Daniel Hawkins, Avail MedSystems - AMOI Studio Interview | LSI USA '23

Transcription

Ben Glenn  0:11  

My guest is Daniel Hawkins. LSI, 2023 Daniel, thanks for coming by the studio.

Daniel Hawkins  0:17  

Appreciate the opportunity. Good to see you again.

Ben Glenn  0:19  

You got up early. You were with Fred Moll, and Henry Peck, LSI's very own Henry Peck starting off day two of LSI. How did your panel discussion go?

Daniel Hawkins  0:29  

I thought it went great. I mean, you never know how these things are necessarily going to go. It was a random walk through a little bit of history and a little bit of what future could bring that. I thought I thought it wouldn't Great. folks tell me that. So I'm pleased. 

Ben Glenn  0:40  

And you were talking about, really? How is how is digital? How is data coming in to the OR? And I think I think you guys went a little bit wider than that in sort of healthcare generally. So what do you what are you seeing on that kind of a digital data trend for all of us that are living and breathing inside of med tech.

Daniel Hawkins  0:58  

So one of the key sort of foundations of the digital or started with what Fred did, right, I just I had the privilege and opportunity to join him early at Intuitive Surgical and all of the digital alar, arguably was kicked off by surgical robotics. Of course, as you move past surgical robotics into all the enablement with AI, and machine learning and computer vision, you're now in a whole different place. And robotics is not just Intuitive anymore. It's dozens of other soft tissue robots and hard tissue robots, meaning orthopedic, we went into where could you end up with that? Ultimately, what technologies can be augmented into that? But a key element of what's in all of that is how do you actually take the technology and turn it into clinical practice? There's an implementation problem with all of that. It's very, very difficult to change workflows, you bring in technology, now you have to adopt the workflow associated with that. And there's a lot of obligations for industry to be able to enable that. It's also incredibly expensive to do all of that. So we covered a lot of those topics.

Ben Glenn  1:57  

Was there anything else in the panel that maybe you just ran out of time? Or you had one more thing to add and didn't get to it?

Daniel Hawkins  2:03  

Yeah, you know, we were chatting about this notion, just philosophically, just because you can do something with technology, should you Fred brought up a really interesting point associated with that. There's a point where you could go fully autonomous with some robotics. But then there's that line of Judgment, when the human needs to be involved or machine can take over and technology would have us continue to push farther, the analogy he used as driverless cars, right? So the first 90% of driverless cars, makes you feel like you can do it, then the last 10% It's a little difficult. It's sort of like golf. Right? So the last sort of three or four points in your handicap are a heck of a lot harder than getting from 100 to 80. Right. So from 80 to 72, is a heck of a lot harder, the exact same analogy here. And you know, I would say, just because you could with technology doesn't mean you should we have a responsibility. And that responsibility is to the patient on the table, the privacy around the patient on the table. You know, one of the things Fred brought up is the value of recording. Absolutely. I totally agree with that. One of the challenges, of course, is there's patient privacy in that it's a beautiful example, you could do it, people do it with our system every day, but they're doing it with appropriate approvals and what have you. And that's how we look at that same is true for technology. You shouldn't do something with a robot just cuz you can, you shouldn't do something with digital enablement, just because you can, at the end of the day, it's about are you Advancing Care, either today, tomorrow, or at some point in the future because of the continuum of digital enablement? And are you able to do it in a way that is respectful for the end game of this? And that is, are we improving healthcare,

Ben Glenn  3:48  

and I love the, the what I keep coming back to when I look at our major regulated industries, is there's a reason why the regulations exist. And I think particularly for health care, you know, there's a there's a huge guardrail that prevents you from you know, allowing technology just to go whole hog, open field running just, you know, Turbo thruster, everything you can do. But as you say, that is not what you should do. And actually, legally, you're not allowed to do. So we have these third rails for a reason. And I always think that's, I always kind of, I always questioned a lot of the young entrepreneurs that I meet, I want to be disruptive, then we're going to we're going to shatter this I'm like, really, because I think we don't want you to do that. And you know, it's a slippery slope. So it's a so I'm really glad that you, you and Fred and Henry hit on that theme. It's so elemental, and yet people skip right through it. And we saw that with, you know, Google and Apple trying to just charge into healthcare. Yeah, and they hit these third rails and Oh, what's this? Why do you have this? What's this for? Yes, care system chief.

