Becoming an orthopedic innovator: Strategies to monetize your ideas
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Orthopedic surgery is fortunate to be one of the most dynamic and evolving fields in medicine and it is no surprise that many groundbreaking medical ideas have come from surgeons.
Orthopedic surgeons have the opportunity and burden of being on the front lines of today’s war against musculoskeletal injuries, a perch that often reveals need gaps in our technologies and delivery models. As such, it only makes sense these words continue to ring true: Necessity is the mother of invention. In this column, we discuss strategies that surgeons can use to cultivate their innovative ideas in orthopedic surgery and explore entrepreneurship, as well.
A unique perspective
Orthopedic surgeons are in the trenches of today’s musculoskeletal health care model and experience real challenges seen by many others in medicine, a field worth $3.5 trillion annually in the United States alone. As a physician, you have the unique perspective of encountering problems before others and identifying potential solutions. Additionally, your training and expertise provides you with an innate common sense that life science companies often spend hundreds of thousands of dollars replicating through field research, extensive focus groups and complex consulting arrangements. Millennial surgeons, including those in residency, may even have the unique and valuable viewpoint of a surgeon coupled with a familiarity with advanced technologies, such as artificial intelligence, coding and deep learning. Subsequently, it is no surprise that innovations often arise from younger surgeons early in their practice.
Innovation, licensing
Few fields in medicine possess the dynamism in medical device innovation that is found in orthopedic surgery. Despite interest in new innovative technologies in orthopedic surgery, the pathway for a surgeon to bring a new medical device invention to market can be challenging. Even if the idea is intriguing, the surgeon must successfully navigate the realities of limited market access and device development pathways to make the invention a reality. For example, in well-established markets, market stalwarts often lock up their customer base by making investments in sales and distribution networks, as well as buyer/supplier relationships that cannot be easily accessed by smaller start-up companies. Similarly, costs to create a technology can require a staggering investment of capital and time. Given these circumstances, it is no surprise that many physician innovators choose to bring their product to market through an alternative pathway to development, such as partnership, licensing or sale/acquisition.
In device development partnerships, entities share responsibility for the development and/or commercialization of an idea or invention. A licensing arrangement involves the transfer of an idea or invention from the innovator to a licensee in exchange for ongoing royalties and/or other payments.
Licensing arrangements can be exclusive, non-exclusive or sole. Although the prospect of royalty payments may be appealing to an innovator, licensing arrangements often come with a loss of control in management and manufacturing which could limit commercialization potential. As such, nothing is more important to the success of the licensing arrangement than ultimately choosing the right entity with which to contract.
Finally, in some cases, orthopedic innovators bring their ideas to market through an outright sale of their technology to an existing company. If this sale happens at an early stage, the buyer usually obtains the rights to the technology and intellectual property (IP). If the acquisition happens at a later stage, however, the buyer frequently will acquire all assets of the start-up company. Large companies acquire smaller companies and technologies for various reasons, but often do so to strengthen their patent portfolio, protect current or anticipated products through IP, expand into new areas or block market access for competitors.
Innovation in health care delivery
The application of 21st century technologies to modern orthopedic practice will always be disruptive as it is part of the digital revolution happening throughout medicine. For innovators in orthopedic surgery, focusing on a cloud-based, software-based or web-based solution, as opposed to a medical device development, may be a more impactful and easier means for improving our antiquated health care delivery model.
Unlike medical device development, which necessitates costly prototypes, quality assessments and FDA approval, software platform development typically requires a software, web or app designer to make the idea a reality. The downside of these pathways is it may be more difficult to protect one’s idea via IP than with a medical device or pharmaceutical product. Additionally, cultivating a large user base to gain traction with digital technologies may also be challenging. Regardless, any solution that can creatively leverage technological advances to improve access, reduce cost and improve transparency will always have a role to play in today’s health care environment.
Conclusion
The practice of orthopedic surgery will always need ideas from innovators to improve the quality of care delivered to patients. Orthopedic surgeons, including millennial surgeons in residency, have the opportunity and burden of being on the front lines of today’s musculoskeletal health care delivery system, a perspective that often reveals problem areas before they are readily apparent. Support for orthopedic surgery inventors can be found through OrthoFounders, a collaborative network of orthopedic surgeons who founded independent companies to address day-to-day problems faced by those in our field.
- References:
- Herr GL. 6.4: Licensing and Alternative Pathways. In: Zenios S, Makower J, Yock P, eds. Biodesign: The Process of Innovating Medical Technologies. 1st ed. First edition. New York, NY; Cambridge University Press; 2010.
- National Health Expenditures 2017 Highlights. CMS. www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/Downloads/highlights.pdf
- Wealth Protection Planning for Orthopedic Surgeons and the newly published Wealth Planning for the Modern Physician: Residency to Retirement are available free in print or by e-book download by texting OT20 to 555-888 or at www.ojmbookstore.com. Enter code OT20 at checkout.
- www.orthofounders.com
- For more information:
- Sanjeev Bhatia, MD, is an orthopedic sports medicine surgeon at Northwestern Medicine in Warrenville, Illinois. He can be reached at email: sanjeevbhatia1@gmail.com.
- David B. Mandell, JD, MBA, is an attorney and founder of the wealth management firm OJM Group www.ojmgroup.com. You should seek professional tax and legal advice before implementing any strategy discussed herein. He can be reached at mandell@ojmgroup.com or 877-656-4362.
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