Inside Orthopedics: The Future of Surgery Support with the Avail CEO, Daniel Hawkins (#37)

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 37 titled The future of surgery support with the Avail CEO Daniel Hawkins. This is a look into an early trend that is here permanently. Avail is changing how technical surgery support will both be accessed by the operating room team and delivered by the rep or clinical expert in orthopedics.

Enjoy.

So I'm live with Daniel Hawkins at Avail MedSystems. Daniel, thank you for your time. I'm really thrilled to have you on the podcast. Been looking forward to this since we first talked, I think, in April. I'll just say these are rare times in orthopedics where a med tech startup actually has the perfect Solution at the Perfect Time in History. So welcome to the podcast.

Thank you very much. I appreciate the opportunity.

Yeah, yeah. So first of all, just jump in, tell us who you are and where you are and give us a little bit about your background.

Absolutely. So I have been in med tech at this point for 26 years. I'm not trained in medicine. I'm not trained as an engineer. I am the son of a physician, and I've always been interested in business and in startups. And as the son of a physician, I've always had a bias towards healthcare. Scientifically minded, I guess I would describe it. After business school, there's only one industry I wanted to be in, and that was medtech. I started in angioplasty before the introduction of the Palmershot stent, so definitely dating myself a little bit. I was working for a division of Eli Lilly called Advanced Cardiovascular Systems, that's now Abbott Vascular. Cardiovascular. Shortly after that, I was able to realize my— a bit of my dream, if you will, to be in a startup. Fred Mull, the founder of Intuitive Surgical, brought me in as the first non-technical person at Intuitive. And Fred and I and one other gentleman set the specs on the da Vinci robot. So as you can imagine— Yeah, that was a wild time. As you can imagine, a non-technical person who knows nothing about robotics setting the specs on a piece of equipment that scared most physicians when I first introduced it to them, and I'm trying to learn procedures that we might be relevant for. I met with a few challenges during that time frame, as you might imagine. And what was really fascinating about that is exploring a potential, exploring what could be done, and tearing the Band-Aid off of the typical restrictions that center around medical device creation. And that was squarely in the middle of exactly what I wanted to do when I decided to get into medtech. And, you know, I had to go to a big company first for a couple of years, but But at Intuitive, what we did was groundbreaking. And Fred Moll trained me on disruption, I guess is the best way to describe it. So I did that for 4, 4.5 years, thereabouts. And for family reasons, moved back to the East Coast and got involved in some startups. And very early-stage startups. And one I was involved with lost funding actually right after 9/11. So here I am, Tiger, I'm in Maryland and there's exactly zero medtech in Maryland. I was actually doing a biotech company with the founder of Amgen. And even a company that was co-founded by the founder of Amgen lost funding after 9/11. So what I ended up doing, Extraordinary. It was a very tough time. And what I ended up doing was consulting for an incubator in the Midwest. And we launched two companies. One of them was in the ENT space that ultimately went public and was acquired by Medtronic. The second one, I was shown the technology and asked by the founder of the company, where should we use it? That was one of the more fascinating experiences because I would— I was able to figure out using what amounted to a hyperstimulation algorithm, a vagus nerve hyperstimulation algorithm, how we can use the technology to solve a problem. I had the whole body to work with. And I came up with a couple ideas. And one of them was in pain and another one was in obesity. The obesity technology ended up being the one picked in the short run. Company was launched and went off to go public, and it's still public now. The pain algorithm ultimately ended up being changed, but it was the foundational technology for Neura. Oh, wow. Yeah, kind of fun. While I was doing that, a couple of venture firms spotted some of what I was working on and knew me from prior interactions, and I got asked by two venture firms to join a couple engineers up in Seattle to start companies for for them. That sounds a bit strange, let me describe what the job is. Two venture firms each put $1 million into a bucket and gave it to us. And then they gave us a whiteboard and a marker and said, go figure out a technology for a market that is a clear unmet clinical need. And if we like what you come up with, we'll give you the money to start the company. And there's zero direction other than that.

That's nice, that's rare.

