BoneChat #89 - Various topics (see description below)

All right, people are straggling in, so we have no topic today and totally open if anybody's got anything burning. You got a problem you're trying to solve, advice?

I've got something I'd like to jump into, if you would, that's very timely, and I just kind of get the general opinion just since we're all you know, device backgrounds, know the market. But if that's all right, I'd like to present it to the group and just get everybody's opinion.

Far away, Al, all yours.

So for about a couple of years now, me and a buddy of mine, he's actually out in Detroit. Both of us left big ortho and went to start our own independence. And, you know, we're very, we're very in tune and aware of some of the anti-competitive, you know, limiting vendors and all that other stuff. But what we're really diving into and what D.C. now is requesting our for an audience with us is the re-examination of the GPOs. And I want— like, I know, you know, I've learned a ton about the pay-to-play and really the little value that the GPOs actually provide anyone. So I don't need any, like, the advice around that. Like, I've got a ton of education and I've got a lot of inside information. The question I'd have for the panel is we've We've got an insider who has left the GPOs. She's starting her own consulting group, and I kind of danced around the conversation at first, just not sure how much she would want to reveal about this. But is Cope on this call yet? Is he on?

I don't see him yet.

Okay. Okay. Because it might, you know, it'd probably be relevant to his answer as well. But We have, um, so we have an opportunity. This person decided to go all in with, with us, um, and she, she actually hated the experience of, of leaving the supply chain on the hospitals, which, you know, we can all criticize as well probably about how they ran that. But, and then moving for 7 or 8 years with a major GPO, and she just, she just really discussed a lot of the conflicts and a lot of the stuff that, you know, what's with the best of intent these things were set up and how there's really no value in the— and there's a lot of conflicts. So What she's done is she's put together a program for us. We told her we've kind of ignited some distributors across the country. In fact, that's why I was going to try and get a hold of Mark last— after the last call. What do you think? So she put kind of a number in front of us and it's a little higher than I— than I thought initially for like an educational program and kind of like a deep dive into all things GPO. What do you think the market interest would be in the device world to truly understand what's going on in the GPOs?

Well, we, we, uh, got our Visian contract, uh, last September, and the, you know, the compliance with GPOs is atrocious, right? Um, and that's what our, our biggest challenge has been, and I think we all know that they lack value. So to me, if that person was able to give us some secret sauce on how to drive compliance, that would be huge. So that would be, you know, however that was, that consulting service was priced, if you were able to get some, some sort of compliance or conversion, that would be very interesting. But it's hard to plan for that.

Yeah.

Yeah.

Well, I think what, what we are interested in, well, we know, you know, I'll give you a very quick factual statement, you know, when they make these big deals with Strykers and the big companies out there, they— and you come in and try and negotiate a local contractor, you want to get on contract and actually have a lower price or whatever, they won't allow that because their deal is so big with these big companies that they can't have someone cheaper on their GPO or even to do a local contract that would affect that 3% rebate from the big spend on the, on the big, on the big companies. So we've did— we've dove into this like really hard and like just opening some eyes up with people when they just finally realize, and A lot of these GPOs have ex-CFOs and ex-supply chain VPs on their boards, and they're promised board positions. Now Vizient's even extending their— as putting their own people in the supply chains within the hospital. So your buyer, your person, your first gatekeeper is going to actually be an employee of Vizient. So, you know, all these things that we're learning is what she's put around. So to me, the compliance thing, in truth, like, I don't know if anybody's ever going be able to affect compliance without going through the traditional, you know, just sales approach, right? However you have it, because they have no desire to drive compliance relative to new products. None. Because all they care about is those big, big relationships and those rebates. So I guess it's, you know, again, my question would be, as I said, like, she gave me a number, but I thought, you know what, if I were to put it out there and say, okay, You know, we're going to run through a little mini, mini program for about 20 minutes, you know, 20, 30 minutes just to get an idea of just, just what this content is going to be. But what do you think? I, you know, when I, when I go to put these things, I don't care about stirring the pot on LinkedIn. I don't give a shit about any of this. Like, they can't do anything to hurt me. Um, but yeah, I guess I'm, um, I really want to expose this, this, this GPO nonsense that's out there right now.

That's So Mark Maloney just came in and, and Copeland just walked in from the beach, so may have to restate your question real quick.

Yeah, uh, so guys, real quick, I, I just have somebody who's an insider on GPO and, uh, mentioned that me and another buddy of mine in Detroit have gotten kind of asked to come down to DC to talk about some things, and we're, we're trying to get this GPO dynamic, um, you know, for what it is, uh, and they're very interested down there, um, and so I have somebody who's an insider who has left and started an own consulting company, developed a program. It's a little higher than I'd like it to be from a cost perspective, but I wanted to see, especially you, cope with your business. Like, what do you think the value or interest would be, uh, in our world for somebody to say, I'm full transparency, here's what it's going to cost everybody to be a part of the, the, you know, the discussion, the education? I just don't know if anybody's as emotional about the GPOs as I am, or as, as, as angry for the, you know, 23 out of 24 hours a day, you know.

So, so obviously I just jumped in. Is there, is there like education associated? Because I find a lot of, a lot of the companies I talk to don't even actually understand what these things are, much less what to do about them. So could you— sorry if I'm jumping in late— could you bring me— No, buddy.

