#39 - The new Digital Playbook for Orthopedic Procedures with ExplORer Surgical co-founder and CEO Jennifer Fried (38 mins)

Brought to you by Tiger Buford.

Welcome back to Inside Orthopedics. This is Tiger, your orthopedic industry insider and retained recruiter for early-stage orthopedic companies. This is episode number 39. Titled The New Digital Playbook for Orthopedic Procedures with Explorer Surgical co-founder and CEO Jennifer Fried. Jennifer and her team at Explorer Surgical have built a playbook, or maybe a guide, for the OR that is both scripted and interactive. And they have innovated fast with very little capital. I think all startups should learn from the Explorer approach, but I believe that Jennifer's background in healthcare venture capital is a major enabler that has helped Springboard explore so quickly and effectively in the market. Today, the Explorer System is available for any orthopedic device company If you want to improve the performance of OR teams implanting your specific device with less errors, less wasted motion, less time, and the Explorer System can be customized for any specific surgeon's nuances. Enjoy this conversation. This is a look towards the future. All right, I'm live with Jennifer Fried, CEO of Explorer Surgical. Welcome, Jennifer.

Thanks, Tiger, for having me.

Yeah, thanks for your time. So this is a, this is a really exciting area during COVID and I know the audience is going to really soak this up. But before we get into the technology, tell us how Explorer started. What year and where did the idea come from?

Explorer was born out of a research laboratory within the Department of Surgery at University of Chicago. My co-founder, Alex Langerman, is a head and neck surgeon and a researcher. And so I met Alex in 2013. He had formed this research lab a couple years prior. Prior studying operating room workflow and operating room efficiency, or the lack thereof, as we like to say. And I got to know Alex and spent a couple of years working with him, thinking about the market, thinking about some of the questions that he had, and happy to go into that at a later point. But we ultimately formed Xplore in 2015 and incorporated it with a National Science Foundation grant that we received alongside University of Chicago to really study the potential of creating a digital playbook for the OR and the impact that that could have on OR workflow and OR efficiency. So, we formed the company officially in 2015, and then we released our first commercial product Okay, and so how big was that grant that got you started? Yeah, well, so the National Science Foundation grant was $225,000, and prior to that we had received some smaller grants from the University of Chicago directly, which we're incredibly thankful for. And so that, you know, quarter million dollars or so was what we used to start building our first kind of real commercial prototype and to start testing that in live procedures at University of Chicago to start collecting that early data on our product.

Wow, interesting. So, yeah, I'm sure that money went fast.

It always does.

It always does, yeah. It's amazing what you can do with $250,000, and then some other companies can blow $250,000 in, you know, one day. It's just amazing. Well, that's great. That's great to hear. And then you've had additional funding since then?

Yeah, so we are venture capital backed. We've raised just shy of $10 million in outside funding since then. We are very fortunate to have great investors that are really experienced in healthcare investing and in technology investing. And then University of Chicago also invested in us as well. We were the first direct investment in a startup that the university made out of its endowment. And so we're really proud of those original ties and just really lucky to have great financial backers behind us to help us build this product and get it to market. And now we're in this really, really exciting commercial stage of expansion.

Right. Wow. And when was your first sale? I mean, I'm trying to get a feel for the timeline.

Yeah, 2017.

Okay. Well, that is really fast. And I mean, I mean, that 2 years to go from an idea to a sale, uh, with— it's— that's really fast. That's impressive.

That's the nice thing about software is that you can move quickly. And, you know, that was the first one. And I'll say, I think we're still in the early days of our company when, you know, Hopefully we look back in 5 or 10 years and think about where we are today. But, you know, the thing about software is that you can build it very quickly. You can listen to your customers. You can adapt. You can incorporate product feedback and, you know, release that to your customers very quickly. And so we really prided ourselves on spending a lot of time early on in customer discovery, you know, even before 2015 when we incorporated. A lot of what we did was spend time interviewing, you know, not only surgeons, but circulating nurses, scrub techs, anesthesiologists, you know, reps, people from med device companies, to really understand what kind of a solution was needed and what kind of solution would be embraced in the OR.

