Welcome to the Medsider interview series, a regular feature at MassDevice. All interviews are conducted by Scott Nelson, Founder of Medsider and Group Director for WCG. We hope you enjoy them!
Eric Stone cofounded Velano Vascular with Dr. Pitou Devgon, an internal medicine physician. Velano’s first device, PIVO, enables needle-free blood draws directly from peripheral IV catheters. Velano Vascular is backed by a series of well-respected investment firms, leading U.S. health systems, and dozens of health industry veterans.
Before starting Velano Vascular, Stone most recently served as VP of Sales and Marketing for MolecularHealth. Prior to that, he helped launch the world’s first bioabsorable stent for Abbott while working out of their California and Belgium offices. He was also a founding member of Model N’s Life Sciences division and began his career in software marketing with Trilogy. Eric also holds advanced degrees in Business Administration and Education from the Wharton School and Harvard University, respectively. He earned a BA degree in English and Psychology from the University of Pennsylvania, he always wanted to be able to provide Psychology services to people in need.
Here are a few of the things we’re going to learn in this interview with Eric Stone:
- Why Eric has been referred to as the “Steve Jobs of drawing blood”.
- How PIVO compares to the current standard of care for blood draws.
- What brought Eric into healthcare after starting his career in software marketing.
- Why Eric pursued both an MBA and Masters in Education and how both degrees have benefited him both personally and professionally.
- The biggest lessons Eric learned while launching the first bioabsorbable stent with Abbott.
- How Eric first connected with Dr. Devgon and the origin story for the PIVO device.
- The four milestones Eric and his team accomplished in taking the PIVO device from initial idea to commercial prototype.
- Eric’s approach to garnering financial support from healthcare systems and raising money for Velano Vascular.
- How the PIVO device fits into the value-based healthcare equation.
- Eric’s favorite business book, the CEO he admires most, and what he’d tell his 25-year-old self.
The following transcript is based on an audio interview with Eric Stone and Scott Nelson. It has been modified for enhanced readability.
Scott Nelson: Eric, welcome to the Medsider program, I appreciate you coming on.
Eric Stone: Thank you for having me, Scott.
Scott Nelson: You cofounded your current company, Velano Vascular, back early 2012 and you and your team have racked up a series of accolades, including the Frost and Sullivan 2016 New Product Innovation Award. You’ve also been referred to as “the Steve Jobs of drawing blood”.
When you think about your time with Velano over the last four and a half years or so and what you and your team have accomplished, what immediately comes to mind?
Eric Stone: Well, it’s undoubtedly been a journey, and I would consider it a journey of exceptional people and this overarching commitment to a vision that is human-centered at its core. The company was started by a patient and a physician, and it was based on a question asked by a patient to our physician inventor. Since the early days, we’ve remained true to this unwavering effort to do the right thing, and to do the right thing with clinical integrity, and with cutting-edge technical innovation, and through the lens of human-centered design.
I think a lot of times when we talk about human-centered design and healthcare, we talk about patients, which is an important and essential stakeholder. But from our perspective, it’s both the patients and the practitioners whose interest we have in mind with all the technologies that we are developing and will continue to develop.
I liken the folks that we work with to an extended family of like-minded and open-minded hospital partners and clinical collaborators to our investors, our advisers, our employees. I see and view every one of those individuals and institutions as taking a bit of a risk, personally, with respect to their role and their organization and association with Velano by respectfully challenging the status quo of an extremely entrenched practice.
That practice for our first technology is related to drawing blood from hospital in-patients and you hear jokes of references of blood drawing going back centuries to bloodletting. And while it seems comical in nature and easy to dismiss, if you live the life of a patient who is in a hospital repeatedly during any given period of time for multiple days and nights, the blood draw is a fundamental aspect of clinical care. Seventy percent of decisions are based on the data that comes from this blood draw, yet they’re done at four AM and five AM when we’re supposed to be sleeping and healing.
