Upstarts: M.D. Entrepreneurs

Here's how sports physicians are cashing in on their association with professional athletes by branding high-end health products. Plus: a look at the rise of M.D.'s doubling as M.B.A.'s.

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Sports doctors kick off a consulting business

Pros' physicians team up to help market health products for athletes

Norm Scott, an orthopedic surgeon and the team doctor for the New York Knicks, tends to the likes of Patrick Ewing and Latrell Sprewell when he isn't treating mere mortals in his Manhattan office. In his off-duty hours Scott pursues an entrepreneurial sideline: consulting on health-related products.

Scott and some 30 other doctors, for example, helped design and test athletic braces for manufacturer Tru-Fit, a Becton-Dickinson company, which later created a new brand called Stardox (for Star Doctors). The Stardox label serves, in effect, as an endorsement by Scott and the other doctors of the high-end line of Tru-Fit-manufactured braces. The products are widely available in sporting-goods stores, where Tru-Fit promotes them with freestanding, interactive six-foot-tall display racks.

The Stardox label isn't the only one on the brace. The other is a brand that Scott hopes someday will appear on popular painkillers and sports beverages. It reads simply "by PTP."

The initials refer to the Association of Professional Team Physicians, a business that Scott and 39 other doctors who care for professional sports teams began two and a half years ago. Also based in New York City, PTP now comprises 120 professional-sports-team physicians who moonlight by the hour as expert consultants for Tru-Fit and other PTP customers. So far, only the Stardox braces sport the PTP label, but partnerships with two other companies--Thor-Lo, an athletic-sock manufacturer, and Phase Change Laboratories, a hot-and-cold-compress maker--could lead to more cobranded items.

PTP exemplifies a new wave of businesses being started by M.D.'s. The start-ups aren't confined to clinics and other medical businesses that physicians have typically established but encompass such fields as insurance, professional recruiting, and venture capital. "With the managed-care revolution, and entrepreneurship growing in general, we've seen many more start-ups, and they're in nontraditional areas," says Scott Weber, founder and copublisher of Physician's Practice Digest. Many doctors are working part-time outside their practices or quitting medicine altogether to start companies because, according to Weber, they are disenchanted with a managed-care system that has limited their pay, forced them to squeeze in more patients per day, increased red tape, and constrained care.

It was managed care, says Norm Scott, that caused him to start PTP. By the mid 1990s he was losing many of his patients to health-maintenance organizations with which he wasn't affiliated or which in any event curtailed referrals to specialists like him. His former patients, however, still deluged him with calls and questions.

Seeking to respond en masse and sensing a business opportunity, in December 1996 Scott began recruiting other professional-sports-team physicians to join PTP. The next year the company signed a contract with Tru-Fit, which is based in Lynn, Mass., providing PTP with royalties on Stardox sales. Without the "credibility" of the PTP partnership, says Louis Caprio, general manager of Tru-Fit's parent company, introducing the top-of-the-line brace to the market would have been far more difficult.

PTP swiftly hired Dean Howes, a former marketing vice-president at Bristol-Myers Squibb, as CEO, as well as two other executives. To develop a sales strategy, PTP engaged the Parthenon Group, a Boston-based management-consulting firm. Parthenon accepted a 10% equity stake as its fee, lured by the prospect of "building a brand around a unique asset of doctors," says Parthenon's managing director, Chris Jenny.

In joining PTP, the 120 doctors reportedly share in 5% of the company's profits, and they are invited annually to buy stock in the company. Seven of the doctors serve as the company's advisory board, steering it on such matters as deciding which products PTP should evaluate.

Howes declines to disclose PTP's revenues for last year but projects more than $1 million for 1999. So far, the PTP model is unique to the market. But it could face stiff competition should health-related companies begin partnering with prestigious research institutions whose reputation might overshadow the "prestige of sports teams," notes Dominique Hanssens, a marketing professor at the Anderson Graduate School of Management at the University of California at Los Angeles.

Another risk to the business is criticism by medical ethicists, whose attacks might undercut the credibility of PTP's endorsement. One such critic is Arnold Relman, former editor of the New England Journal of Medicine, who told Inc.: "These doctors have a financial interest in the products, so what they say about integrity is laughable." Howes counters that the advisory board safeguards PTP's probity, adding that the doctors, who retain their daytime practices, would never risk their reputation on questionable partnerships. "We don't claim Stardox is the best brace," he says. "We try to educate consumers on what constitutes a good brace."

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