FinancialRecon

Twin Cities med-tech start-up looks to shake up orthopedics market

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Minnesota is home to more than 600 medical technology companies, and virtually all of them began when someone decided to build a business around a new medical device.

Responsive Orthopedics is different. Started by veteran Twin Cities med-tech executive Doug Kohrs and two partners, Responsive Orthopedics began with the realization of a once-in-a-lifetime sales opportunity for reasonably priced medical devices, spurred by macroeconomic changes underway in the U.S. health care system.

 Kohrs and his partners realized that the ongoing transition to a financial model known as “bundled payments” is rapidly creating a new market for low-cost, standardized medical devices. But the major device makers are unwilling to sell such models because the prices are too low, and venture capital firms are reluctant to fund start-ups without the promise of premium pricing someday.

So Kohrs and his partners funded Responsive Orthopedics on their own, with backing from an as-yet unnamed large health care provider in Minnesota.

The principals quickly decided that selling low-cost systems for hip and knee replacements would be the most obvious types of devices to concentrate on first, given the early focus on bundled payments in orthopedic devices.

“As of now, the incumbent orthopedic players have yet to evolve in the right direction, in our view, creating an opening for others who are more prepared to potentially seize the opportunity,” analysts with Citigroup Global Markets wrote last month in a 72-page analysis looking at how the bundled payment model is going to upset the status quo on price models among hospitals and device makers.

 

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Josh Sandberg

Josh Sandberg is the President and CEO of Ortho Spine Partners and sits on several company and industry related Boards. He also is the Creator and Editor of OrthoSpineNews.

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