What we’ve done with our technologies and our company is to respectfully challenge that status quo for how hospitals are drawing blood today. My team has taken very limited resources, financial and human and otherwise, and thoughtfully deployed them over the course of the last five years or so towards receiving two FDA clearances and a European approval, or CE mark.
We’ve conducted tens of thousands of blood draws on hospital patients with our first marketed product, PIVO, and we’ve done this with some of the leading hospitals in the United States and soon to be overseas. We’ve identified a whole host of opportunities for enhancement and innovation in the hospital, all patient-centered and practitioner-centered in nature and all related to the vascular access domain, which has been a pretty under-appreciated space. Which is a bit ironic because our patients are becoming increasingly “diva” in nature, if you will — a comical reference but not meant to be. “DIVA” meaning difficult venous access.
We’re talking about obese patients, we’re talking about the growing elderly population, we’re talking about patients like myself that suffer from chronic illness and experience repeat hospitalizations. We’re talking about diabetic populations. These are all the fastest growing inpatients in the hospital. An estimated 30 percent of hospital inpatients at any given time. While we’ve brought this initial technology to market, I do firmly feel that we’ve done it consistently and without falter, putting people first and are our small company that is attempting to make a significant difference has followed the core values around impact of integrity and making a difference, being passionate about our work, and accountable while being compassionate and doing everything that we do with tenacity.
So I look back over the last five years and at times it feels like it’s been a 20-year journey and at times it seems like it’s happened in a blink of an eye, but I’m very proud of everything we’ve accomplished.
Scott Nelson: Speaking of the PIVO device, you mentioned that there hasn’t been a lot of emphasis from an innovation standpoint for blood drawing over the years. Can you help us better understand how your device is different than the way blood is currently drawn for patients in a hospital setting?
Eric Stone: We’re talking about arguably the most common invasive medical procedure that we do in a hospital every day; the act of drawing blood. Yet, at least from our experience, over the last five years and my experience as a patient over the last 25 years, it’s overwhelmingly under-appreciated by hospital administration and even in many respects by clinicians or practitioners.
Any given hospital could conduct hundreds of thousands of inpatient blood draws in a given year. Some of our larger hospital partners that have multiple hospitals in their network conduct upwards of one million inpatient blood draws in a calendar year. Take a step back for a second, and absent taking vital signs, what else do you imagine a hospital is doing a million times in a year?
Scott Nelson: That’s a really good point.
Eric Stone: It’s pretty astounding. The amount of resource that has gone to innovation, to your point, it’s been 20 to 30 years since we’ve had very modest or moderate innovation in the space—it’s negligible. So this is where we feel we’ve developed a really exciting opportunity to have an impact.
Around the world, we’re probably talking about well north of a billion inpatient blood draws every year. In the United States, $300-500 million alone and you can get to those numbers from a very simple bottoms up perspective of understanding how many inpatient stays are in a year, the average length of stay — which is about 4.8 days times 36 to 38 million stays — estimate how many blood draws patients are having on a given day. One blood draw, two blood draws. If you’re in a critical care setting, three, four, or five blood draws. It’s an astounding number.
So how do we do what we do? How do we draw blood without sticking patients repeatedly with needles? It comes down to the technology that has been around for quite some time that nearly every hospital inpatient has in their hand or their arm called the peripheral IV catheter. These are short, roughly one-inch pieces of plastic, they’re placed into the body over a needle upon admission to the hospital or entrance to the emergency room. These short, peripheral IV catheters are placed primarily for introduction of fluid into the body to infuse drugs, nutrients, and saline.
The clinicians refer to this as “access” and it’s used in emergency situations for rapid infusion of fluids, but it’s also used for daily antibiotics, saline introduction, whatever it may be. Those IV catheters are extremely effective for infusion of fluid, their primary purpose. When you first place them, it’s arguable, you may be able to draw blood directly off of them, but most hospitals have policies not to do that because those IV’s lose their integrity for aspiration of nonhemolyzed lab quality samples very quickly.