No, absolutely. That's, that's the purpose, right? So it's, it's less about you know, how can we affect the compliance? And once you do pay the money and bow at the altar to get on the GPOs, they really have no incentive to help you. So, you know, driving compliance for a bit player is maybe even futile. You just have gotten the opportunity that if the hospital lets you on, then fine, you're in the GPO and you can do business, but they're not going to drive compliance. This is about all of the insider stuff, Mark. How they work, how there's, you know, really the conflict with the, you know, the AHA, the American Hospital Association, you know, and these TPOs. And like, that's what it's all about really is how the mechanism, how the machine works, you know. So that's where I've got this quote from her. And I was kind of like, wow. Well, first Sean and I were like, we need a mini program first before I go saying, hey, I need $50 from, you know, 50 distributors. I mean, it's not a lot of money in, in truth, but I just don't know what the interest is, if, if people are as interested as I am, you know.

I think— oh, go ahead, Mark. Mark, go ahead.

I think they're intensely interested. Uh, I mean, ask a distributor what the difference is between a rebate from Arthrex at the surgery center and a kickback and wait for that answer.

Okay.

And it's the same thing, you know, virtually any company sort of rebate program. It all kind of looks like, smells like to me, and always has. There was this J&J in the '80s. But still, when are you going to D.C.?

So they invited us down in September. But the person who was an insider was throughout the VP roles in supply chain in my area. And then she went to work for premier GPO for 7 years and just hated every moment of it. Now she's out there and I talk to her about this.

And Tiger, when is Joe coming on?

He's coming on the 11th, September 11th.

So the biggest hospital system in Georgia is Piedmont Healthcare. And every couple of months I have coffee with Joe. He's the VP of Supply Chain Logistics. And I also have the same relationship and coffee every couple of months with with Michael McCullough, who does the same thing for the WellStar system. And I got a couple of other relationships like that. I'm not in that world, but I'm fascinated by it.

And this is one of those questions that on the 11th you should ask Joe, and he'll be, you know, well, I don't want to, like, I don't want to be in, like, we have our own, uh, journey and battle we're all going through, you know, in this world. Where they sit on the other side. I've got a good friend who's a CFO of a hospital, and I've barely broached it other than we have a couple beers and I throw a couple jabs at him. Like, you know, am I— I mean, there's a serious conflict that goes on between these GPOs and the hospitals. So I don't know how much I want to get into that.

Like, put them on—

I'm not proposing, I'm not proposing, I'm not proposing any kind of an adversarial question at all. I'm just talking— he'll be honest and ethical. That's who he is.

Okay.

Yeah.

I'd love to know in better understanding.

If it's just business and it's legal, he'll talk about it like that. He's not going to share any dark industry secrets because he's going to pretend like there aren't any. Or maybe there, you know, maybe he doesn't really have any, but he's a good guy. You know, he's a veteran. So that's how I looped him into our veterans organization. And He'll, he'll, I think he'll just talk straight.

He's good.

I talked to him a couple weeks ago and I, and I, I think I shared this with Mark Copeland. I asked him, I said, you know, this whole VAC thing, cuz I, you know, I also own a distributorship in addition to my compliance business. It takes us a year to get shit through. It's just awful. And we cannot, a distributor cannot bear that marketing burden on their own shoulders. They just not, it's just not in the business. And I said, what, what can we do about that? And Joe looked at me, he said, it's only gonna get worse. That's what I said. That quote, he said, it's only gonna get worse. We have no incentive to help you there. In fact, we are disincentivized. If I had my way, every doctor would Piedmont would use one manufacturer for knees. I mean, that's how they— that's kind of where they come from.

That's how they're thinking.

Yeah.

And it just extends the sales process and for everybody.

Something.

Well, I'll keep you guys— I'll keep you guys posted. Go ahead.

I'm sorry.

I, I think there's a lot of interest. I think there's a lot of confusion, uh, lack of education. But I do think there's a lot of interest, and I think there's a lot of frustration, and frustration usually drives action, right? And I would love to be involved. I mean, I will tell you guys, I joined, I think it's like $80 a year as a member of what's called AVAP, the Association of Hospital Value Analysis Professionals, right? I thought, oh cool, I'll learn something. It's more a listening post. Want to guess who runs AVAP? Premier. Like, it's basically an extension of Premier. They're trying to create all the certification for every single person in health systems who wants to become, um, become a value analysis professional, is to do all the certification through them. So, like, you know, We all come from industry and we've all been accused of certain things behind the scenes that, you know, conflict of interest. I'm going to— I promise you, I believe it's an equivalent level of conflict of interest when we're trying to get this stuff through. And that's why whenever Al wants to try to get something approved at Virtua, it's got to go to supply chain first because they have hijacked this. And if he, and this is where this comes from, and it's nonsense. It wasn't the intent of GPOs, but if we don't, if people don't start addressing this in a different way, and Al, I think you're part of the solution. You're not the only one that's frustrated, although you might want to talk to your therapist if you're thinking about it 23 outta 24 hours a day. But, um, This is— there, there are problems coming. And, and we, if we're not doing something about it, all we're doing is becoming victims of it. And so I actually do think there's a lot of interest and need.