Very rare. So I looked at everything from hair loss to, you know, toenail fungus, right? Everything in between, in orthopedics, in cardiovascular, in neuro, in GI, in men's health, in women's health, pediatrics and adults, and I looked at all of it. We ended up, I was the guy who was supposed to come up with ideas, and the engineers and I were supposed to come up with solutions, and candidly, more them than me on the ladder. I came up with the notion of a skin-worn patch pump for insulin delivery in type 2 diabetes. And what this was, and what was novel about it, is it was completely disposable, and it was a 3-day device, and it was nominally a syringe on the skin. The short story is they funded the company, and it was moved from Seattle to the Bay Area, and I worked myself out of a job because I didn't want to move from Seattle. That company ultimately was acquired by Johnson Johnson. And right after it moved, I was in that same situation, but not Maryland, I was in Seattle. Almost no medtech. And I wanted to start another company. The Venture Guys decided to do that again with me. The engineers taught me how to invent in the first incubator we did. In the second one, I started inventing like crazy. Along with one of the two engineers who was a primary partner. We invented a lot of things. One of the things we came up with was to put lithotripsy inside angioplasty balloons. Oh, wow. And a handful of other ideas that we came up with. When that idea occurred to me, I was super excited because it pulled from my history in angioplasty in the early days of my career, and it looked like to me a brand new category. 2009 happened right then, that's when that was, 2008, 2009. And the Cliff Notes is I couldn't start a company because no early-stage companies were getting started then. But I remembered what Fred Moll had taught me back at Intuitive, and I wasn't gonna give up. So I actually took my kids' college fund and I acquired the intellectual property myself. Out of that incubator, shut down the incubator, and started a company called Shockwave Medical. Shockwave is now public. It went public March of last year, about a billion and a half dollar valuation. It's exclusively focused on complex angioplasty in the legs and in the heart, as well as a structural heart condition that really is involved in the aortic valve replacement. And the technology is doing absolutely everything I envisioned it would do and candidly a bit more. I'm humbled by how well that sort of base technology is doing. And what drove me to do that was an ability to move an industry or a portion of an industry, a clinical indication. And that's exactly what we've done. I've been told that that technology is the greatest thing to hit angioplasty since the drug-eluting stent. Very humbling, loved hearing that. I ran that company for about 5 years. And the technology was invented before my youngest son was born. I transitioned the company to new leadership in 2017. Because my last investor was T. Rowe Price and the company was going public. And after traveling a quarter million miles the prior year, I wasn't willing to take the family trade-off of running a public company as a CEO. It just wasn't going to work for me, Tiger. It just wasn't. So I spent 6 months transitioning and we found a great guy. He's sort of unbelievably good job running the company in Canada. I think probably better than I'd be able to do given how deep his contacts are in the space. And I spent 6 months transitioning and looking for something else to do, and I came across some technology that I looked at and I saw what the potential to do what we're now doing at Avail. So hopefully that gives you a little bit of sense of how I walked up to walked up to the beginning of Vail.

Interesting, yeah. It's a great story, non-technical person that knows how to find solutions to unmet clinical needs. It's fascinating. So how did Vail Med Systems start?

What was the— So, yeah, this was— it was kind of interesting. I got hooked on— I'll describe it as moving the needle. We had an amazing time doing that at Intuitive Surgical. Intuitive Surgical. And I— as soon as I did that with Fred, I just became a junkie for it. With all due respect to every technology I worked on between Intuitive Surgical and Shockwave, those were really additive technologies rather than transformative technologies in my view. Even my insulin delivery device, I would not describe it as transformative. It was additive. Shockwave was transformative and remains so. And I love that. And that's kind of what I wanted to do again. So I spent about 6 months during my transitioning looking for something that could be transformative. And I was open to working for another company, running another company, and I was also hatching a handful of ideas. I keep a lab book, you know, an engineer's lab book. And I jot ideas all the time and I file patents that I might be interested in. And maybe turning into a company. I was introduced to a couple of guys that had been spending about 4 years working on a— what amounted to a telemedicine technology that is the underpinnings for what is available right now. And they had done a really nice job on understanding some needs and they had built a piece of hardware and they had built some software related to it. They had been struggling quite a bit for a variety of reasons related to their business model, related to their ability to raise capital, related to technical issues that they were running into. I was introduced to them and they asked me if I might advise them, so I started doing that. And at one point, Tiger, in the conversation, one conversation I'll never forget, I said, guys, look, I'm just going to be really blunt with you. You're missing how this needs to go. I've spent now, you know, 10, 15 hours with you guys. Here's what you need to do. And I got up to a whiteboard and I drew the future of what that technology should be, the technical issues, the hardware-related issues, and importantly, how it should be used, positioned, business model, how to approach. I did a whole marketing strategy. I just whiteboarded the whole thing. And the gentleman looked at me and said, "Wow, can you— will you become our CEO? Can you do that?" And candidly, Tiger, I had opportunities to go work for— as CEO of other medical device companies in other branches of healthcare, and they were very well funded. Very well funded and I'd be walking into a role with, you know, great sort of personal, you know, things that will come to me personally from doing it, you know, competition-wise and career opportunity-wise and whatnot. And I elected not to do that. I instead elected to go with an entity that had no money. It was in fact technically bankrupt. Exactly. It was in fact technically bankrupt. It had frustrated shareholders, defaults on loans, because I saw something. What I saw was a chance to use technology to change how healthcare operates, not in a clinical segment, but in every clinical segment. And what I saw was a chance to use technology to enable expertise to be delivered at any time from anywhere to whoever needs it when they need it. And that's what I built with Avail. If you imagine—

You found your transformative idea again.

