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Three Questions Medical Product Business Owners Should Ask About Private Investments

By: John Geis, Principal of Cresset Partners

Owners of privately held medical product companies who either want to take their businesses to the next level or be rewarded for their years of hard work through a liquidity event often look to private investments to make that happen, since the money flowing into medical product companies is substantial. For example, in the medical technologies space, the average deal size in 2017 was $605 million (1).

Although valuations can be very significant, many medical product companies tend to be smaller, family-run businesses. One study that analyzed economic data from the Census Bureau found that 73 percent of medical device firms had fewer than 20 employees, and 88 percent had fewer than 100 employees (2). Owners of these companies are often looking for private investment partners who will not only complement their company culture, but will also respect and honor their vision and give it the time and space to be fully realized.

It’s all about finding the right private capital to support where you want your company to go. It may sound obvious, but not all private investments are created equal, and it is important for medical product company owners to understand that.

For owners who want to invest in private capital but still want a say in the direction of their companies, it is suggested that you explore the following three questions:

DO THEY SUPPORT THE LONG-TERM VISION OF THE COMPANY?

This is key. If a private equity firm or private investor doesn’t see eye to eye with where you want your company to go, that is a clear indication to keep looking. With the amount of private investment dollars out there, it is very likely that there is a better suitor who will embrace your vision.

DO THEY HAVE THE PATIENCE TO SEE THAT VISION THROUGH?

Many private equity firms are only willing to hold an investment for five years before they sell it.

As an owner of a medical product company, you need to decide whether that is enough time to see your vision through.

Alternatively, with a firm like Cresset that is made up of families of investors, we can have a much longer time horizon. We have the patience to really let a business grow and mature.

HOW MUCH CONTROL WILL THEY DEMAND?

Control can be hard to let go of for any business owner, but that is exactly what many private investments will demand. Whether it is a private equity firm or a large, multi-national healthcare company looking for an acquisition, business owners typically will want a controlling interest in a company so they can do exactly what they want, when they want.

It is absolutely possible to remain independent from the big manufacturers and distributors and find a partner who appreciates and encourages what you have to offer in defining the legacy of your business. Seek out a partner who will let you retain a say in the future of your business.

About the author: John Geis, is a Principal of Cresset Partners, where he leads the firm’s private investment activities in healthcare.


References:

(1) Source: McKinsey & Company, 2017: Pitchbook Data; Pregin: S&P Capital IQ

(2) Source: MedPac: Report to the Congress: Medicare and the Health Care Delivery System, June 2017

Dr. Robert Marema: It’s Time to Prioritize Surgeons’ Quality of Life

Dr. Robert Marema: It’s Time to Prioritize Surgeons’ Quality of Life

Dr. Robert Marema: It’s Time to Prioritize Surgeons’ Quality of Life

July 22, 2019

Let’s not kid ourselves: The surgical workforce is in a crisis.

For starters, the Association of American Medical Colleges forecasts a deficit of between 33,500 and 61,800 surgeons and specialists by 2030.[1]

This projected shortage is especially troubling given an increase in the number of older Americans who need specialty care and services. Retirement decisions of practicing doctors will also have an effect on future physician supply, with more than one-third of all active physicians 65 or older in the next 10 years.

Compounding an impending shortage of surgeons in the U.S. are a number of workforce challenges like burnout and performance-related symptoms.

A report found that more than 90% of hospital executives said they expect their organizations to face a serious talent shortage in the next 10 years.[2]

That said, now is the time for hospital administrators to address the serious issues impacting surgeons so we can help maintain acceptable access to surgical care and improve patient outcomes.

At the heart of these issues are difficult working conditions that result in physical ailments due to repetitive tasks of the job. Physician comfort in surgery must be greatly improved.

Although the patient benefits of minimally invasive surgery are evident, research shows there is a need to improve the ergonomic conditions.

A study by the American College of Surgeons revealed that 87 percent of laparoscopic surgeons suffer from performance-related symptoms.[3] Laparoscopy often requires surgeons to hold a static position of the neck and back for a long period, and frequently uncomfortable position of arms and shoulders to optimize hand held camera and instrument positions and minimize movements within the operative field.[4],[5] Holding of the static posture for prolonged periods of time is the source of increased muscle fatigue and musculoskeletal disorders.

In addition to being physically demanding, being a surgeon in today’s environment brings unique mental and time stressors that are negatively impacting the surgeon and surgical staff workforce.

We have to constantly conduct complex procedures under time pressures within a setting plagued with distractions and interruptions while learning new technologies.[6] There is sufficient evidence that excessive stress can impair a surgeon’s hand-eye coordination while affecting their non-technical skills of teamwork and decision-making, highlighting the important effects of stress within the human factor in surgery.