Daniel Hawkins  4:57  

Exactly. So the agency FDA He does a phenomenal job of making sure we stay within guardrails of safety and efficacy. And there always has to be a risk, reward benefit trade off that happens. And yes, you can complain about the agency. The reality is they're doing a phenomenal job of making sure that the right technologies get through. The same is true within privacy, and HIPAA and patient privacy. Everybody loves data. The reality is on the data side, who owns that? Is it the patient that owns it? Is it the hospital that owns it? Does the industry on it, I would argue industry probably doesn't, but they can in partnership with the hospital. That's another example of all of that going a step farther, you could do things with surgical robotics, you could do things with visualization, you could do things with artificial intelligence, should you? So really critical question, Should you from the standpoint of clinical care, should you from the standpoint of patient privacy, all of that being true, but one of the things we also talked about on the panel, is this whole notion of technology can advance at leaps and bounds and it's advancing faster than we as a medical device industry can bring into the continuum of care, you have to get the clinical community comfortable enough with technology to adopt, there's only one way that happens, people, people in rooms to be able to make that optional that transition happen. I was actually the very first one to sell an intuitive surgical robot it was in in Dresden, Germany. And the deal I had with the then CEO of Intuitive Surgical, Lonnie Smith was, I had to go to Dresden, Germany and live there, until we were able to get that clinical group over the hump of doing close chest cardiac bypass in 45 minutes. That was the job. The last procedure before then was done in 12 hours. So we'd go from 12 hours and 45 minutes, there's a workflow problem, right? We had to solve a workflow problem. I wasn't allowed to come home until I did that. So I lived there for a month, I get a full appreciation of it of how difficult this stuff is. Fast forward from there. Yes, they did a great job. They did phenomenal procedure, flow changes and everything. Fred said up on the panel, something's really important. He was early in Mako surgical, phenomenal technology. What Maurice Frey and the team did really outstanding stuff. But they ran into a problem. That problem is that they needed to have people in 100% of procedures to run the robot. That's amazing, that commercial model is flat broken, unless you can generate more revenue during the procedure. So it was a public company, they ended up having to be acquired ultimately, because they couldn't make the business end of it work. Stryker made the business out of it worked phenomenally well, because they could sell implants that were enabled by the Mako robot. And that turned out to be a beautiful marriage of capability. And what Robert Cohen and that team has done over there is absolutely fantastic. They leverage the robot to enable that. But guess what, they still need people in the OR. Right? That's an amazing thing. When you think about the implementation of technology. Now, you know, Henry asked me, Why just start Avail, right in the prep and all that, and we touched on a little bit on stage, one of the key reasons is enabling that type of technology dissemination is a business model that's upside down from the standpoint of people make is a perfect example. Avail allows us to be able to bring that expertise, bring in that technical support that clinical support from industry, into the room to enable the adoption of the very technologies that we're here trying to do in a digital OR world. So that's, it was a fun discussion.

Ben Glenn  8:40  

Yeah, what a lot of the themes that you're hitting on, when I when I, I speak a lot about innovation, I write about innovation, you know, my my content site is called a matter of innovation. And I go back to sort of like old things, and one of them is the Oslo manual. So back in the 90s, right, late 80s, right. And even like Peter Drucker, and what I think we're seeing in healthcare is you can have innovation, it can be a new thing, it can also be a very different way of conducting your business. And I think if you look at the way approval is happening, so approval, FDA clinical trials, clinical trials are being shattered right now by Walgreens, trying to move clinical sites out there, how people are now thinking very ingenious ways about covering reimbursement, delivery, like, like you look at Avail, delivery of delivery, does that mean a person is there? Does that mean there's a is there an AR VR headset there? What is delivery even mean? Now? I think we're coming into this, like, I my whole thing, let's expand the definition of innovation. It doesn't necessarily have to be sort of a deep tech play. It's, it's got to be married up with maybe it's maybe the first thing you need to do is revolutionize your business model. What's going on at Avail that you think's enabling those kinds of changes, so