So they become a one-way conduit to the vessel, but if you try to pull blood back off of them, it’s either difficult to get blood back or if a practitioner is able to get blood back, often times it’s hemolyzed. The red blood cells are torn, or sheered, and the laboratory will then kick the sample back to the floor, or to the ER and ask the practitioner to redraw. You can imagine that it’s difficult for the practitioner, it’s difficult for the patient, it delays care, delays treatment, delays decision making, etc.
Take that short peripheral IV catheter that most inpatients have in their body and utilize our single-use disposable device called PIVO, which very simply and elegantly is a tube in a tube concept. Our device attaches to the peripheral IV catheter. On the back of it, you attach either an evacuated tube holder or a syringe, depending on what your preferred mechanism is for drawing blood — syringes are more commonly used in pediatrics, and evacuated tube holders more commonly in adults — and advance our device, pushing a very small soft, flexible tube through the IV catheter.
As that tube is going through the IV catheter, it’s overcoming the reasons why IV’s fail to aspirate nonhemolyzed lab samples back over time. The first is kinking, or collapse of the IV, when you suck back and our tube goes through and unkinks or un-collapses the IV. The second is that you’ll get debris at the end of your IV catheters. Particularly if they’re not frequently and well maintained by flushing with saline. Our tube goes past the end of the IV past any debris into the vein or the vessel.
The third is you may be up against the vein wall, or the vessel wall, or up against some type of anatomical structure that precludes you from pulling blood back. While our device can be adjusted to push forward, pull back, turned left, turned right, so that if you are budding a valve, a vein wall, what have you, you can get flow. The practitioner very simply draws the number of tubes that he or she requires for that blood draw and then retracts our device back, un-attaches it, flushes the linem and moves on to going about their day.
Scott Nelson: Some of those stats you mentioned earlier, just about the incidents and the number of times blood is drawn in a hospital setting and the problematic nature of traditional blood drawing. I think everyone has either experienced this themselves, or knows someone that ends up with bruises all over the medial side of their elbow from bad attempts at blood drawing. Hearing you describe your device and the simplicity of it, it forces you to ask the question, “Why hasn’t this been done before?”
Let’s use this time to actually go back and learn a little bit more about your background and what led you up to starting Velano Vascular. You graduated from UPenn in the late 90’s and then spent a bit of time initially at Trilogy and then at Model N. What brought you, Eric, into the healthcare space originally?
Eric Stone: In part, it was a bit by chance, and I think and believe deep down it was in part by my personal experience as a Crohn’s patient and diagnosed with this chronic illness, Inflammatory Bowel Disease 25 years ago as a teenager. In my very first role out of school, I was interested in marketing, and there was a large privately held enterprise software company down in Austin, Texas called Trilogy that recruited on campus at my university.
I was very much enamored by the company and its approach to marketing and very fortunate to join the organization. I moved on to Austin, Texas where I knew almost no one except for a few classmates of mine from school to serve in an extremely entrepreneurial culture in a particularly entrepreneurial role where I learned a great deal about marketing and a great deal about building a business.
I would argue that some of the brightest and hardest-working folks I’ve ever encountered as well as some of the most innovative professionals were at Trilogy, and it was an exciting time. It was the late 90’s, it was the tech boom, there was unfettered opportunity, unfettered innovation and I was in Austin, Texas — I think they called it Silicon Hills at the time — surrounded by folks that had big aspirations for building businesses.
During the course of that time, I was fortunate enough to work for the leadership team down there on a number of initiatives and recognized that I truly was, at heart, a marketer. A colleague of mine from Trilogy left and moved to the Bay Area to go work for an Accel-KKR funded company called Model N. I followed him out to the Bay Area upon introduction and a phenomenal, exciting interview process with the Model N team not knowing much about the platform technology space and the platform technologies that they were developing.
