Soft Tissue Robotics — Open Architecture or Closed System? The Road Forward | LSI USA '25

Joe Mullings  0:05  
All right, let's get this started. So thanks everybody for joining us. This promise is to be a fun, provocative, yet respectful debate about the state of soft tissue, robotics, and especially open versus closed, and what it means the ecosystem. And what I mean by ecosystem is not just the surgeon and patient, but the sites of care, the entrepreneurs, the investment community and the rate of acceleration of technologies. So I'll go down the panel here, and they'll each introduce themselves and maybe share the relevance of their experience for this panel, Greg, you wanna go

Greg Roche  0:42  
first? Yeah. So Greg Roche, CEO of distal motion. Distal motion is a soft tissue robotic company based in Switzerland. We've had CE for the past three years, and just we're, we're given de novo approval for in guino hernia in October of this year. So open platform. Look forward to the discussion. Thank you,

Oliver Keown  1:03  
Oliver, yeah, great to be back at LSI and delighted to be here on this panel. Oliver Keogh, CEO of oaf surgical, a startup company that is reinventing outpatient surgery and value based surgery through a network of high performance surgeons and oaf ASCs with a vertical AI layer across that we're in stealth and coming out shortly. But you know, think representing with my background, started off as a physician, been in the world of surgical innovation for 15 years, the last five of those at Intuitive Surgical leading and launching the venture capital arm there, and seeing where surgical excellence is headed, and I believe firmly it's outpatient, I think there are incredible opportunities to align value outcomes experience and at a fraction of the cost. And so as I think about the future of technology, I think about the drivers of value in that setting and the opportunity for new care models.

Scott Huennekens  2:06  
Excellent. Scott Hi. Scott Huennekens, former CEO of verb surgical before that volcano in the interventional space, and now on a number of different boards and involved in robots or digital, what I would call surgery platforms, orthopedics, dental as well as soft tissue. Great.

Joe Mullings  2:25  
All right, let's start at the top so we can level set here, Scott, I'll start with you, and then we'll run down the line. How would you define an open versus closed soft tissue robotic platform, just for the audience? So we can level

Scott Huennekens  2:39  
set? Well, when I was running VR, but my vision, and I think the the right vision is there's there's no difference. So you you have a robot that can control an instrument, whether it's an open procedure, a closed procedure or a hybrid procedure. And so it's finding the right tool for the clinician, given the circumstance that's required during the procedure. And there are procedures that part of it can be open, part of it can be closed, and I think in that regard. And then I think in terms of the I never even like the term robotic surgery. I always like preferred digital surgery. And thinking in terms of a platform where you have the robot, you have the instruments, you have connectivity, and you have data and the ability to have analytics for precision guidance, just like you, you know, you would program, you know, CNC machine. You can eventually, in a future state, program different steps in a in a surgical procedure, but it takes the totality of a system, not just the robot. The robot enables that to occur.

Oliver Keown  3:48  
Oliver, I would, you know, echo that, but actually expand it forever. I don't know if any systems today are truly open or truly closed, because I think it really is about the surgical episode of care, and I think the what happens in the operating room is a portion of that continuity of care that starts, you know, kind of in the pre op phase and through to recovery. I do think that it's, you know, in the context of this conversation, it's about what is the super powers of any medical innovator in terms of technology in the operating room, and then what is the kind of collection of capabilities that it's offering to, you know, the end customer, which is the healthcare system, the surgeon. So I think about it in the kind of context of the breadth and depth of capabilities and how they align to the value drivers in that setting of care, which I will, you know, over the course of this conversation, get to I think are very different when you think of patient surgical care versus hospital based surgery.

Scott Huennekens  4:50  
Joe, maybe, and to clarify what I was saying, is like with all those elements of the platform, you know, you can mix and match and take best. Class instruments, best in class, AI program for something. And they can all work like back to, you know, the iPhone open platform, you know, I can run Uber on it, I can run Lyft on it. I can run Strava on it. And now it creates a multiplier effect that snowballs. And when you limit platforms and close them, from an application standpoint, I think you limit the potential for them as we go forward and and that's been a frustration of mine across all of these different implementations of digital surgery, platforms, robots, whether it's orthopedic, dental or EP labs, you name it, we could be going faster and better if we had open platforms where people had the opportunity to develop applications that could be used on it. We did that at volcano. We ended having over 25 apps on our system. Boston had three. St Jude had three. We ended up with 70% share. We had more developers of software could work on the platform have a way to get to market without having to do everything, and I think we're do a disservice to the patient by not having that kind of environment. Epics, another classic example we're all familiar with with the frustration of getting data and having a closed platform. Greg, yeah,

