Crooked-toothed teens may want to consider sliding a picture of Tom Prescott next to that fading "Twilight" poster on the wall.
The CEO of Align Technology (NSDQ:ALGN) may not be as dreamy as Edward the vampire, but the head of the Sunnyvale, Calif.-based maker of Invisalign invisible braces is doing his best to free teens from the tyranny of the wire-and-bracket braces that have dominated the world of orthontistry for more than a century.
Disrupting the dental industry isn’t easy, Prescott told MassDevice.com. But Align has aggressively grown into a clear market force in the industry, with more than 2 million Invisalign products on the market and about $500 million in annual sales, in part through 1 of the most aggressive direct-to-consumer campaigns ever seen in medtech. The result? Prospective patients are asking their dentists for Invisalign by name.
We sat down with Prescott recently, in advance of his appearance at the MassDevice Big 100 West Dec. 11 in Newport Beach, Calif., to talk about how Align’s sales & marketing model works and explore how the lessons embedded there could be applied to the medical device space.
MassDevice.com: Is the dental industry facing the same problems as the device industry, in terms of uncertainty around its business model?
Tom Prescott: The dental industry is mostly private-pay, with patients paying out-of-pocket plus pre-paid insurance through a Delta or 1 of the other big providers. It’s not capitated insurance, like the Kaisers of the world. People are used to paying for part of, or sometimes all of, their procedures.
In our case, orthodontics has a pretty consistent set of benefits, but patients are typically on their own for at least ½ of the cost of the treatment. It’s a pretty stable industry, so it’s not as affected as much by all the changes in healthcare. However, dental technology was thrown in with medical devices, so like everyone else, on Jan. 1, we’re getting a 2.3% excise tax on revenues and everyone in dentistry is sorting through that as well.
It is different than medical devices, in that it’s not based on CMS for reimbursement. There is very little Medicare payment for dentistry and certainly not for orthodontics. It’s a bit sheltered and probably 10% of the size of the total healthcare bucket, which is still relatively small in comparison.
MassDevice.com: When you look at the dental world, it’s mostly patient-paid and it seems like there’s more understanding from the patient about paying for the care they receive. On the general healthcare side, patients don’t have the same tolerance or belief that they should have as active a role in paying for their care. Where’s the disconnect? Has the dental world just done a better job of communicating the value of its services, or is it something deeper?
TP: I’m certainly not an expert in healthcare insurance but have been in the Medical Device industry for over 25 years. Most industry participants share a view that economics has to be reintroduced back into the equation for total costs and healthcare expenditures to become better managed. If I look back to when I was a kid growing up, we had a family doctor and insurance to the extent that it existed, was for really big problems. Back then [health insurance] was more of a stop-loss type of a program. I can remember going to the doctor’s office and my mother would write a check for setting a broken bone or something. Now, in general, you just leave the office and they figure out what to charge the insurance company while the patient waits to get their portion of the bill at the end of the process. The patient has no idea what costs are either for an acute event or for management of a progressive disease state. I am pretty sure if we as patients could have the information and had incentives to use resources appropriately a lot of things could change.
What if you gave patients incentives to be more aggressive in physical therapy instead of immediately going for a knee surgery? Who would want knee surgery if they didn’t have to have it, if there’s a logical path that takes you towards rehab vs, surgery for the same outcome?
One of the things that’s really missing here is getting economics working again back in big healthcare. There are areas of medicine, which are completely private pay. In dermatology pricing on a net adjusted basis has been going down over time due to competition and productivity both at a provider and supplier level. Competition works. People line up for their BOTOX and the market works and people fit it into their spending profile. If it’s important enough they do it.
Most breast augmentation surgeries are done totally out of pocket and while that market tracks in general with the economy, it has been competitive and the players around that space position themselves for success.
We don’t have those same economic dynamics working for most of the broader healthcare industry. Therefore, the incentives for people to use judgement are missing. What if, as a consumer of healthcare resources, you could approach this differently by having your premiums go down because you were less intensively using resources. Why not give charge individuals more if their overweight or they smoke – significantly more? We know they’re going to use more resources because it’s a choice. Give everybody that choice and let them see the cost over 10-15 years.
I really believe that as we continue the journey to reform healthcare, we must integrate rational economics, market forces like competition, and information so consumers can make choices. This will be difficult because the entire provider and payment system is not organized that way today – but it will be worth doing.