Yeah, I agree. I agree.

Okay, we've got—

got Mario and Kyle who got their hands up for a while.

Go ahead, guys. Thank you.

Yeah, no, I wanted to tell you, yeah, this is— that's super interesting. I actually, I became friends with a former supply chain manager from Moffitt in Tampa. And he actually took me to ARM National, the conference. That is— that's if you want to see the belly of the beast. It's a, it's a lot more than you, than you can imagine from the sales side. So any insight that distributors can get into that, it's it's, it's going to be very welcome.

Yeah, Kyle, I have a different topic, so I don't want to force changing. Is that okay?

Are you good, Al? You good for now? All right, Kyle, you're up.

So I wanted to offer my compliments to Colleen for her appearance on State of MedTech podcast. That was awesome. And I was curious to know if you've gotten any sort of feedback or direction or any sort of information after that related to your topic of raising money?

Well, thank you. I appreciate that feedback, Kyle. I have probably close to, you know, 500 to 700 views of at least part of that podcast. I mean, you know, it's hard to allocate, you know, almost 50 minutes of your time, but, you know, I have gotten some feedback that it was helpful for you know, founders and management teams to hear some of the specific discussions on, you know, things to do, things to avoid. So, you know, I think also it's, you know, resulted in some companies reaching out to me to want to have a, you know, a follow-on conversation, which I'm always up for. But, but yeah, it was, it was good. And, you know, my, my views on this keep evolving as the market changes a bit. In terms of raising capital. But yeah, I mean, I think it, I hope that it provided, you know, some real good information to people either raising capital or thinking about raising capital.

Kyle, did you take home something from Colleen's podcast specifically?

Well, I was looking at it from the perspective of having seen a lot of pitches through Plug and Play. Right, so that the orthopedic vertical of Plug and Play is in Warsaw. Priority Medical, we're kind of in a mentor sort of role with that, and we end up talking to a lot of these startups. And I would have made that podcast, among other things, mandatory listening for a ton of these people before they even start thinking about raising money, because Colleen talked about a couple of just bare-bones basic must-have things that amazingly some people just completely neglect, and they're out there asking for big raises.

Excellent. Yeah, the other thing I would comment on, and I didn't really talk about this on the podcast, but in a lot of cases, the companies I see in, uh, orthopedics that are fairly early stage— some of them are generating revenue but not a lot— um, tend to have, um, management teams or founders that are a little bit more on the experienced side, which I get because that is kind of a common theme in orthopedics. And there's still, some of them are still stuck in this idea from like the mid-teens that, you know, it's easy to raise money. And, you know, I can go out and do it on my own and I'll get it done in, you know, a couple of months. And I think that's the other end of the scale. You've got the, you know, the kind of younger management teams and founders, and then you've got the ones who think it's the same as it was 10 years ago. So, um, yeah, I, I, I do hope that the market, uh, for capital, uh, the macro environment, you know, starts to change favorably, but I don't see that anytime soon.

No, neither do I. I mean, I keep writing about this, but the whole world changed in May 2022 when we— the, the medtech went from risk-on to risk-off and hasn't come back. And I mean, it's been 2 and a half years. People should know it by now. Anyway, good, good comment. Anything else burning?

Raymond? Yeah, I'm sorry, I had to take a call and that very last comment was probably maybe the same thing I'm going to bring up, so I'm sorry if it's redundant, just shut me down. The question— well, let me be real specific. Has anybody ever heard of a group called— I think it's Apex Ascension or Ascension Apex. Guy's name is Nam Tran. Does anybody— does that name ring a bell to anybody?

You drop it, drop it in the chat if you, if you have a LinkedIn or something.

It It does, Ray. I'm trying to think where, probably a LinkedIn thing. I can't, I'm—

Okay. Thank you. So, um, he has a program where for X amount of dollars, you are guaranteed, uh, 8, but potentially up to 100 matched investors. It's a matchmaking thing. Uh, there's an upfront fee, zero. Finder's fee associated with it. And so it's just that one fee. And so you make these pitches to supposedly well-matched investors that are, you know, by Zoom. And so since nobody's heard of him, the references that I checked sounded pretty legit, sounded reasonable. And I'm sure there's probably 2 or 3, you know, using some kind of AI algorithm. I plan to go ahead and do that. So it's— that's not really the question anymore because I've already sort of committed. So I could report in about 2 months from now how that went, unless somebody tells me, Raymond, you're wasting your time. So I don't know, I'd love to hear it if anybody wants to shut— you know, say, you know, that was a really dumb decision. But Otherwise, I'm going to— I took the gamble and we'll see how it goes.

Right. I just checked my email. That's why I went off screen. He did send me an email, so I got that. That's where it was. I knew he— I knew I had made contact somewhere with him.

So.

Okay.

So I have a couple of questions for you. Do you know if he's a licensed individual with FINRA or since he's not charging a success fee, he's charging by the hour for introductions to get around that requirement?

He is, uh, charging just a simple upfront fee and that's it. No success fee, no guarantee.

How, how long will he, um, stay at it with you in terms of making—

I think it is, um, 45 days, maybe 2 months, something like that.

You know, that's not a very long period of time. Um, I mean, I guess once he makes the introduction, it's up to you to do the rest, right?