Greg Roche  6:19  
I would say choice is the difference between open and closed, in my opinion. So you have to have some core technology at the root to create an ecosystem in any environment. But when you close something down, and we've talked about this at length, and I know we'll probably talk about it, there's multiple verticals within a robotic platform, almost impossible. I think that's one of the lessons I learned in my history in robotics. Is to be the master of everything is an impossibility. And we can talk about, you know, what those are, but to give, you know, caregivers, surgeons, hospitals, the ability to choose the right technology. And I actually think, you know, you can build a better ecosystem by picking and choosing, you know, best in class technologies around that site of care. Like I said, I think when you try to to have some kind of a closed loop, you really limit the offering in the long term. So I think it provides a lot of choice and optionality for people to do, or create a custom ecosystem for them, which is most important.

Joe Mullings  7:25  
And one of the things Scott, I want to come back to you on this. You and I have had discussions about the innovation curve going on right now in surgery, and I'd like to say it's probably at the most, steepest rate that we've seen in a long time, if you start to fold in imaging, ICG, data analytics, predictive analytics, et cetera, stapling even, I'll even go down to the fundamental but that innovation, that ramp of that innovation curve versus a flat curve. You and I have had conversations about this, and you've got a very clear thesis philosophy around that. Keep going, yeah. So I mean, we're in a very high innovation curve. And if we look at the organization that created soft tissue, surgical robotics, intuitive, yeah, we go down robots, instruments, stapling, advanced instrumentation, visualization, advanced visualization, data, AI, telepresence, right? Those are all on incredibly high ramp innovation curves. When you try and bundle them all together, you lose that optionality.

Scott Huennekens  8:20  
Yeah. Two things. Look, you know, they had a protected position for 20 years. Given their IP, they did what they did. They bought computer motion, and that is what it is. But I don't think anyone you know would have envisioned here we are, 20 years later, and we still have this giant, you know, robot. We don't really have the ability to do remote surgery anywhere in the world. We still only have two and a half billion people having access to surgery out of seven and a half billion people. So I think intuitive has done an incredible, incredible job, and they're all these obstacles with reimbursement and everything else that make make things challenging. But at the same time, I think this next 10 years is going to get really, really interesting and exciting now, with more people having the freedom to operate, more competitive robots, more application specific robots, different business models, like these guys, these two are talking about, but we're back to Hey. You know, you mentioned ICG, and I'm on the board of on target. So we have fluorescing images for for cancer. If that only worked on one system, the intuitive system. Just think of the limitations of cancer surgery. But no, we're going to be Switzerland, and Stuart system will have it. Olympus system will have it, you know, Medtronic intuitive, you know, Stryker, etc, that gives there the opportunity for there to be innovation, not just for us, but for four or five other companies developing imaging agents. And then you, you throw a proximity in there with a layer to connectivity to then take the data and CO register things and feed it back to the robot. And you. Yeah, when those things can all work together, things get, I think, steeper and faster and better than closed systems that try and protect your your interest economically, solely then trying to get the best outcome. Or,

Oliver Keown  10:16  
yeah, I would go again, kind of broader. I think, you know what, we're in the business of creating value, and I think the incredible innovation ecosystem here is creating value and trying to build companies and have an impact on surgery. I think we should acknowledge that surgeons and healthcare systems want to deliver surgery right? They're not necessarily thinking down to the minutiae of that individual platform. They're looking for the much bigger turnkey outcome. And if you go all the way to the pair that I think is increasingly relevant as we think about value based surgery, quality being a driver, they're looking for savings. They're looking for high quality outcomes for their members, for their patients. So I think it's incumbent on the innovators to show up to that environment. The reality is, there's a customer there with a certain set of expectations, with a solution that is compelling and is aligned to the set of metrics that are important to that end customer. I think that's increasingly in this environment about whether revenue growth, it's about reimbursement. Can you create more reimbursement around these procedures. Can you support growth within a surgical program? And it's about efficiency. Can you actually really move the needle around savings, around staffing ratios? And so I suppose I would love us to kind of focus on the constructive, which is, how do innovators that are coming from a perspective of feeling like they're open kind of show up with the kind of breadth of solution that can move the needle for the end customer, and that might mean in a really