That's what I did. Exactly. And what I came back to, to talk to advisors and friends and family, and I said, I'm going to turn down a job where I'd have really good compensation, I have this great board and it's established in financing and everything else, and I'm going to work for a company that can't pay me, in a technology that needs a lot of work, in a market that doesn't exist, and I'm going to have to convince industry and hospitals and physicians to change a practice that they've been doing for 50 years because I see a chance to completely transform new product introduction, procedural support, dissemination of expertise, product launches, and medical education. That's what I saw. And it's a, make no mistake, Tiger, this is a gutsy deal to do that, right? Because foundationally, I'm suggesting that all of this can get created in a world where nobody knows they need it. Because I saw a problem back in my ACS days, 23 years prior, and it still exists today. The folks in the field, the sales reps, the clinical specialists, spend 50 to 60% of their time running between hospitals for procedures or waiting for the next procedure. They have to care for their best customers, and that inefficiency in terms of case support and caring and the need to care for their best customers means they don't have time to sell competitive accounts. They don't have time that they need to cultivate new business. That drives me absolutely nuts. And my thought was, if we could have equipment in hospitals where these clinical folks and sales reps have their primary business, and instead of going into those hospitals physically 100% of the time, they went into them physically 50% of the time, and they spent that extra time going to competitive locations pitching new products and getting cases done, and when they need to support their best customer, go to a conference room, go to an office somewhere, or frankly just go to their car, shut the doors, put on a headset, flip on a touchpad, and log into a procedure across town or a state away and support their customers. That's what I saw when I saw the technology. I saw a chance to do that. That's what we've built.

So what year is this, Daniel, when you—

That was 2017, August of 2017. And I had mentioned I'm the son of a physician. One of the things that I always noticed, I noticed back then because I used to go to the medical conferences, you know, as a family we used to go to medical conferences and we, you know, I'd sit in on the talks when I was 15 and hear things and whatnot. So I got a sense of that exposure of medical education a long time ago. But one of the things I grew up knowing, and I really knew when I got into medtech on my own in— you know, right after business school, is that physicians— if you're a physician, you've gone through a lot and you've got fantastic expertise, but you ultimately develop sub-expertises, if you will. There might be a particular clinical area of interest, or there might be a particular capability. You might have the hands for this type of a difficult procedure, and you start to explore it. What ends up happening there is you end up with pockets of real excellence. And the— that's fantastic, but the problem is if there's a patient in a facility where that real excellence is not in that facility, but it's across town or a state or two away, the physician treating will obviously do the very best they can and no doubt will do a very nice job. But if that real, true, deep expertise were available to them electronically, available to them remotely, where that remote expert could chime in and provide the expertise mid-procedure, 2 things happen. First one is the treating physician then has more direct in-procedure professional education opportunities, clinical education opportunities to optimize their general understanding of treating patients of that particular presentation type. But also the patient can actually get potentially an improved outcome. That's all super compelling. And that was, and remains, an undercurrent of what I wanted to do with Avail, and I'm still trying to pursue, and we are making headroads in with Avail. It also, there's another undercurrent that I think many in your audience have felt for a decade or more, depending on how long they've been in business. Hospitals really like the notion of, I'm gonna put pressure on the reps and make it hard for them to get in.

Yeah.

There's the, right? I mean, you know that.

Yeah, there's friction. They just don't want them wandering around the hospital. They're considered overhead and not value-added. But the surgeons, most, the surgeons love the good ones.

Yes, and, you know, early in my career, I grew to appreciate the importance of clinical support from industry and how that can move an outcome in a case. And I've had the deepest of respect for that ever since, and saw that in spades in multiple places in my career. I've been the guy supporting a procedure where I see something, and as those who do this for a living know, you gently and carefully describe a potential alternative and make aware, make the physician aware of something that they should consider. Meanwhile, what you're actually doing is steering the procedure in a direction that will clinically optimize it. The ultimate decision is still the physician's, we all know that, but that interface, that capability has to be there. Hospital administration is trying to remove it because they see the challenging stuff. They see the new product introductions, they see roving the halls, they see contamination risk, particularly now with COVID And what I saw with the technology back in August of '17 is a chance to be that perfect middle ground, that place where industry can provide the support they need to provide to a physician. The physician can get that expertise from industry, 'cause let's call it what it is. That is what it is.