Yeah, yeah. And it's my pitch, and, uh, he makes it crystal clear he gives no guarantee, and nor would I expect him to. Um, he just does the matchmaking. So it's basically you're doing pitches by, um, Zoom with no And presumably with people that are well matched, you know, he does the criteria.

I would keep him on a pretty short leash that, you know, the meetings and the matches need to start, you know, pretty quickly. You know, or, you know, there's something, you know, off in terms of what he thinks a match is. But yeah, I mean, you know, if you don't put all your eggs in this basket, You know, maybe it's worth a try.

Okay.

Can I ask a follow-up question, Tiger Buford? Absolutely. So this again, you know, here I'm an engineer practicing CEO without a license. Okay. How's that for a pitch? But I think we're all friends here, I hope. And so my question is, other than debt, you know, getting a credit line or something like that and selling equity and grants. Other than those three categories, are there other creative ways of raising money without diluting existing investors? And don't include convertible note in that category either. What else is there?

Well, we see, um, if we can successfully get a strategic or something, uh, somebody who's, you know, peripherally involved in a particular industry interested in a company, we'll see them sometimes provide in-kind services so that, um, you know, it, it helps the business, but it isn't Necessarily equity.

Okay, that's a good one. And actually, I have a possibility that you just reminded me of. I forgot about that.

Thank you. I mean, they're going to be industry insiders, right? Somebody in your ecosystem, right, that is also going to benefit, you know, if you become successful.

Okay. Um, anything else? Anybody?

Well, yeah.

Well, there's crowdfunding, which has got a double-edged sword. A lot of, a lot of orthopedic companies have done it now. Monogram's probably the poster child.

Yeah. You know, Monogram has 27,000 shareholders. Yeah.

Your cap table's insane.

Yeah. Yeah.

Yeah.

Must have been a big score for them.

They raised over $45 million through crowdfunding, so they're pretty, pretty successful.

Yeah, that was what I was going to say too, Tiger, was crowdfunding.

But you're still selling equity, right?

Yeah, I was gonna, I was gonna say two things, right? First thing, I, I got an offer from an Indian company a few months ago with the same value proposition. I checked the references, they all checked out, but I chickened out. So let me know how it goes with the with the, with the references. I guess I, they were showing me a demo. And in the demo, they showed a fund that I had talked to, and that fund was offering them, was offering the founder a SAFE. And they had told me that they don't offer SAFE, that they don't do SAFEs, they only do price rounds. So it sort of threw me off and I chickened out. But maybe, I mean, maybe the fund was the one that was not being upfront with me. So just to make sure, yeah, just report back on us. And yeah, the crowdfunding, Also, it's a, it's a very interesting option. You have to be very good at marketing. I, I talked to Start Engine a couple of years ago. I was trying to follow the Monogram path, but I decided we were not, we were not good enough at digital marketing to make that raise work.

Well, also it is, as Colleen said, that is equity and that's what I'm trying to avoid. I'm just trying to protect the existing members from additional dilution.

Um, yeah, I'm sure that this is common, but we're developing a couple things now that I've, you know, I don't, I'm not giving out any more equity, but, um, we are securing services for different things. It just depends on the product, but, uh, for like long-term agreements and different things that I'm, I'm doing to secure their stake in the, um, to the product or our company. Um, so I've been able to offset services and, you know, incredibly reduce, uh, upfront costs by giving them back-end value through, um, those type of arrangements. But again, that just is relevant to my two things that I have going on. I'm not sure about for you, Ray.

Okay, thank you.

What about offering a, a second class of, um, of stock, of securities?

I mean, I, I haven't done that before, but So that now that does require an update to our operating agreement, but you're right, that may be the, you know, the strategy. And this is where I need to consult with my attorney.

But yeah, good, that's a good one.

Good idea.

Great, great question, Raymond. Uh, yeah, Maloney's up.

That's a different subject. Um, so Tiger, I must apologize to you in advance. My— I, as you know, I'm kind of heavily invested in the AI world, and my co-host scheduled my next podcast for next Thursday at the same time.

Well, well, it's no problem. Actually, I was going to talk about this. We're going to skip next Tuesday or next Thursday. Oh, perfect, because I'm traveling that day. That's— so the 21st is going to be Bone Chat vacation day.

Oh, the— it'll be LinkedIn Live and it's called— it basically, it'll be AI and medical design.

Oh, cool.

Our guest talker will be a medical industry engineer designer and he'll talk about what impact AI is having in that.

Sure.

Link and I'll email it out to all the BoneChat members.

Yeah, I'll send it to you. I'll send it to you. And as sort of a corollary to that subject, there's some interesting things going on with AI too. It's a pretty cool article in a, in a British medical journal that doctors that start using AI and diagnos— and diagnosing cancer in—

I saw that.

Yeah. Colonoscopies actually get worse after 6 months when they don't use AI.

They get there's a laziness factor. Seems like when physicians lean on the AI too much, they, they, they lose their edge, at least in colonoscopy. Yeah, that's fascinating.

