1. Commercialization of an IRB
Workshop W870 IRB Best Practices
MAGI East 2016
Parker Nolen, MBA, CCRC, CIP
Director
Research Compliance & Regulatory Affairs
Community Health Network

2. Identify Market Consolidation
Implications for the Local IRB
Understand Basic Concepts of Management Theory
Identify SWOT
Identify a Local IRB’s Built-in Advantages
Cost Analysis Case Study
Understand Net Present Value Concepts
Objectives

3. I am from a
A. Hospital-based IRB
B. Medical Academic Center IRB
C. Commercial IRB
D. Sponsor
Polling Question
3

4. Then…

5. 5
Now…

6. ...Nearly 200 airports, most of them tiny and many in remote places,
have lost air service entirely since 2008....Airlines have made a
deliberate decision to forgo certain markets...Their new business
model is leaving communities disenfranchised and disconnected from
the global marketplace.
(Mouad, Jad. "Lost Jobs, Lost Flights." New York Times 09 July 2011)
Result of airline consolidation
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7. 7
What do we do?

8. 2016
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9. 20XX
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10. Implications for Local IRBs
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• Will Local IRBs have relevance?
• Will the field remain “Professional”?
• Will we have access to Sponsored research?
• Will our patients have access to novel points of care?
Yes! But…
Local IRBs must be strategic in their thinking and
creative in approaching their operations and their
cost/revenue analysis…

11. • IRB consolidation will continue into “2nd Tier”
• SOME form of the Single IRB Review will survive from NPRM
• IRB Segment of will de-stabilize in 24-36 months
• Institutionally-based IRBs will commercialize to ensure
access to sponsored research
• New Revenue models will emerge
• New Partnerships will emerge
• May be some interest from DOJ regarding anti-trust in the
commercial IRB sector
Industry Forecast (Private Sector)
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12. SWOT Analysis
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13. • Figure out what your IRB wants to be
• Porter’s Three Strategies
• Figure out how to do it
• Strategy vs. Tactic
• Develop a relationship with Finance
• Identify your Competitive Advantage
• Calculate your Net Present Value (NPV)
Addressing the SWOT
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14. Porter’s Three Strategies
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Cost Leadership Differentiation
Niche (Focus)
Stuck in the Middle

15. • Know what your product costs!
• How much does it cost to run a meeting?
• How are our overhead costs allocated in the
organization?
• Can they be shared across a wide population/large
number of regions or departments?
• Develop a close relationship with Finance
Department
Quick note about Financials…
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16. Polling Question
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I know how much it costs to run my IRB meeting.
A. Yes
B. No

17. • It is exactly what it sounds like
• The low-cost leader in any market gains competitive
advantage from being able to produce the
product/service at the lowest cost.
• This is an easy strategy that can be leveraged by
Local IRBs!
Cost Leadership
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18. • Allows companies to charge high process and focus
on a volume that generates a better margin.
• This will incur additional costs in creating the
competitive advantage.
• Example: Creating an oncology-only IRB
Differentiation
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19. • Identifiable and unique needs
• Sufficient size
• Difficult, but doable!
Niche (Focus)
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20. • Identify capability in which your IRB excels.
• Focus on opportunities in that area, letting others
go.
• This capability is difficult for others to duplicate.
• Involves the skill and coordination of people across
a variety of functional areas or processes used to
deliver value to the customer.
Core Competency
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21. Strategy vs. Tactic
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Strategy
• Is the “What”
• Defines goals
• Larger plan made up of
several tactics
• Example:
• Make our Local IRB
desirable for Sponsors
to use by offering
multi-site approvals
Tactic
• Is the “How”
• Specific actions
• Implements the strategy
• Example:
• Aligning with another
Local IRB through
merger or reciprocal
agreement

22. Put another way:
Source: http://www.uxmatters.com/mt/archives/2015/02/strategy-versus-tactics.php

23. Polling Question
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A capability in which you excel and is difficult for
others to duplicate is a:
A. Cost Leadership Strategy
B. Tactic
C. Core Competency
D. Niche (focus) Strategy

24. • How much does it cost to run a meeting?
• How are our overhead costs allocated in the
organization?
• Can they be shared across a wide region/number of
departments?
• What are we doing that does not need to be done?
Things to Immediately Understand
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25. • Cost and Overhead Allocation
• Work with Finance people to spread costs over
the entire institution/network as a shared
service.
• May not be possible, but if you are a multi-site IRB, it is
probable.
• Not an easy argument – Be Prepared!
• Marginal Costs are Low
• Allows for innovative pricing/revenue
management strategies.
Local IRB’s Built-in Advantages:
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26. • Scenario # 1 – Outsource ALL IRB functions
• Scenario #2 – Create a Revenue Stream/Cost Offset
(Commercialize)
• Actual Bid Details:
• $326,000 per year
• $50,000 transfer cost (one-time charge)
• Expedited/Exempt studies will be billed to the
hospital, with $0 revenue back to the hospital for
industry trials
• Steady state of 150 protocols
Cost Analysis Case Study
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27. NPV Definition and Formula
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“r” represents the rate of return. It is determined by industry and usually ranges from 8% – 15%.

28. • Bid Details:
• $326,000 Annual
Operational Cost
• $50,000 Transfer Cost
• Expedited/Exempt
Studies billed to hospital
• 1 FTE @ $50,000
Scenario #1 – Outsource Completely
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Completely outsourcing would be an expense of $1.6M! And
this does not include the additional $2M malpractice
insurance required by the central IRB.

29. Yearly Interst Rate 2.00%
Cost of Investment ($710,048)
2015 Revenue $18,000 $7,500 $180,000
2016 Revenue $30,000 $12,500 $300,000
2017 Revenue $42,000 $17,500 $420,000
2018 Revenue $69,000 $22,500 $540,000
NPV ($560,243) $766,693 $2,069,521
Software
Lease Cost per month $626 Initial Review $1,000
Annual Lease $30,048
Salaries* $130,000 $520,000 Renewals $500
Fringe $156,000
Supplies $1,000 $4,000 Amendments $250
Cost of Investment $710,048
Cost of Investment over 4 Year Period Fees
Assumptions:
• 1 New Protocol per Month
• $1000 - Initial Review
• $500 - Renewals
• $250 - Amendments
• 0 Renewals Year 1
• 2 Amendments per
protocol per year
• 2 FTE @ $130,000
• Software Lease
Scenario # 2 – Create a Revenue Stream
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Keeping the IRB functions in-house and creating a revenue stream has
AVOIDED an additional expense of $907,952 over the four-year period

30. • Sponsor buy-in
• Accreditation
• 501(c)3 (non-profit) status justification
• Benefit for the community
• Not profit-driven – this is a cost-offset model
Obstacles
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NOTE:
Local IRBs are NOT sitting on a hidden Gold Mine…
You will be a revenue-positive cost-offset - ONLY

31. 2013
Snapshot
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2016

32. Conclusion
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• Keep abreast of industry trends
• Know your SWOT
• Identify your Core Competencies
• Identify your Competitive Advantages
• Identify your costs/potential revenue
• Build a relationship with Finance
• Consider Alternative Models

33. Contact Information
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Parker Nolen, MBA, CCRC, CIP
Director
Research Compliance and Regulatory Affairs
PNolen@eCommunity.com
(317) 355-5678