I wanted to be in the Bay Area in part for personal reasons, and was quite enamored with the leadership team at Model N. Serial, successful entrepreneurs and exceptional backers with Accel partners and Kohlberg Kravis Roberts, KKR, getting together. And during the course of my years with Model N was really able to learn from a group that I would call true rock stars. It’s now a public company and they’ve done exceptional work for some of the largest medical device and pharmaceutical companies out there.
At the time that I joined, the company was remaking itself. It was a platform technology company and they were providing solutions to the construction industry and the beef, pork and poultry industries. Two spaces that I knew nothing about and, to be honest, wasn’t particularly interested in. I was fortunate enough to be placed on a project by our CEO to assess the life sciences market and the utilities market. Those were the two spaces that I was charged with putting together an assessment of the market opportunity over a few months’ period.
I was a member a Skunkworks team coming out of that market assessment of 10 to 12 industries that was designated to develop a life sciences business, and specifically software applications for life science companies. I served as the head of marketing and business development and alongside our head of products, and our head of sales, and our general manager for the business, the four of us went out and built aspirational solutions and sold to our very first customer, a division of Johnson & Johnson called Ortho Clinical Diagnostics.
During the course of my years with Model N, I had the opportunity to meet exceptional folks, from companies like Boston Scientific and Johnson & Johnson and Medtronic, to structure very important partnerships for the business with Accenture and Deloitte Consulting, and other system integrator firms.
Now I look back 15 years later and a number of my early investors in Velano were colleagues at Model N and Deloitte and are customers, the large device companies, and it’s those relationships that have helped me to learn and grow my interest in the space over the course of the last decade and a half. So I somewhat fell into the space with the intersection of software and healthcare. I’ve always been passionate and motivated to find a way to give back and to participate in healthcare as a patient and do feel really fortunate how it’s all worked out.
Scott Nelson: Fortunately, I have had a chance to interview a lot of medtech and healthcare leaders like yourself, Eric, and a lot of them have similar stories where early on in their career – based on the projects or the companies they were at – were able to forge relationships with other folks, which maybe didn’t happen immediately but eight or 12 years down the road, some of those same people are either helping them start other companies or investing in early stage startups. Interesting to hear that you’ve had similar experiences, and I guess the old adage of “don’t burn bridges,” certainly proves itself true in your scenario as well.
Eric Stone: One-hundred percent. I do believe that change and impact and innovation, it’s really all based on people. We wouldn’t be able to do what we’re doing without those folks that took a risk and a bet on me 15 plus years ago and are doing it again today. It’s really a pretty exciting opportunity to show those individuals who you look up to that, “You know what? I too am able to achieve something that’s significant just as you have.”
Scott Nelson: You’ve got both your MBA from Wharton as well as your master’s in education from Harvard. I think most people would understand the MBA from Wharton. But the master’s in education, that’s definitely an interesting detail about your background.
Why the decision to pursue both degrees? Help us understand that, your thought process around both.
Eric Stone: Well, my path has been anything but straight, and this is yet another fork in the road that happened in part by chance, and by intellectual curiosity in some respects. It goes back to my first role out of school, at Trilogy, when I worked for the CEO of the company and he had a professional coach, a University of Michigan professor named Noel Tishi.
Noel was the coach to a number of very large company, well-known CEO’s, and in working on a project with Noel, I became enamored with the world of organizational psychology; the intersection of business and psychology, all coming back to human behavior. So I very much considered getting a PhD., or a doctorate in organizational behavior, organizational psychology. And I remember a phone conversation with Noel when I was at Model N where he suggested to me, “Before you jump in to five or six years of academic research, working in a silo and the laborious process of fighting for tenure, maybe you should try this out from the perspective of the masters.”