Yeah, so let's dive into that because I know the audience loves to hear about how did startups figure it out. So did you have access to the operating room, or did you create mock operating rooms, or how did that work?

Yeah, so from the very beginning, we have been using our product in the operating room. And so again, you know, coming out of an academic medical center and having a research basis was really critical to having that access early on. It's also something where it's It's almost funny thinking about the world that we live in today. So when I first met Alex in 2013, I had never been in an operating room myself. And so when he started telling me about the challenges that he saw every day as a surgeon, which was, you know, in his eyes, you know, half the time I go into the room and I'm doing one of my regular cases and I've got my favorite team and my favorite rep and everything is so amazing. But the other half the time, You know, one of those variables isn't there. And so whether that's— it's a new product that he was using that he was still learning, if it was a different scrub, if the rep was stuck somewhere else. And what he shared with me was, Jen, there are moments where I look up from my microscope, I reach out my hand, and I see somebody rummaging around the back table to realize what I need isn't even in the room. So by then— Yeah, I know, Tiger, you've been there, right? And But, you know, when Alex said to me, I then have to send my circulating nurse out of the room and, you know, to the other floor to sterile processing to get it, and we're sitting there twiddling our thumbs, I just didn't believe him, right? And so I didn't— as somebody that had never been in the OR until then, I just thought there's no way that something like that is happening in as an intense care environment as the operating room. And so Alex then invited me in. to the operating room to watch procedures for myself where I saw exactly what he described. But, you know, thinking back then in 2013 where it was, you know, relatively easy to invite an observer into the operating room, to then seeing, you know, what's happened with HIPAA and what's happened with VendorMate and, you know, now the challenges around, you know, even med device reps getting into their local sites and having access. It's incredible. So I think we had really good timing where we were able to, you know, spend a lot of time observing different types of surgical procedures at University of Chicago and at other institutions and working with those early partners to really understand, you know, what are the pain points that you're facing every day.

So you would watch, you would take the device in, watch the case, and then Make changes to the, to the product, I guess, every time. And would you video the cases or do you just take notes in there?

Yeah. So our product itself is a software product. And so it's a digital playbook where what we do is break down procedures step by step, but also role by role. And so, you know, we work with companies and we'll work with a particular implant or product to say, what are your best practices? And we have a couple of different processes for helping companies, you know, put pen to paper and get everything organized. And so, we then have for each step of a procedure, you know, from pre-op and intra-op setup to the different technical steps of the procedure, We have role-specific content. And so the way that's delivered is you have a big board in the room where everybody can see that step-specific content. It's really visual. So you've got pictures and videos. We know people are visual learners. For the scrub, they have content that's specific to them. So typically that's, hey, what instrument is needed, right? What's coming up? What are the things on a tray that I need to be checking for? How do I put this particular instrument together. And so, in the early days, what this looked like was honestly just— it was the user interface of a website that was a landing page where we said, what is the value of this content? So, you know, I remember some of the residents we worked with rolling in these big TV screens on one of those rolling carts and putting that TV screen in the room. And asking the team to give feedback and say, is this helpful? Is this useful? What information do you want to see? And then as we developed different iterations of the actual software over time, we said, hey, look, we're not going to have a landing page with a website of content, but we're going to have this fully interactive playbook. We were able to then see what do people interact with, what do people engage with, and then through some of those And so, through the studies that we did with the National Science Foundation and later on with other partners, we were able to measure that impact and say, you know, what does having the best practices actually do in terms of setup time? Can we reduce some of those intraoperative delays and disruptions? How did the staff receive it? Are people excited about it? How did they use it? And so, every time, you know, we used the product in the OR, you know, all the way back from, you know, pre-2015, you know, what was just a landing page, we were getting all of this amazing real-time feedback from our customers that said, this works, this doesn't. You know, I want this to be larger, I want this to be smaller, this is how I need to interact with it. And we continue to have, you know, that level of engagement with all of our end users to help us create a better and better product every day.