I think, yeah, I mean, I, to me it's an awareness issue. They just were, they were not aware that they needed to, you know, stay sharp or something or train, whatever. But it's kind of interesting. Also, the governor of Illinois just passed a law that prohibits you from using AI in behavioral mental health, like your psychiatrist or psychologist cannot basically use AI clinically speaking. They can only use AI administratively, which, you know, I don't know, it's a slippery slope to me, but I, that's just, it is kind of intriguing. So, you know, there's a dozen other things on that same field, but I wanted to bring that up.

Oh, go ahead, Mauricio.

Yeah, I wanted to— an extra, another subject. And the last month, the Florida governor signed a law that allows stem cells to be used for joint pain in Florida legally, even if they are not FDA cleared. So I wanted to get everybody's take on biological juice in how it's gonna affect our—

and this is autologous, autologous stem cells, right?

Heterologous. So coming from, uh, from umbilical cord and—

oh, placenta, umbilical cord.

Placenta.

Yeah.

So basically now you can get a GMP, uh, CMO to make vials of stem cell, uh, of stem cells, and doctors can inject them legally in their practices.

Wow. And that's no claims. There's— it's no FDA clearance and no—

no FDA clearance. It's a state approval for pain management and the joints in particular.

Is that cash pay?

Yeah, that's what I was going to say. Yeah.

Okay.

Yeah, no insurance is going to cover that, but no, there's a, there's a ton of people— I've heard of a ton of businesses. I actually I've been hovering around one in Latin America. They're based in Scottsdale, Arizona. And they have a whole hospital in Colombia and people just, they fly, they flow like NFL athletes. They've flown crazy people like GOAT quarterbacks that have gotten stem cell treatments in Colombia in secret. And so now they're making, they're just making it legal in Florida to do that same thing. And I know Tony Robbins has something called Fountain Life, and they're in Orlando, and they're like bringing VIPs and they're pumping them full of stem cells everywhere.

With this new law, that's big. That's a big— and that's the first state to do that. Yeah.

Wow.

Yeah, that was signed into law in July by Governor DeSantis. I'm not sure the FDA is going to be very happy that the state is usurping their authority. So I think that's— there's a legal fight coming up. But but, you know, the Santas and the FDA right now are friendly.

So I don't know if it's gonna—

Interesting.

I've got 6 topics I'm gonna throw out. I'm let— if you guys are interested, we'll jump into, or we'll just go to your own topic. The roll-up of preservation therapies. You know, I talked to Tom about that this morning. I mean, there's just, it seems like it's getting legs. Everybody, there's a need. For better information for patients for regenerative therapies. I heard 70% of orthopedists are now employees. And it's just, you know, it's more and more every month. And I be— we can talk about the impact of that. I heard about a— there's a VC now. So the little companies that have lots of patents and they can't really go toe to toe with the big orthos. They don't have the money or the time. There's actually a VC. I don't know who it is yet, but they are prosecuting IP for the little orthos, which I think is fascinating. Almost acting like a law firm on retainer.

Are they harvesting patent trolls?

Yeah. Next topic is surgeons are— non-competes are going away in a lot of states. So now Now surgeons can go down the street and work for a competitor. Thought that was interesting.

They can go be an employee for another hospital down the street.

Yeah.

What, what, what state, Tiger? That's, that, that's interesting.

Yeah. I wrote an article. It's, yeah, just go to OrthoStreams and it's here. I, I can pull it up. Another one is Crime Pays. I don't know if you guys saw my last thing about spine Frontier, the guy defrauded millions and millions of dollars. He got a slap on the wrist.

Kinsley Chin. Kinsley Chin.

That was Chin.

Exactly. That, I mean, that, that tells you that the downside is really small and the upside's big. So why didn't everybody do it?

You know, I couldn't even find him on the OIG sanction list.

Hmm.

Which shocked me anyway. Yeah. I looked at, I saw that anyway.

And then the last one is that I had was clinical outcomes are meaningless. You know, you can't use clinical outcomes to judge that one product is better than another or it just, it's all apples and oranges. And I, a friend of mine wrote a really good historical thing about total knees and how we've gotten to this point where the clinical, the clinical data's totally meaningless. Now you need it for, you know, venture, you know, for VAT committees and you need it to make your surgeon feel comfortable, stuff like that. But as, as far as comparing products or procedures, it's, it's all just crap. And I thought that was really interesting.

I, I deal with multiple companies in my, on my independent side, on the joint replacement side, and literally conversations all the time, nothing to do with clinical, nothing. Yeah, um, it's only about technology, robotics, what can I do for your practice, here's this program. Like, it's all bullshit. It's all, and it's all, it's all, um, it's absolutely deliberate. I mean, this is all deliberate. Stryker's Triathlon is 20 years old. I mean, the NextGen's having problems over in Europe, and, you know, nobody's blinking an eye, you know. And it's not good, and it does feed back into the 70% employed physicians. I mean, all of this is connected, and it doesn't bode well for the open market to differentiation, innovation in not critical, non-critical areas. So, we're talking about hip and knee replacements, pretty successful procedures, right? But there's still innovation that could be done, you know. So all of this is, is a major problem for the industry. Major. And, and it's, you know, you gotta be moving and that's why we're trying to do some other stuff, you know, just to combat it.

In California, only 2% of the surgeons are private. 98% are owned by, working for some sort of hospital or surgery center.

That's right.

