More Related Content
Similar to UCSF Life Sciences Week 2 devices
Similar to UCSF Life Sciences Week 2 devices (20)
More from Stanford University
More from Stanford University (20)
UCSF Life Sciences Week 2 devices
- 1. UCSF Lean Launchpad For Life Science
and Healthcare Startups
Medical Device Track
Class 2
Customer Segments
October 8, 2013
Allan May
Chairman, Life Science Angels
amay@lifescienceangels.com
UCSF Lean Launchpad - Allan May ©
- 2. MEDICAL DEVICE MARKETS ARE OFTEN
- BUT NOT ALWAYS - MULTI-SIDED
MARKETS
The patient is the beneficiary of the device or
service and must receive a clinical benefit
The physician is the device user
The hospital or physician practice is the
economic buyer
Medicare or private insurance payor is the
ultimate influencer of what gets purchased
The FDA determines what can be legally sold
CMS determines what Medicare pays for
UCSF Lean Launchpad - Allan May ©
- 3. MEDICAL DEVICE CUSTOMER
SEGMENTS IN A NUTSHELL
FOLLOW THE MONEY!!!
Understand whether the device is reimbursed
Being covered in the hospital DRG is NOT
reimbursement, it is an expense
Unless you are replacing a device currently being used
within a DRG at a lesser cost
Determine who the payor is
Understand the funds flow process
Understand who gets paid
Same physician, or shifting specialties (and so some
other physician will no longer get paid)
UCSF Lean Launchpad - Allan May ©
- 4. PHYSICIANS AS CUSTOMERS?
Physicians often decide what device to use
Depends on where the physician works; how she is paid
Hospital-based physicians are influencers (at best)
The ability of physicians to influence hospital purchasing
decisions is evaporating
Novare vs. Intuitive Surgical
Same cost versus higher cost – Figure 8
Private practice physicians are purchasers
Actually multiple physician specialties often influence the
course of therapy of a patient
EG, LCP Pacemaker - GP; cardiologist; interventional
cardiologist; electrophysiologist
Physician turf battlers are common
E.g., cardiac surgeons versus interventional cardiologists
UCSF Lean Launchpad - Allan May ©
- 5. PATIENTS AS CUSTOMERS?
Competing trends are at work
Patients are far better informed and increasingly request
specific devices and procedures
Can impact where substantial data exists as to clinical outcomes
and benefits
Prostate or breast cancer therapy choices
But, the evidence requirement for new devices or procedures is
daunting
Physicians often recommend existing or standard devices and
procedures until the adverse effects of new technology (and
how to handle those effects) are well known
Out-of-pocket or self-pay usually dooms device business
models
Cosmetic versus therapeutic procedures
Check out impact of reimbursement and market size – InvisiAlign
http://provider.invisalign.com/Pages/pay.aspx
UCSF Lean Launchpad - Allan May ©
- 6. HOSPITALS AS CUSTOMERS?
Hospital purchases are increasingly governed by
“New Technology Committees”, who’s purpose is
to keep new technologies out of hospitals
Hospitals purchase devices that are reimbursed
Hospitals will only purchase devices that claim to
lower costs where those cost benefits are proven
by hard data
and often still require onsite trials to verify data
generated elsewhere
Who is the Customer in the hospital?
What exactly is the purchasing process, and who
all are involved in that process?
UCSF Lean Launchpad - Allan May ©
- 7. UNDERSTANDING CUSTOMERS REQUIRES
UNDERSTANDING REIMBURSEMENT
Existing reimbursement code versus new code
versus not reimbursed
Re-engineer your product or solution if possible to
still achieve Product Market Fit while falling under
an existing code
BTW, ditto for falling under 510k versus PMA (more later)
Understand the length of time it takes to get a new
code and when you are able to effectively start
Understand who owns the patient and the physician
referral process
UCSF Lean Launchpad - Allan May ©
- 8. INTERVIEWING PHYSICIANS
You need to view one or more target procedures to be
effective in speaking with physicians
Take a prototype or mockup to hand/show them
Animations and CAD CAM is good but not good enough
Physicians are all difficult to interview effectively, but
surgeons tend to be harder than non surgeons
Physicians are scientists and tend to answer exactly what is
asked, not interpret what you meant to ask
Physicians often believe they are better than their peers
and so don’t experience the complications or adverse
events that others might
How do they perform the procedure? How would they do it better?
What changes would they like? Why
UCSF Lean Launchpad - Allan May ©
- 9. PHYSICIAN – PATIENT GAINS
Same or better clinical outcomes in a less invasive
setting
Invasive → less invasive → non-invasive
Often involves a reduction in expense
Some procedures move out of hospital surgery to outpatient
and then back
Opens up previously untreatable patients to therapy
Increases procedure speed (reduces complexity or
time)
Count steps in the existing procedure versus yours
No Harm, No Foul solutions
UCSF Lean Launchpad - Allan May ©
- 10. PHYSICIAN – PATIENT PAINS
Reduces mortality
Reduces morbidity
Complications, adverse events
Increases durability of procedure
Balloon angioplasty → stents → Drug Eluting Stents
But re-occurrence can generate additional physician revenue
Prevents losing patient to another specialty
UCSF Lean Launchpad - Allan May ©
- 11. MEDICAL DEVICE MARKET TYPES
For Physicians and Hospitals
Existing
Better clinical outcomes; same physician
If moves procedure to new physician (cardiac surgeon to
interventional cardiologist), will provoke a turf war between
supporters and saboteurs
Carotid stenting
Resegmented
Niche products aimed at specific patient populations have long
been successful
New
If and when reimbursed, the solution is embraced
Clone
Often done regarding procedures; rare in devices due to IP
UCSF Lean Launchpad - Allan May ©
- 12. MEDICAL DEVICE COMPANIES
AS ULTIMATE “CUSTOMERS”
Almost all innovation in medical devices resulted in
acquisitions by major strategics
In-house R&D innovation is negligible
Is it still possible to build a major standalone medical
device company?
Will there be another J&J, Medtronic, GE?
Manufacturing is local; marketing, sales and customer
support are global
What pain or gain do you provide to the acquiror?
Why can’t they just do the same thing without you?
UCSF Lean Launchpad - Allan May ©
- 13. MEDICAL DEVICE MARKET TYPES
For Major Medical Device Companies
Existing
Better clinical outcomes; same physician
If moves procedure to new physician (cardiac surgeon to interventional
cardiologist), can fall outside of ability of major companies to leverage
existing sales and marketing infrastructure
Resegmented
This is a good place for startups
But major device companies are pretty good at this also
The key is to spot holes in their IP
New
Surgeons versus interventionalists
The Holy Grail for startups
Pioneering often requires startup to build its own sales and marketing
channel to enable the major company to enter the market
Clone
Probably not a place for startups to play
UCSF Lean Launchpad - Allan May ©
- 14. GAINS AND PAINS TO ACQUIRORS
Leverage existing corporate resources and customer
call points
Gain entry with new widget to sell rest of line
Facilitate upselling
Increase market size
Add to sales and profits
Don’t cannibalize existing markets
Eventually this will fail as reverse innovation becomes a
reality
Create new markets
Increase share relative to competitors
UCSF Lean Launchpad - Allan May ©
- 15. UCSF Lean Launchpad For Life Science
and Healthcare Startups
Medical Device Track
Class 2
Customer Segments
October 8, 2013
Allan May
Chairman, Life Science Angels
amay@lifescienceangels.com
UCSF Lean Launchpad - Allan May ©