And burnout among physicians is a pervasive problem that can lead to major medical errors.[7]

It’s astonishing that 40 percent of surgeons suffer from burnout according to an American College of Surgeons study.3 The number of cases performed per year is a stronger predictor of symptomatology than either age or years in practice. This is likely the reason why general surgeons nearly top the list of burnout rates (49 percent) among specialties in the 2018 Medscape Physician Lifestyle Report.[8]

We ultimately must manage our workload and take much needed time off to curb physician burnout, improve our well-being, keep up morale and focus our time and attention on caring for patients. This is a clarion call that we need to take better care of the surgeon so they can take better care of the growing patient caseload.

Perhaps technology advances will also be a solution rather than an added complexity in surgeons’ lives.

The original robotic surgical platform (the da Vinci System) was designed to improve surgeon ergonomics, but also added per-procedure cost that limited the full value robotics can play in today’s value-based healthcare environment. As such, less than 10% of surgery was performed with surgeons in a more ergonomic setting. Today, a new robotic surgical platform referred by some as digital laparoscopy (the Senhance Surgical System) can offer many of the ergonomic and control benefits needed by surgeons at per-procedure costs similar to traditional laparoscopy. That’s a promising, and frankly novel, direction for surgical tools to keep costs low while considering value to the surgeon experience.

The issues that surgeons face today aren’t going away tomorrow or next month. That’s why hospital leadership needs to come together to create a tactical, actionable plan that tackles surgeon burnout, improves ergonomic conditions and makes sensible investments in new technology to help surgeons do their job more efficiently and effectively.

Robert Marema, M.D., is Director of Bariatric Surgery, Flagler Hospital Bariatric Center, Saint Augustine, Florida


References

[1] https://news.aamc.org/medical-education/article/new-aamc-research-reaffirms-looming-physician-shor/

[2] The Economist Intelligent Unit. Beyond the tipping point: hospital resilience revisited. https://healthcare.prudentialretirement.com/_assets/documents_pdfs/hcflre5_eiusurveyhighlights2017_wcag.pdf

[3] Park A, Lee G, Seagull FJ, Meenaghan N, Dexter D. Patients benefit while surgeons suffer: an impending epidemic. J Am Coll Surg. 2010;210(3):306-313.

[4] Berguer R, Forkey DL, Smith WD (1999) Ergonomic problems associated with laparoscopic surgery. Surg Endosc 13:466–468.

[5] Esposito C, Najmaldin A, Schier F, Yamataka A, Ferro M, Riccipetitoni G, Czauderna P, Ponsky T, Till H, Escolino M, Iaquinto M, Marte A, Saxena A, Settimi A, Rothenberg S (2014) Work-related upper limb musculoskeletal disorders in pediatric minimally invasive surgery: a multicentric survey comparing laparoscopic and sils ergonomy. Pediatr Surg Int 30:395–399.

[6] Edgar M, Mansfield A, Thomson J. Surgeons under stress (II). Update following the college seminar/workshop on pastoral care. Ann R Coll Surg Engl. 2000;82:87–88.

[7] Blendon RJ, DesRoches CM, Brodie M, et al. Views of practicing physicians and the public on medical errors. N Engl J Med. 2002;347(24):1933-1940.

[8] Peckham C. [Accessed October 15, 2015];Medscape Physician Lifestyle Report 2015. https://www.medscape.com/features/slideshow/lifestyle/2015/public/overview

Did NICE Lose its Marbles on the AAA Guidelines? Sultan Speaks Out

NICE AAA GUIDELINES: At the First Frank J. Veith International Society meeting held at the University Club in New York City, Professor Sherif Sultan, MB BCh MCh MD FRCSI DEVS FISVS FASA, DMD FRCS/Vasc EBQS/Vasc FAARM FACS FEVBS PhD presented the state of the NICE AAA Guideline and how it will impact the future of Vascular Surgery.

Professor Sherif A. Sultan* told Medical Device News Magazine: “Conflict of interest and personal agenda are one of the main reasons of such incompetence.” In the below-noted article, Dr. Sultan renders his thoughts and concerns.

In May 2018 the National Institute for Health and Care Excellence (NICE) released a draft for consultation of its updated guidelines for Abdominal Aortic Aneurysm (AAA) diagnosis and management. With a typical “Brexit, house of commons scenario” the publication of the NICE AAA document was postponed three (3) times.

The NICE advice impedes UK AAA management and vigorously withdrawing the predominant intervention for a life-threatening condition, notwithstanding the ample proof of safety and effectiveness of EVAR. This is the first time in the history of the NICE Guidelines that a life-saving procedure has been frozen because of a defectively computed UK economic model.

The NICE committee had used an economic analysis model, which is not validated outside the UK. The UK delivery of vascular services depends on the combined use of a full Vascular Surgery team and a full radiology workforce to run aortic repair cases, which is hardly used in the majority of other countries.