Harvard is unique in that it has two human development departments. In fact, its human development department in the school of education dates back to when Eric Ericson taught there, and subsequently has been staffed by just unbelievable experts in the domain of psychology and human development. The program enabled me to fashion my own master’s program in human development and leadership studies. While I certainly learned about the education domain from my classmates, I was actually studying human development and leadership, and the education school in the business school in the Kennedy School of Government and The School of Arts and Sciences.
From that experience, I was exposed to really unique approaches to thinking about building and sustaining organizations. I contemplated the doctorate, applied, deferred, and then recognized that you know what, I would not make a very good academic, and probably would be extremely ineffective at even making my way through the doctorate program. With that said, professionally, that experience, those studies, those professors helped provide me with some of the frameworks for critical thinking that I use today.
I look to my master’s degree in education and my MBA as a building block upon which we’re working in this melting pot of functions ranging from finance to marketing, to operations, to developing products, to selling, and of course, the human behavior side of it. Everything really does come back to people, team members, customers, partners, investors. And so some of the perspective from my time at Harvard has very much followed through to what we do today. Even my experience in my MBA program has very much carried forth a lot of the value that we’re creating at Velano today.
Scott Nelson: That led up to your time at Abbott Vascular, and I mentioned that you spent about four or five years there, from 2007 to about 2011, but you were involved in their launch of the bioabsorbable coronary stent, which I would have to imagine was a pretty cool project to work on. So when you think about your time there at Abbott, do you recall a couple of challenges or even some of the biggest lessons that you learned during your four or five years at Abbott, which eventually led up to the eventual formation of Velano?
Eric Stone: From a challenge perspective, definitely working on the bioabsorbable scaffold or stent program presented many of them. It presented many opportunities and a real air of excitement. At the same time, there was a lot skepticism around whether the product was truly differentiated – is this product truly viable and necessary, and is there a true market need? I think that the verdict is still out, but it very much forced us on a daily basis to think through our commercialization, planning, and strategy.
I spent a lot of time during the course of that time in Europe with the team helping the local teams think through how would they go about selling this and how do they go about selling it some respect against the company’s own drug eluting stent portfolio. From a lessons perspective, probably the most eye-opening experience was living overseas with Abbott in Europe for a year and leading along with our head of international marketing, our next generation drug eluting stent product launch.
During the course of those 12 months, I travelled to Asia probably 10 times and travelled across Europe just about every week that I was not in the US or in Asia, and it was a remarkable experience in understanding that not only is every country around the world quite unique in how they deliver healthcare, but even to the level of the hospital, there was a whole host of distinctions. One size definitely does not fit all.
Yet when you’re launching a product, building a small business that aspires to be a large business, you don’t have the resources to customize your offering to every country and every hospital. So to this day, I and my colleagues here and at other companies struggle with how do you bring that level of personal relation and customization to an extremely fragmented approach to delivering healthcare?
Scott Nelson: A question that I think a lot of folks have and one that probably doesn’t have a definitive answer for anyone, but maybe the lesson learned is to be cognizant of that. Whether you’re in the prototyping stage or planning for eventual commercialization, keeping in mind that each country does truly have its own unique needs and challenges within their healthcare ecosystem. To your point about the ABSORB stent, the bioabsorbable scaffolding, it has been interesting to see that launch here in the US and the concept is definitely very disruptive in nature, yet the clinical data hasn’t necessarily been there to justify the use of that stent, based on my early analysis.
Let’s transition up to Velano Vascular and learn a little more about the PIVO device. You’d spent some time at Molecular Health and then you’d gotten to know doctor Pitou Devgon, How did you connect, and can you take us back to that time when the PIVO device was really just an idea on a napkin.
Eric Stone: So I left Abbott with the support of an unbelievable group of leaders at the company. Actually, four retired Abbott corporate officers are investors in Velano, and helped us to get started. During the course of roughly a three-month period, I pursued an approach to founder dating. That’s how I refer to that period in my life where I met with inventors and ideators all over the country, all of whom were introduced through my personal network, or personal network once removed.