MassDevice.com: Speaking of communicating value, how do you communicate the value of Invisalign to your customers and patients?
TP: The first is communicating value to our customer, who is the orthodontist or the dentist. There’s a substitute product to Invisalign called brackets and they’ve been doing it for 100 years or more. Braces, or wires and brackets are well established. They are the standard and we come along and have a disruptive technology that requires doctors to change the way they provide care. Getting doctors to change behavior is always very hard. There are always economic reasons, social reasons, clinical reasons to address.
In dentistry, the standard of care changes more slowly than in the broader healthcare or medical device market due to many factors. These factors include the relative lack of morbidity or mortality associated with dental procedures, the large fragmented nature of the delivery system – as over 90% of procedures take place in sole practioner offices, and less focus on outcomes. In the broader medical device industry, when dramatically improved outcomes can be demonstrated, the standard of care can move rapidly. Of course, getting that cleared by regulatory bodies or approved for reimbursed is an entirely different issue these days.
In dentistry, there’s very little morbidity or mortality, so some of the forces involved in changing the standard of care that drives doctor behavior. So, you have to go back to the question of ‘how are you going to become a good partner to the doctor?’
For Align, we are enormously active in practice building if the orthodontist or dentist works with us and implements Invisalign into their practice. We help them grow their practice base. If a dentist brings in Invisalign to do simpler cases, while referring the really hard one’s to an orthodontist, they have the benefit of picking up that new patient and their family for a long time. That’s an annuity. Those patients are coming in for their hygiene visits, their care. So moving beyond the Invisalign treatment, which likely brought that patient to the practice, they now have an opportunity to give that patient a great experience and get them to switch themselves and their family to the new practice. We are a very good practice building partner.
That said, not every dentist sees that. They tend to be more passive. For example when you go to your dentist for a routine hygiene visit they don’t tend to offer other services unless the patient explicitly asks for something. They’re not at all like dermatologists, or ophthalmologists where they’re more inclined to up-sell a procedure. Dentists tend to treat exactly what you came in for. If you came in for a hygiene visit that’s what you’re going to get. If you came in with a toothache, they’re going to take you towards a root canal or crown but in general dentists are passive.
Dentists that are less passive tend to be out there trying to sell implants, cosmetic procedures, restorative work. There are some that are very aggressive but out of the 140,000 dentists out there there are maybe 5% that fall into that category.
On the orthodontist side, these doctors are very comfortable with brackets, they’ve been doing it for years and most of them tend to work 3-4 days a week. They’re booming with kids and teens during the summer and then they pick and choose the patients they want to work with for the rest of the year. Our job is to displace brackets and wires but our product is more expensive, even though it’s more profitable for the orthodontist. It really requires a behavior change so we’re still early on in the adoption game with the dentist and orthodontist and our innovation around product and technology is to eliminate any advantage brackets and wires have. That’s a pretty long journey but we’re satisfied with slow steady adoption and utilization growth.
In parallel with those efforts we have our consumers (potential patients) and patients – either completed or in treatment. We actually just started our 2 millionth patient earlier this month.
Patients are very or extremely satisfied with Invisalign and 90% say they would recommend Invisalign to a friend. The value proposition is just so much better for a patient versus brackets and wires. We have people who had braces as a kid and their teeth have relapsed and they just do not want to go back to braces. We have teenagers who now have a choice and plead to their mom and dad to do Invisalign and we have more and more patients, both Teens and adults, asking for our product by name.
So, as we earn our way into the adoption game with dentists and orthodontists, we’ve created a pull from consumers who are asking for Invisalign by name.
MassDevice.com: How are you creating that pull with the patients?
TP: We have a very robust consumer marketing program for a company our size. We invest real resources and effort into this strategic and tactical lever. We have an integrated platform of traditional media, both tv, radio and new platforms like Pandora with digital radio where you have much more track-ability. We have a very robust PR program on the professional side but also very robust on the consumer side. We have a lot of celebrities and athletes that use Invisalign, as this treatment just fits so much better into a busy active lifestyle.
We have worked with Disney as a platform with “Next Big Thing,” which is a kind of junior “American Idol” for young teens. We put a number of these kids in treatment and in addition to their entertainment careers, they help support our marketing message. Around all that PR, we also do event marketing. In the past, we’ve supported the U.S. Surf Open for surfing. We’ve done the national cheerleading competition. In the U.K, we sponsored the most recent season of “The Bachelor.” So, we tie all those things into traditional media on TV and connect them out with the right PR both professional and consumer.