Got it. Wow, that's great. So no regulatory path, you could just sort of try it out and then Make changes and try it out, and that's brilliant. So walk me through kind of an orthopedic case. So, you know, there's typically hundreds of implant boxes outside the operating room that distributor salespeople have brought, and then there's sterilized trays. There's usually, I don't know, 5 or 10 sterilized trays for a complicated joint or spine procedure. And so when does— at what point does the team use the tool? How soon? Yeah.

So we're used in the room itself. So we're not really focused on that, you know, pre-op or post-op space. So from the time the team starts unwrapping everything and getting the room set up is when Explorer starts. So you have the rep that is, you know, of course running around and making sure that you have everything and all the loaner trays are where they're supposed to be. And then you have the team that is then able to use Explorer to see a list of, okay, what are the trays that I need to have? But we can also go one level, you know, more in terms of detail and say, what are the 4 or 5 things that you better make sure that you have it on this tray or you're in trouble, right? Or here's some of the things that you do. So the team interacts with Explorer for probably the most before you actually make your first cut. And, you know, I'm sure you've seen this, what happens in the case, but a lot of it depends on what happens before the case has started, right?

Yes.

Is everybody prepared? Do you have the right things? So we have all of that content available for people to interact with. And then after the case gets started, you know, we have that step-by-step content that's available really as is needed for the team.

Got it. So before— well, yeah, way before the surgeon comes in, the team's buzzing around making sure everything's in the right— everything's there and in the right spot. And that's where the Explorer tool is used first, is the setup.

That's where it starts, yeah.

Got it. And then during the case, step 2, Each step is basically if people get a heads up to what's coming next and by role and by procedural step. That makes sense. How do— so how does a surgeon— every surgeon is different. They have different ways of doing the same surgery. So how does a surgeon's preferences get put into the system?

Yeah. So, the reps that work with us are able to create what we call variations of a procedure. So, when we work with a company, you're going to have the best practices that are prescribed by Zimmer, by Medtronic, or whatever company you're working for. But then, as you know, there are going to be some nuances from site to site. So, local reps are able to create variations where you can say, Dr. Jones at Northwestern You know, has these couple of things. Dr. Smith at University of Chicago has these couple of things. And we've seen some interesting things over the years. You know, there's, there's one team that the first bullet point they had in Explore and set up was, you have to make sure to put on this Spotify station for this surgeon.

I love it.

So, you know, you're, you're able to have that Customizability, but I'd say not everybody goes into that level of detail. You don't have to customize it for every surgeon, but it is an option.

Got it. And so everything in the system has been loaded ahead of time. Are there any real-time aspects of the system? Can you call up a video? Can you— so some— are there communication tools in the system? Yeah.

So, it's a great question. And it's our newest feature that was released just shy of 6 months ago. We have added in real-time audio and video capabilities that are HIPAA compliant. And so, you know, pre-COVID, we didn't really see challenges around access. You'd always have, you know, the rep in the room and anybody else that needed to be in the room. You could have somebody from R&D, you could have reps that were training, you know, you've been in those rooms, right? It's like a party. You've got a dozen people that are there from the company that are all watching that case. Now we've really seen that be a challenge. And so built into Explore is the ability to have that HIPAA-compliant two-way audio and video. And so that can be a rep that is fully remote, but we also are seeing a lot of hybrid models where you may have your local rep that's still on site, but for a particularly challenging case, you might want to bring in a product specialist, or if there's something technical that's going on, you want to call on the R&D team, or you want to be able to have a rep that's training observe what's going on. And so we have that connectivity capability that is automatically built in. You can go through the cameras on existing devices, so phones, tablet computers, and then we also have, you know, little hardware kits that can be sent out so that you can hook up, you know, fluoro or any other kind of video monitoring that you have going on during the case as well.

Wow. So, yeah, so tell me, how does that connectivity— who initiates it and, and I mean, can you sort of call an audible in the middle of surgery and say, hey, this instrument's not working, we need some help? Or, I mean, how does that work?