Expertise.

Oh yeah, and I've been—

I'm an engineer, I've been in surgeries all over the world, and I've seen a lot of reps, clinical specialists, save the day, you know, make the procedure faster, better outcome, less OR time. I see— I've seen it over and over.

Yeah, absolutely. And, and anybody who's observant in a procedure and is really watching what's going on has seen that and knows it and understands exactly what you and I are chatting about right now. Yeah. But if administration has their reasons, they will find ways to make it harder and harder, and they have with credentialing and everything else. But even harder than that, and there are hospitals that are— have gone repless and many others that are trying to go repless. I actually think that's a bad thing for patient outcomes. I think it's a very difficult thing for the industry and new technology introductions. And I think overall, it's just not a great thing for healthcare. And that's what I saw in August of '17. I saw a chance to be that middle to where that expertise can come into a procedure room. It doesn't need to be 100% of the time remote, and that's something that it's tough for folks to kind of wrap their arms around. This is a technology that allows it to be used when it it should be used by whatever, you know, vendor-driven or hospital-driven policy, and otherwise it's in person. And that middle ground, we have found hospital administration is very, very comfortable with. And they're comfortable with the notion that, yeah, there are those procedures where, you know, industry needs to physically be there, That's fine, and we're fine with that. But there are a lot of them where they'd otherwise want them not in the building at all, and that's not great for outcomes. Yeah, yeah. And that's where we sit is dead in the middle of that.

So it's kind of on-demand by exception, and it's— yeah, and so the surgeon or the nurse calls for the advice. So describe the system. What's the hardware look like and software and— And how is it used?

So the system is— it's a console, we call it. It's on a set of caster-based wheels. It's got— I'll describe it as being about as tall as a fairly tall man, has about the same sort of volumetric feel around the operating table, you know, 6'5", 6'6", somewhere around in there. And it's got an integrated screen, 30+ inch monitor on it. The guts of the system has in it a lot of electronics to process video feeds. Integrated into the system is a speaker microphone array. So the whole thing is self-contained. It has a fixed camera that is above the monitor, and fixed meaning it's not on a boom arm or anything. And then there's another camera that's on a 6-foot-long boom arm. That boom arm needs to be put into position manually by some member of the staff. The way the system works is, I'll start from it being turned off and next to the procedure room, maybe against the back wall. So you start from there, you plug it in, you gotta connect Ethernet, and you turn it on. And when you unlock the system through a code, it pulls down information into the console instantly from the cloud. And that information that it pulls down is that my Smith Nephew rep is available for this procedure, my Stryker rep is available, but my DePew rep is not. All that information is instantly brought down, and I'll describe in a minute how we get that information. And then you pick a procedure, I'm going to do a knee, and you tap one more button, being the nurse or the tech or what have you, or the circulator, and that button is a sales rep or a clinical specialist's name. When that is tapped, an iPad somewhere in the country rings, and it— comes in through the Avail app that is downloadable off the App Store. And once you have an account and you set it up and all of that in the backend, I'll describe in a second. Once that iPad rings, you tap accept call, and in about 2 seconds, you're seeing through the 2 cameras on our console.

Wow.

Any modality that is plugged into the back of our console, an arthroscope, ultrasound, in the case of cardiac, an angiogram or an echo, plugged into the back of our console is one of the feeds that you remotely can watch on an iPad. It doesn't have to be an iPad, it can be an Android device or whatever.

Right.

And so remotely you're able to see all of that, and you can choose in between them all. Very importantly, and here's where the special sauce comes in, everything you control and see on that remote device is what's displayed on the screen in the operating room. So you get to control what the doc sees. Hmm. So if I wanna see a zoom-in view of the operative field, and I wanna see a feed from an arthroscope at the same time, I can split screen them. And the view you're gonna get, quite literally, you can assess tissue planes as if they are 2 feet across on a screen, given the zoom and high-definition capability of a camera system. It's fully pan-tilt-zoom controllable, remotely controllable, so you can look at the head of the patient, the knee of the patient, zoom in, look over at the back table, whatever you want, and zoom down to a point where Tiger— I could—— and we've got a demo doing this in our demo room. We've got a set of spine screws on a tray. From 15 feet away, I can read the size markings of a spine screw. Pedicle screw? Pedicle screw, exactly. Wow. And see the thread patterns and whatever. And here's where it gets really cool. Remotely, I can draw on live video or frozen images in full screen or split screen. So if I am an orthopedic rep and there's a whole tray of 30 pedicle screws and I need the 5th one to the left on the 4th row down, I can describe it that way or I could zoom down, put it on the camera, put the camera on that, put it on the big screen, and I can circle it remotely. And it'll show up within a half a second on the screen in the operating room. And then the nurse knows exactly which one to pick. That's better than a laser pointer. Way better than a laser pointer, right? Way better than a laser pointer. Especially if the ref drops down.