I was looking for an idea that resonated personally with me and that I felt could truly have an impact and be a success in touching lives. So during the course of that time, I certainly was moved by the ideas with a number of these individuals, joined a few different companies as a board member and as an investor, but I think back to that first meeting with Pitou in a bar in Philadelphia where he took out a prototype that he had fashioned in his kitchen from products from the hospital where he worked.
Right away in listening to him talk through the unmet need and the genesis for his idea, it dawned on me that this truly was a game changer. And not only would this be a great medical device, but this would eventually touch the lives of every human being on the planet—talk about impact. I believe it then and I now know it will in fact be the case.
Because we will all spend time in a hospital in our lives and we all need our blood drawn. And whether the product is called PIVO or it’s called something else, the new standard of care even just five years from now will be doing exactly what we have developed . So going back to that period to how we were introduced, Pitou had gone through the Wharton Healthcare MBA program after me. We didn’t overlap, but as I was out pursuing this process of founder dating, three distinct friends and classmates of mine suggested that I reach out to this physician, who, after business school was practicing medicine and also working in healthcare venture capital.
I wasn’t exactly certain what to expect in meeting with him. I knew that he had an idea that was in the vascular access domain but was relatively under wraps in our phone conversations and emails ahead of meeting. Not only was I impressed and moved by the concept, but also by Pitou’s intellectual curiosity and this unrelenting ability that he had and has to tug at the thread of statements and perceived facts, which really at the end of the day is folklore made by clinicians, made by patients, made by industry and the large medical device manufacturers. That intellectual curiosity and that unrelenting desire to challenge the status quo, along with his creativity, was the foundation for our company, that now five years later, has one commercial product and many more vascular access products waiting in the wings to be brought to the market in the years ahead.
So I’m confident that that first meeting in a bar in Philadelphia five plus years ago is going to result in a new standard of care, a better standard of care nationally and globally, and I do believe we’re going to touch every single person on the planet.
Scott Nelson: That’s such a cool story and I want to get inside your head a little bit dating back to that early time with Pitou. I think everyone that has an entrepreneurial streak in them has a dozen ideas that are circling in their heads, but you took an idea that you were excited about, and you executed on it flawlessly.
This early prototype that Pitou developed in his kitchen, how did you take it through the process to where it eventually became a product that can be used on patients?
Eric Stone: The approach was a little bit anti-establishmentarianist, I guess you could call it that. Just going back to your question statement though, I appreciate the reference to flawless execution. I aspire to get there, and there’s certainly been bumps along the way, and we don’t have a standard of care created just yet, but I think we’re close. So, thank you.
Scott Nelson: Well, you’ve done a lot in a very short amount of time. So I think you are being humble. S, if not flawless very, very good on the execution, for sure.
Eric Stone: The team is working hard and we have had great supporters, and of course, there’s a little bit of luck along the way as well. But back to the process – that was a little bit different. So for two years, my co-founder and I had day jobs and the start of that two-year period, the genesis of the company itself, we raised a $150,000 from 10 individuals. Anyone of those 10 individuals I’m quite confident could have written the entirety of the check.
But it was a purposeful fundraising strategy and a very cautious strategy of a crawl, walk, run, fly, and to this day we still follow that model. Those individuals almost exclusively had backgrounds in the healthcare domain from an interventional radiologist to a device company, to an executive at Medtronic, to a senior executive at Boston Scientific, to an executive at Abbott, to a healthcare venture capitalist, to a healthcare banker. Every single one of those individuals back then, and to this day, provided extensive amounts of guidance and counsel that far outweighs the relatively minimalist dollar figure investment they made in the business.