Daniel Hawkins  10:00  

That's actually the whole reason why I started the company was to do exactly what you just described. My last company being Shockwave, you're familiar with that when we chatted about that one in the past, I left in 2017, because I saw that the industry needed to have a new business model to be able to support the commercial operations around all the technology that was coming. And I don't mean digital or technology, I mean, even TAVR, it's perfect example, early stages of transcatheter aortic valve replacement, you need to have bodies in the room. And it limited the adoption of the technology. So there's two problems with that, one fewer patients can get it, then otherwise need it until you've reached an ability to to to penetrate the market in that way. And that is people dependent. And the second one is, as a practical matter, it's extraordinarily expensive. Right? There's limitations as to what you can actually do with that. So we actually at Avail, what we decided to do was take consumer related technology, fine tune and optimize it for the environment of procedural healthcare. And then I've wrapped a whole bunch of software around that that is proprietary, right? Because coming from 25 years of experience in the medtech space, and optimize that for one simple purpose, high volume, repetitive remote engagement, because a business model needs to change to exactly what you just described. So what we found out over the past couple of years, we've got north of 50 manufacturers on our platform right now, the original vision was we're putting a phone booth in the operating room, and everybody can use the phone booth, right? If you remember, you can use a fumble. It's just fine. Everybody started to dabble in, wow, this is really cool. They compared us on other technologies. And they found out that a hardware software is the best way to do it. And so we got judged against other technologies, and they loved ours and went forward with ours. And then they came to us and said, No, wait a minute, we have a problem. Okay, what's problem? The problem is that we want to use your technology in a way that would be competitively disruptive. So great. Go ahead. No, you're Stan, we want to use it in a way that if we get our customers used to using your platform, to engage remotely, that's a business process change we have with them. We don't want our competition to go right behind us and say, Oh, we can do that too, because we're a member of Avail. So Daniel, can we do some exclusives? So we resisted that initially, and I realized, probably has to happen. And then it really did happen. So I sat down with the very first one we did was with Dan Falls is the president of Medtronic Neurovascular. And the only reason I decided to do that is because Dan invited me to a conference, we sat down for a beer in Jackson Hole, Wyoming. I went there just to have that conversation. And then he said to me, Daniel, the reality is we're the number one neurovascular business in the in the industry, in the largest med tech company in the world. And we're getting nibbled by smaller players around the edges of things, we need to change our business model. And I want to do that around remote. And the only way I'll do that is if I can have it exclusively. And we spent another hour chatting about it at the end of that whole discussion it boiled down to he's going to change his business model to do exactly what I set up, Avail to do? And I thought, Okay, I'm going to advocate to my board, and we decided to go ahead and do that. Right. So as soon as we did that, when we kicked the Hornet's Nest, we kind of hornet's nest. Well, it turns out that if if everybody that that that was trying our system out, was interested, ultimately, but didn't tell us they were interested in exclusives, we enable an exclusive. Now they're coming at us, right? So it starts to get pretty interesting. So you know, at that point, we did one, we announced it, and my phone started to ring. And I start to get messages saying, Can you do that in this clinical specialty, I don't want the whole specialty but I want these 12 hospitals, or I want these 100 hospitals. And if we could do a deal around those, and I want to lock up my competition and and in doing that we've seen some business convert. So to your point of business models, a couple of our manufacturing partners used remote as a way to win business competitively, they'll flip the 2080 deal to an 8020 deal, because they're promising to constantly coverage, 24 hours a day, seven days a week using remote and generate hundreds of 1000s of dollars of incremental business when they don't pay us but a fraction of that for the service opportunity. But they were able to win an account and win another one and a win another one. It's happened in orthopedics has happened in general surgery, right? So you just take a look at the capability across this. That's a business model change. And it's put us in a position of of creating some alignments. Candidly, we're in a position of how do we align in a world where everybody wants a piece of exclusive and now we're kind of feeling like we're on one of those medieval torture machines over rack and everybody's pulling fees. But look, it's good it, because that's actually why I started the company is to try to enable the industry to reinvent itself. 

Ben Glenn  15:05  

So now but there's also Avail at a different level, you've got a very interesting development with a very large contracting organization that's going to open even more doors. Thanks. So let's, let's tell talk about that.

Daniel Hawkins  15:18  

Sure. So for the past probably two and a half, maybe three years, we've we've been going one by one, right, so let's talk to a hospital, let's talk to a small IDN. Let's talk to a large IDN. Get them comfortable with our platform, we've taken an approach of going to administration, and getting, I'll describe it as approval agreement around HIPAA around IT security around all the T's and C's and whatnot, and what we call a master services level agreement. And what that means is for us to have a unit in the Cleveland Clinic, we contracted with the foundation, which means every facility in the Cleveland Clinic network can order and Avail with a page and a half order form that takes a couple of weeks, because we solve the problems at the high level. Right? So that's what we call an MSA. So we've got about 1100, maybe 1200 facilities under MSA right now. Very recently, what you're referring to is we started a process, many quarters ago with Premier were the largest buying groups in the country. And now as of recently, the premier membership, which is 1000s and 1000s of facilities, they do phenomenal job. They the membership now can purchase on formulary purchase agreements or set up agreements, I should say with avail. So now we're getting we're at a at a junction point where we can expand our network even farther.

Ben Glenn  16:36  

So it sounds like you're cracking one of the one of the problems that I think a lot of early stage entrepreneurs, is they sort of begin to get an idea, right? I've got to take my ideas, turn them into products. Okay, FDA, that whole FDA thing I've got, I've got to sort that out. And then there's this, oh, wait a minute. Now I've got start selling. And I really do think the days of you know, I mean, back in the day it was it was that you get the big key opinion leader bang in their shoe at procurement like we are, you know, I love this technology. I'm going to use this, I insist I demand they compelled even if the system couldn't afford it. Excited. I think now that voice is very, you know, doctor know, exists inside these hospital systems. And so now I think if you can come in armed with that, I love that you started that. You go to the meta, solve all the issues. Yeah. And now all of a sudden, you just your sales cycle, just you had a big one. But now it's now much more compressed. And you're dealing directly with the pain points for hospitals.