Exactly. Wow, that's amazing. And what about the audio capabilities?

So it is high-definition, real-time audio. And when I say real-time, human perception of latency above 3/4 of a second is perceptible.— we're less than half a second. It is well within the range of not perceptible in terms of latency. And the audio is— we've got a built-in speaker microphone array with multiple speakers and multiple microphones. And we've got a proprietary filtration capability where we're filtering out the chatter and background package opening and walking around noise that you hear in an operating room using directional mics and filtration. All that is proprietary and patented. And that capability comes through as clear as I'm chatting with you right now is how it comes through to the remote user. Interesting. Wow, that's amazing. So the last thing I want to describe about software is how the names get on there. This is important. When I started this, the whole notion was to make it so that remote folks could fully operate, if it's industry, fully operate their business through our system. Nearly everybody uses Salesforce for reporting and interacting with home office and managing their contacts and opening up new business, etc., etc. But the moment they're getting ready to go into an OR, they turn off Salesforce. That's when you open up Avail. So our system has in it a built-in scheduler where you can, you can say customer 1, I'm available between 10 and 1 o'clock because I know they've got 2 cases that I'm going to be up for, and across town customer 2 has a case for me at 2:30 and customer 3 at 1:05. And I'm going to open up windows of availability for those accounts and turn off everybody else. All that information goes from the portal, bounces up to the cloud, and goes down to the relevant consoles in the relevant customer locations.

Does that make sense? Yeah, interesting. Wow.

So what you're able to do is fully manage your availability and schedule that way. You could also say, I don't have any cases today, but I'm available on call for all of my customers, and make everybody green. And then your name will show up green on every console in your territory.

Interesting. So how does it know what procedure is going to be done at a certain location?

That's the beautiful part is we allow outbound only, and hospitals require this, by the way. So in the example where a procedure is getting ready to start, and let's say it's a revision on a total knee, the clinical team knows that. They know that I'm doing a Smith and Nephew knee that day, so I'm gonna go grab the system, I'm gonna plug it in, plug in the Ethernet, and I'm gonna, uh, I'm gonna pick total knee, and I'm gonna tap Smith and Nephew. And when I do that, it's going to place an outbound call to the rep. That's all they got to do.

Oh, I see. That is— it's one-way notification.

It's one way. Yeah, yeah. And the reason we do that is because hospitals don't want to have inbounds randomly. And as you might imagine, if you're a, a Stryker rep in the middle of a procedure, you don't want the Pew bouncing in on your call, right? Right, right. That's, that's why we did that. Makes total sense.

Wow, interesting. So I, I understand the system. So you gotta— I can't wait to hear the story about What's happened in the last few months before COVID and after COVID?