Yeah, it's crazy. I was talking to one of those, I forgot, an IDN, and they're saying like all of our, so I was telling them about like time savings in the surgery and what we can offer. They're like, all of our surgeons are employees, so we really don't care if they save time. And unless you can prove that the time saved in a procedure can translate into an extra procedure the same day, we don't care.

Like what?

Wow.

They don't care.

Outcomes. Tom, you said something fascinating there. You said owned, 98% are owned, which is a fascinating way to put it, probably accurate. And Al, you, you stated that, you know, the clinical side of things on, on a cynical side. I wonder, is at least part of that, especially in the hip and knee space, Is part of the lack of emphasis on clinical results just that the market has reached a level of maturity that people kind of accept that most knees and most hips do really well for a really long time and there's just not a sensitivity around that like there are in some other procedures?

I, I 100%. Absolutely, Kyle. That's, that's, that, yeah. I mean, I'm not, I'm talking, you know, what can we do innovation? I'll, I'll say my statement and then at the same time, at the other side of my mouth, say what can we do really innovative in that space? I don't know, but I do think it's creating this nasty dynamic around technology-dependent surgeons and other things that are just, you know, really deliberate by industry that are going to hurt in the long run. And it's going to box people out unless you're with the big orthos. So, I mean, that's what we're trying to fight. So, it's kind of— you're right, Kyle. I mean, there's not much innovation. These implants are really successful. But then again, I mean, is there innovation out there? I don't know, you know, in materials or whatever it may be.

I think one of the limiting factors on the new technology is the billing side of it. And, you know, if you're gonna do an existing procedure, not, I'm not talking about arthroplasty, but if there's an existing procedure that's tried and true and accepted, when it gets submitted to insurance, it's gonna get covered most of the time. But if it's something out outside of that normal process, we'll, you know, we'll see some things get kicked back, ultimately get paid. But, you know, in the facility, who wants to go through an appeal reimbursement? And I think that's, I mean, that, I think that plays a role in new technology.

Agreed.

Really good point. It's, there's a moat there's a reimbursement moat around new stuff.

Yeah.

So, Tiger, I was curious, your, your statement was, was that clinical outcomes sound like you're saying that, that it didn't matter anymore, right? And what, what do you mean by, by that? I didn't understand.

So the way every, every device company creates their own study to make their stuff look good, right? And the way they do the study, it's impossible to compare it to another product. It's, it's all apples and oranges. They're measuring different things. They're measuring, and then the, let's just talk about joints. This is probably the worst area. By the time you find out if a joint works or not, 15, 20 years later, it's not for sale anymore. You can't get it. And so it's, It, it's so silly, you know, it's like, you know, the, like the, that striker knee or the medial pivot, you know, you say, oh, that, that thing launched in 2003. Looks like it really worked. Oh, you can't get it anymore. You know, they, they're on version 10. So it's, yeah, it's crazy. And then spine's a little different. Spine's, I call it a fashion industry 'cause the surgeons are all looking for the newest thing. And you gotta constantly change the products and, you know, change the, make it more minimally invasive and easier to, you know, do this or that. And, and the products don't last very long in spine. You know, Raymond can speak to that, but you gotta, you have to constantly be bringing new stuff.

Yeah.

Yeah.

That was, that was part of my question. And maybe, maybe it, it's because I'm not so much in, in, you know, the large joints, just spine. But every, almost every IDE study that's been done in spine, we measure the exact same thing. So it's very apples to apples as far as clinical outcomes go.

Some, some studies measure extra stuff, but, well, that's because somebody else has to give you an approval of that IDE. The rest of the studies Tiger's talking about, they don't have to get a, they just get to create it as part of a marketing message. And so they craft it however the heck they want.

Yeah, there's, there's studies. Yeah, studies for regulatory approval are different. Yeah. But studies for marketing to really compare product to product are meaningless.

I hear you. I get it.

It's a crazy thing. Everybody needs data, but no, you know, nobody really looks at it. It's, it's really a dichotomy.

Yeah.

Well, Cynical. Uh, ChatGPT amplifies whatever's out there, whether it's true or not.

That's a good point. So what's, what's next? What do you guys want to talk about?

Tiger, I was going to mention you, you had talked about that, the, the, the patent financing a little bit ago. There's a a guy that I've been following. His name's Rush— or Russ Kradjic with Blue Iron. And, um, they do patent financing, and he sends out like a newsletter every week. But they're very intriguing to me, you know. They, they, they will only deal with people who have extremely good patents, and they will buy those patents and finance your— whatever you're doing based on that. So I don't know if that's who you're talking about, but that's, that's the one name I know.

Sure, there's more than one firm. Yeah, if you can drop that in the chat, if you can find it, Eric.

Sure. Yeah, he sends out a very interesting newsletter or weekly email. He's, he and you are cousins, Tiger. He has a very similar, he just cuts to the quick, gets to the point. Exposes a bunch of lies. And really, he's an ex— he's probably an attorney that basically says, well, this is really why they're pushing you to do this or that. And he's written some pretty inflammatory things, so it's an exciting read every time he sends something. But I've never bit on what he's trying to sell, though.

I'm gonna subscribe.

It's worth it. It's free.

Yeah, cool.