Daniel Hawkins  17:40  

Exactly. And one of the key reasons we did that, it was intentional. We built our system to enable industry to reinvent its commercial processes, its customer management and relationship processes, its innovation processes. Right. I'll take a quick diversion here. One of the things that Dan voles told me that he wanted to do that sold me on working with him, is to enable his engineers on a regular basis to chat with clinicians in the room, but do it remotely. That's extraordinary, because you can't invent truly disruptive technologies clinically disruptive. If you don't spend a lot of time in rooms. Well, it's really, really hard to get John and Sue and Sally and Bob and Joe, the engineers in the rooms to be able to see enough procedure volume to do that. Well, Dan's tilting it up where he hasn't go every week. That's extraordinary. To me, that was a groundbreaking business model change? Well, one of the things that that he needed from me is an ability to scale. Right. So that solve it at the top level with a master services agreement allows us access to 11,000 procedure rooms. So if industry needs to scale into our model, there's 11,000 procedure rooms that were a couple of weeks away from shipping a unit. That's how that volume is, is enabled. Right now we continue to add LSAS. So we've got hundreds upon hundreds of facilities we're going to be doing with Dan, the first nearly 100 They're already customers of ours. Bang, they're in, they're in, they're in, right, which is terrific. And then we're going to work with with Medtronic neurovascular and our team or sales teams together. We're going to keep on adding new facilities because there's a few 100 more that we need to do, right. But every time we do one of those, it's a new MSA which means now I can unlock orthopedics. Now it can unlock general surgery, right. But I went in with neurovascular. That's the strategy and that's the reason why we did it that way. It enables beautiful scale, which is exactly what the industry needs, again to reinvent itself.

Ben Glenn  19:40  

Wow. Daniel, anything else you want to share with us today?

Daniel Hawkins  19:44  

Plainly, I just want to say this is Scott Scott and crew did it again. I don't know how else to put it. Did it again. I thought last year was terrific. I you know, a longtime industry veteran said something to me when we were grabbing coffee, and I'll share his name in just a moment. And he said to me, you know, this is, wow, this is a great conference. I said, Yeah, were you here last year? I don't think you weren't said no, I wasn't. But it just keeps on getting better from what I hear. This feels like the early stage version of jpm. There's some competition going on here. And that person was Jay Watkins. So, you know, Jay has been in the business a long time. He's on my board. He was on my board of Shockwave. And I couldn't agree more with him. I actually think what's what's happening this year, is is a material step up from last year, which was a material step up from the year prior. So I just congratulate the team. And this is one of the best conferences, from my perspective and love being here and appreciate the opportunity.

Ben Glenn  20:40  

I've known Scott for almost 20 years. And this This is the reinvention of something he piloted even back then, yeah, never saw. That's when first time I heard Randy Perkins speak. Yes, at a conference that and I was at Cooley Godward. Back that Yeah. And I went back here I am this puppy of like, probably a second year lawyer. And I'm in there talking to like the head of the we were all under the litigation group. And I said, I don't know how you guys spend your business development money. But if you don't have a sponsorship at this thing, you're out of your mind. Because back then, you know, people didn't have a lot of, you know, my first, you know, entrepreneurial habit is communication. There was not a lot of control of communications, you could go to this conference, and you're getting competitive intelligence. And I've got clients here this this year that have already said, Yeah, and I sat in on a couple of panels, smartest thing I ever did absolute smartest thing, because you're awesome people that present well, people that don't present well. And then sometimes you're like, Oh, I never thought about conveying my unmet need. Here's where the Sarin is this exact list is you get you get really pollinated with all this incredible, hundreds of different perspectives all in this concentrated so 3d wedding party

Daniel Hawkins  21:52  

Exactly this way. Before he started Shockwave, one of my habits was to go to medtech conferences like this, right? With the intent of doing exactly what you just described, you get to learn how other people pitch their stories, and how to turn an idea into something that is described in a compelling enough way that you can start to get engagement. And the other thing you do is you get to ideate. Right. So somebody who's doing something in in coronary vascular might learn from somebody's doing something in neurovascular because they'll hear about a technology tweak or think I'll wait a minute I can incorporate that somebody's doing something in orthopedics might help general surgery, and I'm a junkie for all this stuff. So I started watching all these things, and I couldn't I couldn't stop going to and then I arrived at my first LSI. And it was like, wow, this is great. Not only is there all this, but the venture guys are here. The corporate guys are here and it's just been getting better. So that's that's I guess what I close with it's today's better than ever, and I'm looking forward to next year already. 

Ben Glenn  21:59  

Daniel, thank you for coming by. Appreciate the opportunity. Take care