Uh, yeah, interesting. So but for COVID, we probably would be coming out of stealth about right now. Okay. So when— yeah, so when I took over, um, the effort, the— I needed to get a good solid technical assessment on the equipment and the software and I mentioned previously I'm not an engineer. Not only am I not an engineer, I am mechanically minded, so I've got a bunch of inventions in mechanical engineering and some in electrical related to Shockwave. But one thing I'm definitely not is a software engineer. Not even close. So I didn't know how much work we had to do to get the software ready. 20 people, 25 people, and 2.5 years later, I do know. It's really hard. And the guys that we have doing it are absolutely outstanding. This is a team that is led by a gentleman who actually is one of the first engineers at the very first cloud-based video conferencing service. It's pre-Zoom actually. Zoom was the second one. The first one was called BlueJeans. And he's one of the first engineers at BlueJeans and helped create that whole category of technology and ended up running large programs and on-demand video distribution for Comcast and whatnot. He just did a really phenomenal job in building a team that has just killed it on the software side for us. So we had to revamp the whole software. And we had to rebuild the hardware because there were lots of issues associated with it. So we spent a bunch of time doing that. We got commercial second half of last year and we're getting really nice traction from both hospitals, particularly KOLs, and from industry on new product introduction, on this whole category of if you've got a KOL who knows how to use a device and there's otherwise a pull from industry to get that KOL to travel, Don't need to do that anymore. Put a console in the KOL's location and have the remote person dial in and you can actually do procedure observation to be able to help launch products. Industry took to that idea very quickly. It's peer-to-peer conversation and it's been super interesting. We pursued a model where, you know, our consoles are placed free of charge to hospitals and to ASCs. And I do mean completely and utterly free of charge. If they want to use it to talk amongst themselves, they need to get an app subscription. And then they're subject to a time-based fee structure just like industry is. Industry doesn't pay for the consoles. They're not exclusive to any particular vendor. They're vendor-neutral. So any vendor can, you know, approach us, request that we place units in their preferred locations. And what they do is pre-purchase a block of access time, and then we work with their sales forces to place units in preferred locations. Those units can be usable by their competitors ultimately, but really what this boils out— down to is all the vendors that have been working with us pick the places where they've got locks on the business, 70, 80, 90%, right? Friendly customer. They pick the friendlies. And it's exactly the model that I was previously describing where if you've got units in your accounts, it allows you time to sell competitive accounts. Oh, I see. Interesting. So that's what they're doing. So we had pre-COVID a couple of manufacturers signed up. They were, they were in the cardiovascular space and probably 4 or 5 others that were in varying levels of meaningful dialogue. Since COVID we have between a dozen and a dozen and a half manufacturers signed up, 45 more in process. And of those ones that have signed up, we quite literally have hundreds and hundreds of locations identified by those manufacturers where they want avail consoles placed. Their sales teams are doing joint calls with my sales team, and we're approaching those customers to get a console placed. And each one of those manufacturers that's already under agreement has pre-purchased access time and will be using that access time on every account that gets installed.

So the manufacturers obviously saw the need when COVID happened, but is it because the reps are getting kicked out of the operating room or they want to be more efficient with reps? What's the driver? That's a terrific question.

It's both. So the first thing that happened is, get out of my hospital. Industry says, oh my God, what are we going to do? We need to get access. Huge intensity of interest, inbounds blowing up our contact us at avail.io, which is our website. We were getting inbounds that way. My sales team comes from cardiovascular, structural heart, spine, neuro, general orthopedics, capital equipment. We were getting all kinds of inbounds from my sales team. And we were getting KOL inbounds from, again, you know, the Rolodexes of sales team and my Rolodex, frankly, from my Shark Week days. All of that was centered around wanting to enable core access due to COVID. As that has started to settle in a little bit and relax a little bit, we've gone from a hard swing one direction on the pendulum to slightly back in the direction of center, but everybody knows we're never going back to what we were. We're not going back even close to what we were. So what started to happen with hospitals is they're locking down their credentialing software now requires in many, many instances we've heard a negative COVID test, you know, in the preceding 7 days. We've heard as short as 4 days that you have to present the negative COVID test before you're allowed in the building. We think COVID is going to be much more significant than MRSA was from the standpoint of infection control in hospitals, and that there's a new normal right now. What we hear from industry is actually startling. From industry, what we hear is, this is never going to be the same. In competition, our reps' ability to service customers remotely will be the single most important differentiator in the years to come. There are those vendors that are fully and squarely adopting that notion and talking to us about category changes in how they run their business. And to be clear, these conversations are not, how do we use technology to cut our sales force? That is not this conversation. This conversation instead is, how do we get the excellence and expertise from our field teams in the operating rooms when, first, we might not be allowed at all. Second, we would be allowed but only in special circumstances. And third, more efficiently, to your question, Tiger. So more efficiently meaning, If right now a rep can only service customers that have a volume of X and higher, if we have these consoles all over the place, can that same rep now take on accounts that they have to basically just take phone orders from? Can they broaden their business? Can they do more if they can get rid of all of that logistics time that is just sucking up their schedule? And that's how the thought process is running. Interesting. And I think— sorry, go ahead.

No, that's fascinating. So the companies— and I'm sure not all of the manufacturers are seeing this, but some of the more progressive ones are seeing that product doesn't matter as much nowadays as the service that's delivered. And they're trying to get an edge on the service.