Scott Huennekens  11:52  
intuitive person, I'm pushing back on you, are we creating value for only our investors and value for the clinician, for Your patient? I think, I think quality so intuitive, for how many years has been able to make an instrument that you can re sterilize 50 times, but they don't do it. If it was an open system, people would be making instruments that could be re sterilized 100 times, but no, it's limited to 10 only for their economics, just which limits the accessibility of the technology to help patients around the world that don't have the economics to afford it. We need to get out of that. I mean, I just like, that's, that's you have to go into the minutia of those kinds of situations to fix this and progress to get this technology which helps patients to more people and democratize it around the world. I

Oliver Keown  12:39  
think that's right for me, in our business model, quality, first, I'm not here to litigate. Intuitive, I don't work. No, no, I've heard enough, but I believe it is frustrating, sure, but I think the constructive is, how do we show up and create solutions that are going to meet the needs and kind of settle that? And I think, frankly, again, slightly off topic, but that's business model innovation, or it's having very clear demonstrable ROI for the metrics that matter in these environments. And so to me, that that is the focus here, rather than necessarily litigating intuitives role historically.

Joe Mullings  13:13  
So Greg, I want to get on you for a second here. And Oliver and then Scott, so do the sites of care determine the ROI, and do the site secure, determine the use case and acuity on the patient, and so are we? Are we? Are we taking a robot that may be appropriate for one venue, but now outpatient surgery, ambulatory surgical centers and still hospital, we're able to push that out to a lower cost center? Does that

Greg Roche  13:38  
matter? I think it really does. I mean, I think, you know, to go back to maybe a little bit of what Scott was saying. I mean, there is a barrier, whether that's economic, you know, and you just brought up one economic example, but there's logistical examples. I mean, form factor matter, complexity matters. And when you when you don't have choice or optionality, you don't even have that option. So I think bringing some of these things to the market will, you know, we're going to see, I mean, we've already seen it in orthopedics. I mean, I think when I started in orthopedic robotics, very few total needs were being done in an outpatient ASC setting for a lot of different reasons. Now it's more than half and the reimbursement is trailed and followed. So I think we're at the at the precipice of that type of of action and soft tissue, you know, the lower acuity, high volume surgery is going to the place that's best for the surgeon, but also best for the patient. You know, I so many stories since, you know, since, and really before our FDA approval, I'm hearing people moving or shifting patient flow because of where the robot sits, not not where the robot should be, where the patient should be served. So that is really, for me, part of the paradox that we have to try and solve in the next few years.

Joe Mullings  14:56  
Oliver, you're nodding your head on that.

Oliver Keown  14:58  
Yeah, I think the future of six. Surgery will be outpatient, until proven otherwise. I think complex care can happen, does happen in the outpatient setting. And I think business models, approaches, technology, access, that enable, that will have, will thrive, you know, in the outpatient setting. And so, you know, I think quality becomes a really important determinant. You know, for some of the the business model innovation, but in terms of aligning, again, with the the type of care, I think, you know, total needs and total joints is a fantastic example where you're seeing surgeons that are, you know, more comfortable taking those procedures in the outpatient setting, utilizing that technology, as you think about a driver for adoption, that's an incredibly strong motivator, you know, to be able to create a successful outpatient. You know, total knees, total hips, program enabled through technology and that, you know that that aligns you with the surgeon, if they're co owning these surgical centers, aligns with the payers. So I think again, finding those win wins with technology again, whether it's open or closed. And I think if you're open, it's about partnering and identifying kind of a more expansive solution set and but you know, so I think that's where the

Joe Mullings  16:12  
opportunity is. Scott, you said, you mentioned before O, T, L and target labs, and you sit on a couple other, obviously, boards. What does an open architecture robot format versus closed do for ongoing innovation and the investment community. Yeah,

Scott Huennekens  16:30  
first of all, kind of wrap it on that, on that last point, again, I look at hospitals like I do shopping centers. They're just obsolete, high cost, you know, delivers or manufacturers, and we need to move towards application specific manufacturing and smaller, low cost environments that can have better service and care. And this ties into your question, you need innovation of technology that fits into that better. So whether it's, you know, like hyper fine with a portable MRI that can be in a neuro set, you know, center that then could have a robot attached to it, and an application certificate center to do a surgery, these things, like everything continues with, with with technology to get, you know, smaller, faster, cheaper. And I think you know, the ability to have open platforms allows you to optimize back to the point that was made earlier, to best in class for that, and it allows different solutions for different delivery sites as as well, which then creates opportunity and investment follows to feed it. Yeah,

