRI’s at the drop of a hat. Integration of devices with PACS enables medical images to be captured, backed up, transmitted, analyzed, and reviewed in other care sites and at other times. The age of the standalone medical imaging system is long gone.

Other medical devices are beginning to follow suit, interfacing with electronic medical records (EMRs) and hospital inventory management systems. Networked devices are on the way, and the age of the standalone medical device is heading to a close.

The era of networked medical brings challenges and opportunities. Are you ready?

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Customer-Facing Metrics for Product Launch Assessment

Adoption Curves
Image by Nathan Laurell via Flickr

Medical device product development is justifiably hard. Innovative devices push technical and clinical boundaries. Before being used for patient care, new devices must undergo rigorous analysis and testing. It takes months or years to bring new medical devices from concept to reality. So it’s a big milestone when the last signatures finally authorize product release, and the first units ship to the first customers. Time to celebrate? Not so fast.

Your first customers decide if you should celebrate. Initial shipments are just steps towards the ultimate objective – satisfying unmet customer needs and building a great business. How well have you really done? A couple of weeks ago I wrote about the need for metrics to be customer-facing. Here are a few suggestions for quick-and-dirty customer-facing metrics to help you assess your product launch.

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Finding Your First (or Next) Medical Device Position

It’s March, so if you’re graduating soon you should be well into your job search. When asked for advice, I always give the same response to job seekers. Few of them take my advice, but it hasn’t stopped me from trying. This post isn’t intended to be a comprehensive guide to finding a job, and it really isn’t that specific to medical devices. It’s just one person’s view.

I am surprised that so many candidates expect to get in the door of a company by flinging a resume at an HR department. As a hiring manager I dread poring through piles of resumes, the vast majority of which aren’t even close.

Getting someone to hire you is like getting someone to buy a product. An employee is a big investment, and employment decisions are not taken lightly. As a job seeker, you are the both the product and the sales rep. The hiring company is the prospective buyer. In sales, you identify suspects, qualify them into prospects, then sell the prospects on the unique value of your product. Imagine a sales rep trying to close a sale by flinging a brochure at the purchasing department. How is that different from flinging a resume at HR?

I advise job seekers to think like a sales rep. Here are some specifics.

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Customer-Facing Metrics for Customer Service Operations

3010 Canton, Dallas TX, Ace Equipment Repair sign
Image by coltera via Flickr

I can’t say enough good things about Candela‘s service team. To a person they are skilled, dedicated, hard-working, customer-focused, and great to work with. The customers love them, so the team plays a key role in Candela’s continued market leadership.

When I rejoined Candela in 2007, Candela’s service team was understaffed and overworked, the result of a corporate hiring freeze, higher-than-expected service demand, and some turnover. While we were working extremely hard to support Candela’s customers, we were behind in preventative maintenance visits and sometimes late finishing product repairs. To me, it was obvious we needed two changes: more service staff and product reliability improvements. How could the rest of the company have missed this? How could we set up a system to make sure we meet our customer commitments in the future?

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