They're trying to get an edge on the service, and they're trying to get an edge on the relationship in ways that allows them to broaden. Yeah. And, you know, yes, I've spoken to one or two manufacturers, candidly they're outside of orthopedics, but one or two manufacturers that have talked about, "Hey, let's be more efficient with our sales teams," meaning exactly what we all think it means. What we're instead hearing much, much more of is how do we If the new normal now has a model where telemedicine in the operating room is gaining acceptance, this is a strategic beachhead. Are we gonna own the beachhead? Are we gonna wish that we owned the beachhead? And we need to think differently about how we service our customers. Not by changing the numbers of people we have, but changing how those people interact. If we can do that in a way that allows a broader footprint of accounts without the struggles and limitations we've had historically in terms of cost structure, we can keep the people we have and get more business into the company we can use this whole category of concern related to COVID that is very real and will definitely be persistent as a way to introduce a new beachhead of account access. And it'll be in conceptual partnership with our customers rather than fighting them all the time on this access question, and do so in a way that they're not only accepting but embracing and seeking. That's what we're hearing all over the place.

Yeah, another thing you— one of the things that resonated with you when we talked in April was that this system makes the good reps even better and it makes bad reps kind of useless because if they can't provide, you know, service through a screen, you know, they can't do it in person anyway. So I think it may create a new class of super reps.

I think it will, candidly.

Yeah, guys that make a ton of money and are servicing 2 or 3 times as many procedures as they were before.

Yes, and you know, look, every company has them and those who are these individuals know it. Territories are large. They built the business over years, and let's be plain about this, the business is not built at corporate. The business is built in the street. Yeah, and to the extent that— right, that's absolutely true, we all know that. To the extent that technology can be made to— technology can be used to make a sales rep more efficient with their time. Instead of spending 45 minutes in traffic, 8 to 10 minutes in credentialing, 5 minutes to walk upstairs, 5 to 10 minutes to change, and then get into the procedure room, you've now wasted over an hour to be in a procedure that is 45 minutes or less. And then you gotta wait an hour and a half for the next one at that same facility when your customer across town needs you, but you had to bump till the next day because you're servicing the customer you're serving that day, that's not efficient. No. And you risk losing that business across town to a competitive device, a competitive rep. But if instead you can do what I described, or even I'll go one step farther, Tiger, I hadn't mentioned it yet, our technology will ultimately allow you to observe more than one procedure at a time.

Yeah, I was going to ask that. So 2 tablets, 2 iPads sitting in your car, it wouldn't be hard to do.

No, and I'm actually going to go a step farther and suggest that on a large screen at home, we could split it in half and you could watch 2 at the same time and go from your home office.

Interesting. Another factor is hospitals are trying to learn how to do— you know, they're trying to catch up. HSS said they've got a— They have a backlog of 7,000 orthopedic procedures. So they're trying to figure out how to flip the rooms faster and process these procedures. So I mean, this plays into that perfectly.

It does. It does. And to the extent you go from one procedure to the next to the next, and it bounces between a couple of different manufacturers because of the nature of the case involved in the clinical presentation, as somebody who services HSS, you got your turn and you're waiting then. You're waiting. And how do you build a business waiting? Everybody in the field knows you can't build a business waiting. You can't do it. That's a really good point.

So let's talk about— I haven't asked you about the limits. Where are the boundaries right now with Avail, what can't you do virtually?

It's a great question. So from our perspective, this system is actually designed to be manufacturer agnostic, and it's clinically agnostic or neutral as well, meaning the same unit can be used in an operating room where they do orthopedics and general surgery and what have you, because it's a telecommunications platform.

It doesn't care what the conversation is about.

It only cares that it's delivering the services related to the telecommunications platform. So from a clinical perspective, there is no limit. You're asking, I think, more poignantly, what types of procedures do you need, physically need a rep in the room? Look, if you're bringing in trays, we can't do that remotely, right? If the hospital has their own trays or the hospital is trying to go to a place where they have their own trays, now we can be useful. Um, but if you're bringing in trays, you're still bringing in trays.

Yeah, yeah, but you can tell, you can tell the staff that you've got the wrong tray.

On the back table. Oh, 100%. That's— so that's where it gets super interesting. If the hospital has their own trays, you could have a tower of trays, and as long as you can see with a camera, just as you would in the operating room, what one tray versus the next is, you can tell them which one to pull. Yeah. And when the tray is open and you're looking in and you're seeing 5 tibial plates and 2 saws and a whole bunch of screws and what have you, or sorry, saw guides, you can look at those using the camera system, zoom, mag it up on the screen and circle the one that is necessary or the collection that is necessary to get the case done.

Yeah, that's— so you can help with the materials in the room, you can definitely direct. Yes. Guide. Interesting. 100%. Yeah, so it's still pretty early in COVID, so where do you see med systems going, Avail med systems going in the next year or two?

