For Startups, a Fast Track to Success in Health Care
As a registered nurse, Ginny Porowski was all too familiar with the troubling rate of hospital-acquired infections in most health care systems. Something as simple as failing to properly dispose of a hospital gown could put other patients at serious risk. So back in 2009, she filed a patent for a hospital gown that can fold into itself and be sealed off before disposal. The idea was simple. Getting the gowns into hospitals, however, was not.
The medical device industry is notoriously tough to penetrate. Competition is fierce, as the field is dominated by a handful of corporate behemoths such as Stryker and Johnson & Johnson. Then there's the fact that the potential customers, generally large hospital systems, are increasingly strapped for cash and hesitant to experiment with unproven products. And don't forget the tedious process of patenting the device, a necessity for any inventor, and ushering it through the FDA approval process, if required.
"I wasn't interested in manufacturing millions of gowns on my own and shipping and distributing and dealing with lots of large systems," Porowski, who used her personal savings to develop the gown, says. "But I also firmly believed that I had a responsibility to get it into the health care system quickly."
Breaking Down Barriers
So Porowski turned to Edison Nation Medical, a product development firm specifically tailored to the medical industry. An offshoot of the larger development firm Edison Nation, which has commercialized hundreds of products in its history, Edison Nation Medical is designed to address the overwhelming obstacles unique to the medical device industry. Launched in 2012, Edison Nation Medical allows entrepreneurs to submit as little as a back-of-the-napkin idea for a medical device, and then its team of manufacturers, attorneys, and health care specialists takes care of the rest, from patenting and FDA approvals to licensing and distribution.
Now that the Affordable Care Act is holding health care providers accountable for better patient outcomes, it's becoming increasingly important for these breakthrough technologies to get into the market and fast.
"The country, now more than ever, is looking for innovations that can improve care and increase efficiencies," says Robert Grajewski, president of Edison Nation Medical. "They're looking outside the box and at people like us for those kinds of innovations."
In order to be accepted to Edison Nation Medical, Grajewski says, ideas have to cross three hurdles: They need to be innovative enough to be patented, efficient enough to drastically improve care, and serve a market that's large enough that the product can be licensed to a major medical device manufacturer. Rarely does Edison Nation Medical recommend starting a company from scratch around any single product.
"Our goal is to be a pathway to help as many inventors as possible get as many inventive pieces of intellectual property into hospitals," Grajewski says. "If we were building a company from the ground up for every single product, we wouldn't be able to serve that mission."
To sweeten the deal for potential licensees, Edison Nation Medical has partnered with Carolina Healthcare System, which helps develop and distribute successful products. With a purchase order already in hand from a major hospital network, landing a deal with manufacturers becomes infinitely easier. Porowski, for one, was able to license her product, now known as the GoGown, to MedLine Industries, a multibillion-dollar medical supply manufacturer. When Edison Nation is able to successfully license a product, it splits the royalty fees with the inventor 50-50.
Not a Cure-all
Though Porowski says it worked for her, forfeiting such a substantial portion of your company so early on is a tough pill to swallow. You've got to ask yourself: By partnering with a company like Edison Nation Medical, are you robbing yourself of long-term gain in favor of short-term ease?
For Sean Hensler, co-founder of Hensler Surgical, it wasn't worth the tradeoff. A physician assistant, specializing in neurosurgery, Hensler developed a novel way to separate bone from other tissue and fluid during spinal fusion surgery. In 2011, he formed a company, raised his own funding, and invested hundreds of thousands of dollars of his own money to bring the Hensler Bone Press, as it's called, to fruition.
He worked with Enventys, another product development offshoot of the Edison Nation family, to prototype the product, but he paid Enventys an upfront fee and didn't have to give up any stake in future earnings. When, finally, he was approached by Edison Nation to join forces in licensing the product, Hensler stopped short.
"We had put all the money into it, and they wanted to take a huge percentage just to get us distribution," Hensler says. "I didn't see the value there."
That being said, Hensler admits that Edison Nation does serve a purpose by helping entrepreneurs without tons of resources take their ideas to the next level. But the path he's chosen, Hensler says, has been much more rewarding. "I lost more hair than I wanted to," he says. "It's been more stressful, but it has a much higher gain."