Yeah, so through our network, you're able to have somebody outside of the room see which procedures are going on within their organization. So you can choose who has permission to access certain procedures, and then we use a Basically a 4-letter code to designate that unique identifier for that case code. And so, you know, Tiger, I'm sure you've been in that seat before where you've had somebody in the field call you during a case and say, Tiger, I need help with XYZ, right?

Oh yeah, we used to be— we used to get those calls all the time, usually during revision cases where something was really hard to To remove. Yeah, they would call, they would call, I would be in the middle of a meeting and they would call and ask for engineers in emergency. We'd always get the emergency OR call. Yeah, that was really interesting.

Yes, so now imagine this. So, you know, you've got me, Jennifer, the local rep here in Chicago. I'm at Advocate Hospital. And instead of just calling you and trying to explain it, I give you— I shoot you a text and I say, Tiger, I need you to join my case right now. I'm in case ABCD. You open your Explorer app. You can either enter that code or you can see all of the different cases and say, great, I see Jennifer, she's here. You click it and then you can automatically have a HIPAA-compliant view into what's going on in the room. So you're able to then see what's going on. I can— this can be as simple as me using my phone and pointing it towards the back table or pointing it toward the setup of something, or I can have, you know, other things that are set up in advance if I knew that I needed that connectivity. And then you can see it, you can talk to me, but then you can also annotate your screen. So if I'm pointing to the back table, You could actually circle it and say, okay, Jennifer, now you need to grab this item and put it here. You can also share your screen or library with me, where you might say, okay, I need you to do something. I'm going to pull up the picture of the last time this happened. I'm going to share it with you, and you're also able to telestrate on that. So we wanted to create a way that, you know, really provides a deep level of, you know, I think just the different ways that you'd want to interact and provide guidance to that team in the room.

Right, right. Yeah, I downloaded the app this morning. It was so easy. I mean, you just go to the Apple Store and download it, and it, you know, just takes a few seconds.

Yeah, that's what I love to hear.

Yeah, I mean, so you can carry it around with you, you know, your entire— anywhere you are with your cell phone, you've got it. That's cool. So are you familiar with your competitors? And there's enough ocean out there for everybody, but how are you different from some of the other companies that are in the same space?

Well, I think you're really referring to the remote capabilities of our software and the remote case support, remote training, remote proctoring. which has, you know, to be honest, it's so exciting to see all of the momentum in this space. And it's great to see so many brilliant minds that are coming together and bringing new products and solutions into the industry because we need it, right?

Mm-hmm.

The OR needs it. We need new technology. We need new advances. And, you know, our stance on the remote support is that to provide really excellent case support, you need more than just And so where we are different than solutions that focus specifically, you know, just on that audio, video, camera connectivity, of which there's a great market for that, we provide that step-by-step workflow of best practices. So this is where our team is the best in the world. We have been focusing on this for years, and how do you put together those best practices into a digital solution? visual workflow so that you can reduce some of the variability of what happens in the room. And the second part of it is our data collection capabilities. So, as people are interacting with our system, we're able to capture structured intraoperative data points. And that can be everything from how long our team's spending on each step of the procedure, again, so that you can start to get that feedback and see where the variability is. But we also allow medical device team members to really easily capture specific data points about the procedure as well. So, if you're launching a new product, you might say, you know, how many attempts did it take to place this correctly, right?

Or— Right.

You know, all the things that I'm sure, Tiger, you said, gosh, I wish I could hear about this in real time or have data about this from the R&D function rather than just getting a couple anecdotal You know, examples. And so that's where, you know, we're really different, is having the step-by-step workflow to bring those best practices to life in an intraoperative environment, having the ability to easily capture and share intraoperative data, and then as well as having really high-quality and secure audio/video. So it's all of those that come together. That create the comprehensive solution of Xplore.

Got it, got it. No, that makes sense. I don't think anybody's doing the whole surgical planning field that you are and the intraoperative both. That's really, really interesting. So, yeah, so tell me about your business model because everybody seems— everybody's trying to figure out the business models. There's a freemium model. I think one company puts the hardware in for free, and then there's a licensing model. And tell me kind of who your customer is and what some of the business models are.