So we look at the opportunity in front of us, Tiger, to help make a difference across specialties and across care locations from acute care to ASCs and office-based labs, for those familiar with the cardiovascular space. It's sort of a step down in acuity relative to an ASC. We see an opportunity— our business model calls for us to go into every procedure room in every care facility across the country and ultimately around the world. But let's just pick on the United States for a moment. That's 85,000 locations by our math. And we keep all of this equipment on our own balance sheet. So what I'm talking about is basically paying for installing, technically keeping up, updating, and servicing 85,000 of these consoles all over the country. And what I ultimately see here is a network where every hospital, every procedure room where a rep would otherwise have to be there physically, they now have the option to be there remotely. Through our system. In the next couple of years, we anticipate having significant penetration into that 85,000 category that I'm describing. Large hospital systems all the way to individual community hospitals are all over our own list of several hundred independent vendor access like I described a few moments ago. We have a couple hundred, couple 300 accounts that we're actively working on right now, and those accounts can be single hospital all the way up to the largest IDNs where they're interested in whole categories of installations and the like. And we're going through trial versions and permanent installation dialogues and installations and scheduling and all the rest of that stuff. I see us in the next handful of years having significant penetration into the areas I just described. We started off with an initial focus in cardiovascular. About 10 days into it, we had our first request for orthopedics. Then we had a request for subspecialties within orthopedics, so like spine. We had neuro. We had ASCs starting to get very interested with the change in reimbursement for primary knees in ASCs. There's an influx of interest in ASCs for the obvious reasons. Industry has a real hard time covering ASCs. They just don't have the— ASCs, right, want the expertise, so it's a match made in heaven right there. And we're seeing it in a wide variety, everything from robotics to open surgery and across clinical specialties in acute care. So I see us being— expanding the number of clinical specialties. Expanding the number of facilities and importantly deepening the penetration into facilities. We have a handful of hospitals already that either have or are finishing contracting on second and third units and fourth unit kind of conversations are kicking in. So it's starting to propagate, I guess, is the way to describe it. Yeah, yeah.

So there's got to be a critical mass, I would think, out of the 85,000 centers, there's got to be when you're in, I don't know what it is, 5%, 10%, 30%, and you sort of, it's a tipping point where you sort of dominate at that point. Do you have a feel for that?

So dominate is a tough term in some respects. I think from a technology perspective there's nothing like it out there. From the standpoint of market entry, we're making great headway into the market. When we— I would describe the tipping point instead as a, well, this is a novel, interesting thing that slightly scares the hell out of me, but it's really interesting. I might want to try this. I think we are the slightly scares the hell out of me was pre-COVID. Because of COVID we've had 5 to 7 years worth of market development happen in about 8 weeks. Yeah. Awareness is through the roof. Interest is exceptional. Hard to keep up with. And then the next place, of course, is getting them done. I think the true tipping point here is getting contract and getting them installed. Installations are being held back because of our access in the hospitals. But I think the true tipping point here is going from a, wow, this is a really neat idea that makes a lot of sense in COVID, to I need to use this every day in some capacity in some of my customers somewhere, because it's now just how I, how I run my business. Yeah. And we're starting to see that in a couple years. I fully expect that to be ubiquitous.

Yeah, I can't see a cus— I can't see a hospital or ASC going backwards, you know. Yeah, we're, yeah, we're— John, the rep's coming in with his laser pointer, and then all of a sudden, you know, you have Johnny, you have the best rep on demand when you need them.

Exactly.

Yeah, I just can't see anybody going— well, that's, that's fascinating. Well, I want to be careful of your time, Daniel, for sure. This has been great. Tell the listeners where they can find out— like you need more attention, but tell them where they can find more information about Avail and getting a demo or learning more about it.

So we're using a little bit of social media. We're not going nuts. We're on LinkedIn and on Twitter. Some of our regular up-to-date activities are shown up on there. Really, the best way to learn more about us is on the web at avail.io versus .com. It's avail.io. And on there, if you have interest in learning more, there's obviously pages of information you can learn. If you wanted to directly interact, I would recommend hitting the Contact Us button and putting in some information in there, email address, whatever questions you might have or what it's pertaining to. That goes to a number of folks on the staff, and you'll have a follow-up within sort of 36 hours would be my expectation.

Perfect. Perfect. Well, wow. Thanks for your time. Man, this is exciting stuff. If I were a young engineer, I think I would find a way to get to Palo Alto and join the team.

We would certainly welcome that as well. We're growing by leaps and bounds, so welcome the chance to bring in excellent people.

Okay, well, thanks again for your time, and we'll definitely watch and stay in touch.

Perfect. Thanks so much. I appreciate it, Tiger. Take care. Okay. Bye-bye. Bye-bye.