Joe Mullings  17:45  
because you know, when you look around an LSI, these are all the innovators, and if you don't give them a playing field to play on, meaning investment dollars access to that pathway through a successful outcome and a system to plug into that is a meritocracy, not an autocracy. You know, what does that do for innovation? From your perspective,

Scott Huennekens  18:07  
if you see, if you see it, like he mentioned in or in orthopedics, where there's multiple robots for knees, a lot of procedures move to outpatient, and now it's more competitive. There's more innovation, and it becomes more of a standard of care, like soft tissue robotics is not a standard of care like it probably will be here in the next 10 or 15 years, across multiple applications, with more competition and more applications. We're just behind some of these other areas, like in orthopedics at this point, which started later

Greg Roche  18:41  
when maybe one comment from an investment perspective. You know, having having run a company with a closed platform, and having run a company with an open platform, you know, when you look at the verticals, you mentioned six or seven verticals that you mentioned to master, all of those also takes dollars. So we, we talk all the time that robotics is not easy, but either is visualization, either is staple and either is advanced energy. You know, all of these things come with tales. And so from from an investor perspective, the more I think innovation can spawn off focus. And so if you have six independent companies running those verticals, it's going to happen faster. It's likely going to be better, and it's probably more palatable for an investor. You know, when we talk dollars in soft tissue robotics and see, you know, all the players out there, it's expensive, but if you look at a lot of those platforms, they're trying to solve everything, and that is an it's an impossibility. They will never be number one in every category across the ecosystem that are, you know, that a soft tissue robot provides. So, you know, for me, I think it actually is, you know, we talk about partnership all the time, because the ecosystem shouldn't be about me, or, you know, any other robotic company. It should be about. The the surgeon, the patient, the procedure, and what's best?

Joe Mullings  20:04  
Yeah, and what I see happening now from my vantage point with the open versus closed systems is, in the next five years, collaboration is going to happen at the top, competition is going to happen at the bottom. And so as we have all these providers of technologies, whether it's a staple or whether it's visualization, whether it's new camera technology, which these all become massive unlocks, and you'll have that collaboration at the top. And we have to remember, this is not a zero sum game. This is an expansion of the existing market. So this is actually healthy for the market and not a detriment, I think, to the intuitive market. And you know, I'm a huge shareholder of intuitive, and anybody with intelligence is a shareholder of intuitive, right? But the emerging market itself is important Oliver, because of the business you're in. And when you come in, and we look at your business model, you've got to make a decision as a business owner. Well, I've got a Stryker stack, or I've got a Stuart stack, and I've got great energy equipment here do I push that all aside for a robot?

Oliver Keown  21:05  
I think again, it goes back so as an owner and operator of surgical centers, you know, and in a model that is not dissimilar to the current kind of status quo, which is CO ownership with surgeons, which is the ultimate alignment. And when you layer in quality, it's a it's a powerful thing to be aligned with our Surgeon partners, to raise the bar of quality while having a pulse on the economics of every decision that we make in our surgical centers. You know, high quality being our North Star. It comes down to quality. It comes down to robust discussion and evidence and data. But cost really is a factor. Simplicity, alignment in terms of business model. You know, consumptive pricing is a powerful thing in the outpatient setting the cash flows of surgical centers, and can be tight. And I think, you know, capital investment is a significant barrier, but really it's about understanding the growth potential. And, you know, I think where I've seen med tech innovation show up and really capture the attention of surgeons. And, you know, facility owners, it's it does this, you know, does this provide with at least a quality match or quality improvement, a new revenue stream? Is this growth? Is this new surgeon activity that can happen in this setting of care? And, you know. So these are types of decisions, I think, yeah, again, open versus closed. Stryker is a great example, because they do have a full stack. They're in the business of financing surgical center. So, you know, they have found this kind of breadth of solution that they can offer. But the last thing I'll say is, you know, the reality is, there's a lot of individual decisions to make at a surgical center. The inventory list is 10s and 10s and 10s of pages long. So there's a lot of space, and especially as we think about multi specialty, ASCs, for, you know, a range of technologies. But I think we have to think about it programmatically. You know, how am I delivering this? What is the outcome of this clinical specialty, or, you know, this surgeon stakeholder group that I need to support and make sure that they can maintain their practice in this outpatient setting and be profitable and

Joe Mullings  23:07  
in an ASC versus a hospital. I've heard the term good enough is good enough in an ASC. Have you heard that? Yeah,