Yeah. So our customers are the medical device companies. Our customers range from the largest of the large to some startup companies. Our earliest-stage company is a Series B venture-backed medical device company. And our business model is we charge one time upfront to build out that playbook and get everybody trained and onboarded on the system. So that would be saying, let's pick the implants and products that we're going to work with, and our clinical operations team works with our customers to build that out. And then it's a software license fee that is typically based on the number of reps.

Okay.

So we don't charge per case. We don't charge per minute. You know, our goal is we want our customers to use our software all the time. And so it, we want you to be able to access it and use it in every case and provide value in every case, not just, you know, one case a week when you think that you need it.

Yeah. Got it. I like that. So yeah, if there's not a fee per case, it seems like it's a really good value for high-volume hospitals. That's interesting. So how would a— so say there's ABC device company interested in using your system, so what happens? You know, how— so there would be an introductory call and then a— Contract, I guess. And then what happens?

Yeah, so we have our sales processes, as you know, so an intro call, a demo, and then we move into a solution creation conversation with our customers. We know that every customer is, is unique and is going to have their own needs. And so that's where we bring in our operations and customer success team to really understand What's important to our customers? You know, what do they need? What are their deadlines? You know, are there any nuances to their use case and so forth? Once the customer is signed, we start in that content development and onboarding period, which I say is on average about 4 to 6 weeks. So we operate in a period of weeks, not months. We know that time is of the essence. Our clinical operations team works with, you know, very often the medical education team and the product team to say, let's work through your IFUs, let's work through your tips and trick sheets, let's take all of those great education assets that your team already has, and our team will transform it for you into this step-by-step digital playbook that's really interactive. And we iterate on that with our customers and get everybody trained and onboarded. And then it's time for rolling out. And so once the team is trained and onboarded, we're ready to go. And start arming those medical device representatives to be able to use this in hospitals with their customers.

Got it. Got it. So what is— I kind of forgot to ask along the way, what does your team look like? Is it mostly developers or is it support people?

Yeah. About a third of our team is technology-focused. So, it's a full technology organization. Another third of our team is customer success and clinical operations focused. So, we provide really white glove service to our customers and are very hands-on. And so, that's a big portion of our team and our investment. And then the other third is our commercial organization. And then, of course, you know, general and administrative.

Yeah. That's G&A. And how big are you, Jennifer? Are you guys— are you 10 people or 50 people? I'm just trying to get a feel for scope.

Yeah, about 2 dozen people.

Okay, good, good. Wow, great. That's a fun size. Wow, what else? So I just realized that, you know, my audience is orthopedics primarily, but your system is totally agnostic to any procedure, almost anything done in the operating room. So, I mean, so a hospital could license, or I guess multiple device companies could license it for access to a certain hospital customer?

Yeah, so, you know, we work across different specialties of surgery. I will say, you know, more than 2/3 of our business Okay. And so, our 3 verticals is orthopedic, spine, and cardiovascular. And so, I'd say orthopedic and spine are a really great fit for our solution because there is so much complexity and there is so much step-by-step. And that's also right now, you know, there's such a close relationship between industry and providers and collaborating together to take care of the patient on the table. And so, There are other products in other areas where you maybe only use it for 5 minutes, but there aren't a whole lot of ortho or spine procedures where you aren't going to have that close relationship with the rep to make sure that we're going through the right step-by-step and we have the right implant, we have the right instrumentation, and the team knows what to do. And so, it's been a really nice sweet spot for us as a company.

Yeah, it makes sense. Yeah, orthopedics and spine is, like you said, it's so many steps. The implants are generally pretty simple, but how you put it in is really complicated. I used to take notes in the operating room with each step, and it's just— it can literally be hundreds of steps.

I know.

It's crazy, and they've got to be done in an exact order. And every step requires usually a unique instrument. Yeah, it's crazy. That's why there's 5 or 10 instrument trays in a case. It's just, yeah, interesting.

Yeah, and each time you're lucky if it's only 5 or 10.