The interpretation of the evidence was undertaken by a committee of vascular surgeons and one radiologist and although one has to respect their professional integrity, there is no doubt that unconscious bias had influenced the committee’s output.

The aortic practices of those involved, whether mostly open or endovascular or no AAA practice at all, should be made transparent, so an enhanced indulgence of how their conclusions were drawn. Moreover, a particular agenda to set up a new EVAR III trial by one member and the conflict of interest and divergence of one of the senior authors with some of his very successful vascular colleagues came to the attention of the public. When the evidence is manipulated, the interpretation of such evidence is arduous and likely to be prejudiced by the favoritism of the failed committee.

NICE justified its evidence synthesis on the basis of high EVAR maintenance costs and reduced durability, using only evidence from historic four randomized trials of OSR versus EVAR, which recruited patients between 1999 and 2008 with a combined study population of only 2,783!

The utmost provocative recommendations are in relation to the use of EVAR versus open surgical repair and post-EVAR surveillance. Elective EVAR is not recommended except for complex FEVAR/ BEVAR/CHEVAR within a randomized clinical trial, and CT-based surveillance is mandated.

However, in January 2018, in total contrast to NICE, the UK health technology assessment had publicized that endograft type and center experience impact outcome and EVAR offers operative mortality advantage over or in patients fit for both procedures. Among patients unfit for open repair, EVAR is associated with a significant long-term reduction in AAA-related Mortality. EVAR has an early survival benefit up to 8 years but lower late survival benefit compared with OR.

In a total NICE denial situation, the UK data for para-renal open AAA repair reports a mortality rate of 14%, which is one of the highest in the world! Although, the national vascular registry for complex open repair versus EVAR, documented that mortality is more than five (5) times higher and three (3) times likely to be readmitted to critical care and twice as likely to return to theatre in open AAA Repair. NHS does not have the infrastructure, the ICU beds or days to offer a safe open UK-AAA program.

Adding salt to a self-inflicted wound, The Interventional Radiology Committee at The Royal College of Radiologists in the UK, had inveterate that the vast majority of EVAR UK procedures are currently done by interventional radiologists, and any reduction in EVAR caseload will make it impossible to gain or maintain EVAR skills. The Interventional Radiology Committee dictated a pragmatic approach which dictates that the limited number of allowed EVAR cases post-implantation of NICE, must be performed by Interventional Radiologists only, in order to concentrate expertise, and vascular surgeons are dismissed as dinosaurs heading to annihilation.

The inevitable consequence of the removal of elective EVAR will be a marked reduction in the number of practitioners able to train or maintain competence to perform the procedure. This will result in loss of patient choice in having EVAR in the emergency setting, with consequent direct increase in mortality in the ruptured AAA patient. This prohibited exploit of EVAR, will lead to open surgery of any ruptured AAA, which is akin to a criminal act.

The guidelines will result in loss of patient choice in the elective setting, where the NICE Committee have arbitrarily chosen improved long-term outcomes seen with open repair to be more important than improved shorter-term outcomes seen with EVAR; this in a population of patients for many of whom long-term survival is not a realistic outlook and therefore irrelevant. Mostly AAA patients do not survive post fifteen (15) years.

The NICE committee concedes that EVAR mortality is superior in the peri-operative period and remain equivalent up to eight (8) years, beyond this open repair has demonstrated superiority. However, a window from eight (8) years to fifteen (15) years is based on few scanty patients and it is not statically powered, moreover, the lack of reporting of re-interventions for open repair, rather than a lack of occurrence of the need for re-intervention.

Although the committee accepts that this is old data, they declare that they found no evidence that newer devices perform better than their earlier counterparts.

Patients who are unsuitable for open repair are not afforded any chance of intervention by the NICE committee largely due to economic reasons and is based on a poorly run EVAR 2 Trial. Re-evaluated EVAR 2 data using a rank-preserving structural failure time (RPSFT) statistic to account for cross-over between treatment groups which changes completely their numbers and subsequent conclusions. NICE recognized the data and commented that credible assumptions underpinning the RPSFT cannot be empirically validated!

The definitive recommendations is in favor of open surgery and it does not encourage physicians to take any patient factors into account when discussing treatment options with patients and goals for shared decision making.

This is in total contrast to the NICE Charter in 2017 which “Highlight the importance of balancing professional judgment and expertise with the needs and wishes of people receiving care”. This lack of patient choice is a human rights infringement akin to a dictatorship.

 

Read Sultan’s previous NICE related article here.

*Sultan is Professor of Vascular & Endovascular Surgery, National University of Ireland, Chairman of Western Vascular Institute, University Hospital Galway NUIG & The Galway Clinic RCSI