During the course of those two years, we set forth to accomplish four milestones to determine if there really was a “there-there”, as folks say. The first was to prove technical feasibility. Could we build prototypes that could work in a bench setting to draw blood through a peripheral IV catheter? We found a third party prototyping firm and worked quite aggressively with them on fast cycle time iterations. In some respects, an approach we took when I was in the software world of iterating, and iterating rapidly, to get to a point where we felt that from a bench setting perspective, we had accomplished feasibility.
The second was around pre-clinical functionality. Could we draw blood off of a peripheral IV catheter through our device, not through the IV, but our device that was non-hemolyzed in nature, where the lab analysis results were at parody with blood drawn out of a needle – today’s standards of care? We did that, and we were very thoughtful about our work in the animal lab, and we showed results from prototypes that accomplished this milestone.
The third was around intellectual property, and as someone who comes from the medical device industry, I’m sure that you’re well aware that this really is the foundation for any sustainable business. Based initially on Pitou’s invention, we had a similar patent in the space issued and then moved on in an aggressive fashion to develop additional intellectual property, and that has been a fundamental pillar upon which our business has been built.
The fourth milestone is an area that I’ve seen a lot of inventors and founders and entrepreneurs miss the boat on, which is market assessment and market development. If we build it, will they come? I think there’s a lot of great medical technologies that have been developed that are laying in a barren desert right now because there wasn’t a market for them, or the founder under-appreciated the uphill battle to move towards regular use and reorders, if you will.
So during those two years, we spent nights and weekends with hundreds of stake holders from patients to nurses, to hospital administrators, and we built a long, long, long list of reasons not to believe – and an equally lengthy list of reasons that we should do this. During the course of those two years, the validation was so great that if you could make this work technically and clinically, that yes, if you build it, they will come. And that’s what gave us the confidence along with these other three milestones to leave our day jobs and raise a series A, and go out and build the business and establish a standard of care.
Scott Nelson: Those four milestones that you just described are worthy of someone rewinding and listening to again. What a great overview of how you went about going from idea to prototype to eventual commercialization. We could have separate conversations on each of those milestones, but nonetheless, it’s a great framework to think about.
Your comment about raising a series A, I think you raised another round of financing earlier this calendar year, I believe. But when I look at the individuals and institutions that are invested in Velano Vascular, I notice quite a few healthcare systems. So can you help us understand a little bit more about your approach to raising money, and how you went about coalescing the group of investors that you’ve got thus far?
Eric Stone: Well, our approach to financing the business is not that dissimilar to our approach to identifying hospital partners, identifying the right employees, advisers and more. It’s really about looking through the lens of the reasons to believe as opposed to folks who are looking for reasons not to believe. Of course, there needs to be an element of realism to this, right? It can’t be an encumbered aspiration, but we almost fell into this concept of customers as investors, or hospitals as investors and partners.
The first two hospitals that invested, The Children’s Hospital of Philadelphia and Griffin Hospital, resulted from conversations with two visionary CEO’s of each of those institutions who unsolicited, commented that “this is interesting, this has an immense opportunity for impact, we would like to be a part of this and can we invest?” Those are not hospitals that have venture or investment arms like many of the larger health systems. But just visionary individuals who saw the opportunity for impact and wanted to help us make it a reality.
Now, we have systematized that effort more significantly since that time, and just a few weeks ago announced that Sutter Health, the 24-hospital system based here in California, is also one of our investors. There really is an unparalleled alignment with hospitals as investors. I feel very fortunate to have fallen into this, what has now become fundamental strategy for our business. Because while the investments may not make or break the business from the perspective of the size of the investment, and while a potential return on their investment may not determine the future of that hospital or hospital systems, there is an unbelievable alignment behind the mission orientation of what we’re doing.
Which is, they want this product for the patients and practitioners. They want to be able to deliver less painful, safer human blood draws in a way that the hospital can benefit financially, become more efficient, less costly, etc. So again, better to be lucky than smart.