Yeah, yeah. And they're stacking them, you know, they're playing Jenga on the back table with Oh, I know. Trays. Um, well, I— so I get it. Yeah, I totally get it. I, you know, as we were talking earlier, I can see that the surgical team can make— it can save a surgeon out of trouble sometimes, or a surgical team can completely make a disaster. And the surgical team is almost more important than the surgeon sometimes. And I've seen good— I'll tell you a story. Once I was traveling, I went to a case at Mayo Clinic in Rochester, and then I went to a case at HJD the next day in New York. And it was night and day. It really opened up my eyes. Mayo Clinic, everybody, it was just brilliant team coordination. Everybody knew exactly what the surgeon was going to be doing 30 seconds before he or she needed the instrument. It was just complete flow, and it was fast, no wasted motion. And then I went to HJD, and the operating room door just opening and closing constantly. Nobody spoke. The surgeon was from Colombia. The fellow was from Czechoslovakia. The nurses were from Korea, and nobody could understand anybody. And there's people coming in and out of the operating room, and they had to restart a couple times. And I was thinking, how can this be the same procedure? And I— that's where I realized there's a wide spectrum of the quality of surgical teams. So yeah, so obviously explore. will help make the Mayo scenario doable for everybody.

Yeah, you really hit the nail on the head with that, Tiger. I mean, that's exactly the reason why we founded the company is, you know, it takes the full team to take care of the patient, and that has been core to our philosophy as a company and why we have the role-specific content. That we provide to teams. A surgeon isn't going in and taking care of a patient by him or herself. They're really collaborating closely with their team, and very often that team includes industry in the room there to provide the products and the guidance and the best practices. And so, if every surgery that happened was like the one you described at Mayo, there wouldn't be a need for our product. And it would be a great world to live in as a patient and as somebody's family healthcare. And that's why we started this company. I mean, to be honest, that's why I left my career as a venture capitalist, is seeing that variability in what happened in the room that was so dependent on the experience level of the team. It really came down to access to information, because nobody in that room that you described, you know, where you have the language barrier, nobody was happy, right?

Right.

And if you talk to, you know, the scrub techs in the room, they say, I just, I really want to know what they need, and I want to know what's coming up next, and I want to be able to anticipate it, because I want it to be seamless. I want it to feel like that orchestra. And so that's where, when you're able to take those best practices that companies spend so much time and money and effort developing and have a way to actually bring that information into the room in a visual way, right, right there when it's needed, you can start to eliminate some of that variability. And so that, that's really the core of, of why we started and why we are who we are. And everything that's happened in the past 6 months has really magnified that issue of variability because you don't know who is able to get into the room, right? And what we're seeing in terms of the training opportunities are totally different, you know, let alone what we're seeing with case volume being all over the place and staff going back and forth and procedures moving to different settings. You've just taken a problem and magnified it to be so much worse. And that's what we're really trying to do is say, how can we— we know that we can't make every room act exactly like that Mayo case that you described, but can we use technology and can we use the connectivity that allows those product experts to come into the room? Can we get 90% of the way there? And I think we can.

Yeah, yeah, certainly. You're absolutely right. COVID has accelerated the need for Teams to be more efficient with less support from industry, that's for sure. It's amazing how fast it— so, well, this is great. I didn't even think about ASCs, but there's certainly a huge trend towards joints and spine now, you know, moving to ASCs. Yeah.

ASCs and more procedures moving to the office too. I mean, there's a lot.

Interesting. Well, this has been great, Jen. Um, so tell the audience, where should they go to find out more about Explorer Surgical?

Yeah, um, you can go onto our website, explorersurgical.com. Um, we have a Contact Us, so if anybody's interested in learning more, feel free to fill that out and our team will get back to you. So thank you so much, Tiger, for having me on this. It was Great to share a little bit of our story and to connect again with you.

Yeah, thank you. It's, uh, it's the perfect technology at the perfect time. You don't see that very often, but it's, uh, yeah, I wish you guys all the best.

Thanks, Tiger.