Yeah, he, he does expose a lot and it is a fun read because he is, you know, provocative.

Yes.

So what effect— good.

I'm sorry.

I was just gonna ask, what effect do you think 70%, assuming the number is close to that, of orthopedic surgeons being employed by either the hospital or hospital-owned practice or private equity-owned practice or an IDN network is going to have on their desire to use innovation, innovative products, or what effect will it have on their ability to use them?

That, that's what I was gonna say. I think the desire will remain intact. The problem is the ability.

I agree. I agree. And I'll just echo that last meeting I had with the gentleman I was talking about. And the hospital-owned doctors, it's like they don't even count. They're, they're, they're in the conversation from a, from a clinical perspective. But if it's, if it's not, it's, if it's not a huge improvement, in time, money, a small clinical improvement, a little bit of OR time, nobody cares.

Mm-hmm.

Yeah, it's interesting. I, my Venox company, we, we're, we're in, in talks right now with a partnership with one of those highly hated vendor credentialing companies. And the, the reason we're in talks with them is because they need to screen all of those, you know, thousands, tens of thousands of vendor reps that they, quote, credentialize, and they don't do a good job of it. But we would, just like we screen, you know, over 800 medical practices and all of their employees and doctors every month. And when I talk to them about, you know, physician-owned hospitals, physician-owned owned practices and hospitals, they've seen that change considerably. I think it's almost 80% of physicians now are employed by either by, you know, a hospital-owned practice or a hospital or a PE group or network. They're not that independent anymore. And you compare that to the research I did in 1999 on this very subject, At that time, 24% of all orthopedic surgeons were solo. Wow. And that's an extinct species, just about.

It's, and it's the trend is it's just gonna get worse. They have less and less autonomy every year.

Yeah.

And even when they say, I wanna use your product, it, that's, That's just a starting point. Yeah. So here's the— so they, uh, not gonna be able to find this now. So the FTC proposed a nationwide ban on non-competes, um, for physicians. And last month— no, this month. And so in Louisiana, it limits it to 2 or 3 years max. Maryland, they ban anything for those earning less than $350,000. Pennsylvania, there's a 1-year limit post-employment. Colorado prohibits non-competes. Indiana, that bans between physicians and hospital affiliates, a 1-year non-solicitation cap. I mean, just like the states, it's going down to the states now and they're making different rules. So, Physicians may have more autonomy, but like somebody said, they may go from employed over here to employee over there, and still not a lot. That's fascinating. Yeah, so it sounds like Copeland's business is just going to get more and more important every month. Is, is that what you're seeing, Cope? Is it just everybody's got pain on the backside?

Yeah. Yeah. Um, everybody does. Uh, well, I should say everybody I talk to certainly does, but usually they call me when they're in pain. So it's a bit of a bias, I suppose. But, um, I, I don't see how this is going to stop. Like, this isn't— this is not going to— I think I've said this for a while. I think Med Device is going to be selling the way I present it. Everybody's going to be doing it in 10 years.

They're gonna—

they're going to have to. We're selling to sophisticated entities now. Um, and now I will— here, I'll give you guys some good news. A small foot and ankle company, uh, I, that I'd never heard of, hired me to help them get their sort of what I call the passport together. And, uh, it's more, and I helped them create it. And a lot of times I'll, we'll try to put it in front of somebody and sort of live scrimmage instead of in front of real customers. Well, their VP of sales the other yesterday called me and said, hey, I just decided to do it myself. And I did it with, and it's a health system in, in New England. And he said, uh, I showed it to the right person that you told me to talk to. And the guy said, this is exactly what I need. I'll go, I'm gonna go get us approved. I'm gonna go get you guys approved by value analysis next week. Right? So he called me and I was, I was fired up last night cuz I feel like one of my, like my old hoops coach days, one of my players went out and won. Right. But I will, I will tell you, um, it's going to be more common. We will figure it out because it's just business selling to businesses. That's what it ends up being. And we just have not had historically had to do this. Um, and so we'll figure it out, but you know, it's when you're, whether you're selling to ortho, indie, Or you're selling to Kaiser Permanente. It's big business, right? I mean, it's just big business and we need to, I, I believe inherently away from surgeon champion, they get it approved for you. I mean, you're just gonna, you're just gonna drive yourself crazy. I'm already there. There's no reason for you to drive yourself crazy.

So, or we just need to all get there as fast as possible.

Right, there's that alternative, Kyle. That's right.

So I do have a question for you, Mark, with that in mind, and I suppose this is for anybody, but in my old days in shoulders, when the reverse shoulder was in, you know, its meteoric rise from, you know, whatever, '04 to a few years ago— maybe it's still technically in the same sort of trajectory— one of the advantages that the reverse shoulder had was you could get $13,000 for a reverse shoulder. But it flew under the radar of these analysis committees because you had so many line items that were much bigger dollar figures above it. And they were going after pushing knees to $4,000, pushing hips down, pushing all these other procedures, and the shoulder just kind of went along. And eventually it catches up to everything. So my question for you is, does anything fall outside of that radar? You talked about foot and ankle. That would have been an area I would have thought maybe that sneaks in. Is there Is there hot trauma or other trauma stuff? Is there anything in the orthopedic field that still lives in this space where it, it kind of just, it, it gets away with it still?