We started out with hospital investors because of visionary CEO’s and I really think as we look at where the medtech funding markets are now, it’s certainly challenging. We do have traditional medtech investors like Safeguard Scientifics. But we really have gained quite a bit from the relationship with these hospitals, and obviously dozens of angel investors who have run large companies like Abbott and Boston Scientific, who have run insurance companies, who’ve run hospitals. Because as I mentioned earlier, with our initial angels, the money was important, but the advice and the counsel is priceless.
Scott Nelson: That would be a huge benefit to any early stage company that can build out a group of healthcare systems that want to invest in their company. Not only does it help fund the company for future clinical trials and commercialization, but it’s an open door to the healthcare system in and of itself.
I wanted to ask you about your thoughts on value-based healthcare because it does seem that PIVO sits at that classic intersection of improving the patient experience, while also helping our healthcare systems achieve a certain amount of financial profitability. So how do you think PIVO fits into that equation, and maybe just your brief thoughts on value-based healthcare overall?
Eric Stone: There is a sea-change for value-based purchasing and the democratization of information, more competition amongst hospitals. Patients have more choice now with their insurance plans and they have the internet, which gives them more information. And I think that’s why in part you see hospitals increasingly marketing themselves, and why you see billboards that suggest ER wait times in a city or a community that has more than one hospital.
I think it is hospitals that are vying, in many respects, for their own survival. And so to have a technology that is better for the patient, that enhances patient experiences where we know there are direct dollars from value-based purchasing associated with that patient experience and patient loyalty.
A procedure that can be safer for the practitioner, by removing the needle from the equation, that can potentially be safer for the patient, there truly is direct and indirect dollars and cents.
There is of course the efficiency argument, which in that “DIVA” patient, a practitioner can spend 30 minutes to an hour trying to get blood out of – and sometimes multiple practitioners. So when you look at those different domains, you look at the occupational health impact for providing a safer experience by removing that needle for the practitioner.
We come back to that 30% of inpatients that are DIVAs, not to mention the waste of materials and time and drawing blood across the procedure that we may do one million times in a hospital, the dollars and cents quickly add up. We’ve been having a lot of fun working with our hospital partners, and our customers, because the very first thing we do when we engage with them is we access every inpatient blood draw that they did in a given calendar year.
We slice it, we dice it and we come back, and we tell them how many they did, what percentage were between the hours of two AM and seven AM. What percentage of their patients had two, three, or more blood draws in a given day, and I think the insights, irrespective of our innovation, are quite profound. You see hospital CMO’s and CFO’s looking at one another almost in shock. It’s really gratifying to be able to help them recognize what’s happening in their hospital, and then very quickly provide them a solution to some of those opportunities.
A technology, a procedure, a practice change, it will not fly if the dollars and cents don’t add up. We are doing that work with our hospital partners now, and I’m quite confident that what we are going to provide is going to be better for everyone including the hospital and they will be significant dollar savings behind it.
Scott Nelson: No doubt. Such a great story. It has been fun to have a conversation, learn a little bit more about your background, Eric, as well as the Velano Vascular story.
Let’s conclude the conversation with the last three rapid-fire questions. Eric, what’s your favorite business book?
Eric Stone: Undoubtedly, On Becoming A Leader by my late mentor Warren Bennis.
Scott Nelson: Great. Is there a CEO that you’re following or one that’s inspired you in the past?
Eric Stone: A CEO that’s inspired me in the past and inspires me today is Michael Osso. He’s the CEO of the Crohn’s and Colitis Foundation of America. Healthcare nonprofit that I’m a national board member of and is affecting the lives of the 1.6 million Americans that have Crohn’s and Colitis.
Scott Nelson: The last question for you Eric is, if you could rewind the clock and give your 25-year-old self some advice, what would it be?
Eric Stone: That’s a tough one. Probably be patient. Be patient personally, professionally and even from the perspective of having an impact. Good things will come.
Scott Nelson: Good stuff. Thanks, Eric.