Greg Roche  23:15  
yeah. So you mean, you said two things you're always going to over index on quality, of course, but you but when you start to move centers, then, then profit does matter. So sometimes good enough is good enough, and that could go to the product or the clinical approach, because things radically change relative to reimbursement when you move to the site of care, although I think long term. Again, we've seen it. Reimbursement usually finds a way. This is very good, in my mind, for the payers as well, to shift a lot of you know, these types of procedures into this setting. It's good for everyone, but you don't always have the story when you lead there, right? So you're going to have multiple specialties that are trying to get there, but are really trying to find a way. So that's when good is good enough. And you hear that all the time,

Oliver Keown  24:06  
yeah. But I do think, and I implore this community, the opportunity is to measure, you all these ROI elements, and kind of meet these stakeholders, you know, where they're at in terms of the ASC dynamics, because, you know, ASCs as a category here the ultimate kind of cost of care savings opportunity in terms of site of service shift, and it was exempt from Meaningful Use. There's only about 20% of surgical centers have an EHR you're looking at digitally naive footprints of surgical consumers. And so I think the opportunity to build the data lies on the medical innovators. And so I think that's a challenge, but it's also an opportunity to show up with quality, to show up with cost improvement, because good enough is good enough is well said, but not many people really understand what good even is, because there isn't significant amount of data. And so I think that's a really big opportunity for. Of innovators in this space.

Joe Mullings  25:01  
Scott, you've always been a visionary from way back when on where where care is going, where technology is going, where there are going to be collisions of opportunity and collisions of destruction. So where does surgery go for the patient over the next 10 years?

Scott Huennekens  25:20  
I think we've got a whole host of technologies which are going to make it more accessible and make the technology more accessible to more clinicians to deliver it, robotics, AI, precision guided tools that they're going to improve outcomes dramatically and reduce costs. And we have all the tools to make those three objectives happen in significant ways, so that, you know, the, you know, I'm passionate intuitive a bit here at the beginning, but what I think, we can thank them. They've created this opportunity where we're going to go from, you know, teens, penetration and procedures, you know, to where this becomes standard of care here, over the next, you know, 10 years, and they'll, they'll a lot of that will aggregate to them. But like you said, it'll the market will grow bigger, and there'll be opportunities for for guys like these two guys, companies, to participate and create a lot of value, which then just feeds the snowball of more investment, which then is going to continue to improve visualization, which is going to include imaging agents and create navigation and create smaller, faster, application specific robots and the like. So I'm super, super excited about the area and the potential for the next 10 years and what's coming so, and that's on a global basis, not like a US basis, which the market has primarily been, you know, for the the era of intuitive now you're seeing robots being built around the world. They're going to populate those different environments as well. 

Joe Mullings  26:54  
So you're standing on the betting line as we're in our last two minutes here, and I want to hit Oliver and Greg with the same question, you had a bet open or closed?

Scott Huennekens  27:07  
I think it's going to be a mix, you know, I think there's certain parts that intuitive is going to keep closed, and certain things that they're going to have as open. I mean, they've been open to a degree historically, like you can use your Stryker camera with it. I think there's going to be innovation where they could say, Hey, I'm gonna, I'm gonna buy that and put it onto my platform. If they do that and and don't allow it to be on other platforms, it's going to limit the potential of that particular product, given more things are going to be out there on the market. So I think it's, I'm optimistic that it'll be a hybrid, and there'll be a more open elements than there have been historically. Greg,

Greg Roche  27:48  
yeah. I mean, I would be silly if I didn't say open. I think bias, but yeah, no open. And, you know, really, for me, if I had to make one bet. So Scott just stayed in the middle, which was convenient, but I'm kidding, I took them in. No but, you know, look, if we want to push innovation, it can't be closed. So I do agree, though, just share market share, what's out there today, it's going to be, I think open will be growing. I think there's a lot of adjacent technologies that people will want, that they won't have access to on a standard mainframe robotic system. So I do think I see a higher prevalence of open 10 years from now, much higher prevalence than you do today.

Joe Mullings  28:30  
Oliver, bring us home.

Oliver Keown  28:32  
I think in 10 years, we won't be talking about robotics being open or closed. I think we're going to talk about vertically integrated surgical care models that span sites of care, and I think we're going to be talking about the rest of the healthcare system, and I think that's where the opportunity will be

Joe Mullings  28:47  
great. Well, gentlemen, thank you so much for your thoughts and always provocative insights on things, and please give it up for my audience, for my panel.