Yeah, I think there is biologics.

Yeah.

Yeah. To an extent. Biologics, tissue biologics, all of that, all of that I think falls under the radar. Was that for, I'm sorry. Wrong, Mark.

I know, but no, but it was, it was, it's accurate. Kyle asked, you know, I don't see— it's less about do these implants not sort of show up on the radar, it's more if there's anything that's not in their system now. Like, we're now to that point where if you have part numbers and things like that not in their system flags start to go up. Um, they like— that's why supply chain has sort of moved into this position. So, um, I don't see much. I'm not saying there isn't. I don't see much going under the radar like we used to.

Um, I mean, so all this, all the systems will have some sort of flag, like before you can pay somebody according to an invoice, you have to actually show that your part number is in the system, otherwise you don't get paid. So there's no point in trying to sell them product until that flag is lifted, essentially.

Yeah, that's pretty— that's a good way to describe it. Yes, that's what we're seeing now. And it's not so much that they don't let you in, um, although they don't anymore. They're, you know, they're— but they're like, if you somehow get in and try to bring even a new product line for— you're an established vendor and you try to come in with a new product line from the same company, you are supposed to go through the value analysis. The new product request process is what I should call it, which falls under value analysis. It's not, it's not even like it was 5 or 6 years ago, generally speaking. There are still some outliers. But I, like I've said, I would not want to build a business on the idea that I can slide into this one area and it doesn't show up on radar. Everything's starting to show up on everyone's radar, it seems like.

So then a quick question, a quick workaround that I've seen tried. I'm curious if, if it works. I've seen companies where they will do essentially a branding expansion. You know, they call everything product gamma. And they're just, it, it was already approved and they just kind of expand what that product list is even though it starts to get into other indications to have it sneak in through the back door. Is that going away too?

Yeah, there's less of it. Line extension we used to call it, or brand extension, right? And yeah, it's not like it doesn't work, but you will get quite like, hey, how come this isn't our system? What is this? We don't know what it is. Um, look, there's human beings involved in this, so it doesn't mean that there's not some of that available. It's just not like— it just isn't like it was even in 2018, because these health systems, as I think I told people, I was thinking, I think there's 9, there might be 10 health systems in the state of Pennsylvania, right? Like 10. There used to be 24, not that long ago. They, they just have more sophisticated systems in place, and you can be in one of them and they get bought by another and you're back out again. Because I'm seeing what Jefferson is doing at Lehigh Valley, and they're, they're booting out vendors left and right. And guess who's under the gun right now? Spine just got closed out, and joints is right next coming up. And you, those, those joint reps, you should see the joint reps in the Lehigh Valley hospitals because Jefferson is coming in and they are not gonna be raising prices. I can tell you that it's about to get really ugly. And, um, it's just, he's just seeing it everywhere, everywhere. I don't, I like this group of people. I don't envy selling total joints and spine implants these days. In these health systems. I just don't— implants are— it's a— it's just a bloodbath right now.

It's a bullseye. Yeah.

Maurice here.

Yeah, one thing I've seen, and I would love Cope's feedback, I'm seeing it more and more on the field. The people develop one like crazy implant for a tiny indication that nobody cares about, and they use it like— and then it's, you know, happens once every full moon or whatever. They have a, they have a case once every full moon, and they have a patent for it. And they use that to get through the VAC. And as a Trojan horse, and behind it, they bring all of the part numbers. I've seen, I've seen a couple of companies in our space doing that a lot.

Yeah, I've seen some of it. I think it's— I have not seen as much of it, Mauricio, as we used to see. Right. Um, but I just think like everything's under more scrutiny. Um, there are in Spine, they have such big buckets for every bucket. If you don't fit into one of their buckets, that product that you just described, um, it's still going to go through value analysis. And then nowadays you used to be able to pull stuff in through that, but now they're like, yeah, hey, listen, we capitated all that stuff and we picked 3 vendors. Here's what Jefferson's doing. Jefferson has picked, for example, because I think this is typical, picked 3 spine vendors. They're getting 80% of the spend, and the surgeons can pick 20%, but there's only 2 other vendors in that 20% that can walk in and start doing cases. So if you're a third or fourth, or you're— you, us you, any of us here, and you want to come in and do cases, the surgeons are like, well, you can be in my 20%, but I still have to get you into the system and approved. And guess how long that's going to take? Nobody knows. So like, surgeons are just like, enough, enough. And by the way, they're all employed now, so now they're like Always, always thought that oncology and big hairy revisions were outside, but I don't know. Yeah, that's, and that's where you're seeing it, like Icotek and Illuminate, you know, Alyssa's company. Like those are the companies that are coming in, but those are in oncology spine, at least on that side where there's big reimbursement. It's a minimal, there's less places who do that. And the reimbursement in those oncological patients are much higher. So people like, it's kind of carved out and like, you know, it's just a sort of a different space. But the day-to-day stuff, I would say if you're gonna do it, you should be doing it in those spaces because, um, even, even revision stuff is, everybody's pretty good at it now, you know?

So.

All right, Tiger, I gotta go. Yep, been a good hour. All right, no bone chat next week. Enjoy the vacation, but we'll log in to Maloney's, uh, AI discussion.