All that ties together with a really extensive social media outreach. We’ve had close to 4 million unique visitors to our web site this year, 100s of thousands of people have registered with us and have let us follow them through their treatment as well as the search for the right doctor. We also work with mommy bloggers and high influence bloggers. Those bloggers do disclose if they have a relationship with us because we still have to be very thoughtful about this area of social media as a medical device player because the FDA has created grey lines rather than specific guidance around what you can and can’t say. When we work with bloggers we have to instruct them what they can or cannot say, concerning claims.
With that said, for a company our size, we’re really best in class in our competitive peer group and have been able to position the Invisalign brand in our consumer’s minds as the most innovative and healthiest way to straighten teeth and improve their smile. We have established real brand equity along the way.
MassDevice.com: How did you come up with that strategy? Was that always on the table as Align grew over the years? Or was there a time when your efforts were more aimed at trying to convert dentists?
TP: I’ve been here over 10 years. When I came into the company the founders were two Stanford MBA students, who didn’t have much business experience but they did some things really right. First, they focused on and created great intellectual property, based on input from the experts around them and the board, and they filed great IP and we’re still living with that benefit. We’re very innovative as a company and invent a lot of the technology we use and pioneer this invisible orthodontic space.
In the very early days, those same founders were frustrated because they were not having success with the doctors or gaining any meaningful adoption. So they decided to go right around the doctors to the consumers. They spent a lot of money early on. A lot of that money was wasted but it did start the company off with a bang. A lot of the effort and investment turned into demand for conventional treatments but it did start to carve out a position for the company.
When I came in we tried to balance it a little bit. I felt we needed to double down on R&D and technology to close the gap between what Invisalign can do and what brackets and wires can do. And we needed to start creating the kind of proof like clinical, profitability, or practice feasibility studies that doctors need to change behavior.
And then we started balancing consumer marketing with the professional marketing. The two work very closely together now. The whole upstream strategic product and technology development cycle, along with downstream professional marketing is very complimentary to consumer. At the end of the day, the product has to work very well to displace existing practice patterns. Having consumers ask for a product by name can help accelerate demand and adoption but not if there are fundamental gaps in product performance.
We have been working with this integrated marketing platform for the last 7 plus years and we know there is still enormous untapped demand with people who just don’t want to do braces. Our job over time is to get them ready and when the time is right help them find then right doc.
In parallel, we’re earning our way bit-by-bit into the doctors practice chair by chair.
MassDevice.com: You don’t see that approach in general medical device, do you? They spend most of their marketing energy on professional marketing and very little on the consumer side. Is that short-sighted?
TP: I don’t know if it’s short sighted. I’ve gotten a lot of calls from board members, VC’s who call me and the typical call goes like this.
‘Jeez, my board is all over me and they say we got to start doing consumer program like Invisalign.’
My first gut check is, maybe that’s the right thing but ‘what’s the problem statement?’
If the dogs aren’t eating the dog food, is the dog food bad? Does your product really work? Is the value proposition good enough for the customer, which is the doctor in this case.
Secondly, it may be that the consumer can help mobilize the doctor but what’s the value proposition for the consumer? There are many areas in healthcare where consumers really don’t want to deal with medical problems, and don’t want to talk about it. How are you going to mobilize that kind of demand?
In terms of consumer marketing for untapped conditions, Viagra changed the game when Pfizer came out with it’s ads featuring Bob Dole doing backflips down the beach. That tapped into a market for new “lifestyle” therapy for aging men everywhere.
The lesson is that not every value proposition is going to work for the consumer for traditional consumer marketing strategies, yet there are ways to better engage patients or potential patients through traditional and non-traditional media like social media. Many medical device companies can become more active in this area to help their customers (the doctors) be better in outreach and communications with patients. If companies can use effective and knowlegable marketing to help them connect with their patient base differently there’s opportunities out there to build credibility, create advocacy, and improve awareness.
Medical device marketing has traditionally focused on the professional side: new product fevelopment, clinical trials, professional marketing and clinical PR to drive adoption. Medical device companies tend to hire more traditional marketers that are used to medical device marketing. Even if your firm is not a perfect fit for broader consumer marketing initiatives, there are still many elements from the consumer side which can create benefits. In the emerging areas of social media and new marketing platforms, I suggest building a small team of younger professionals from a good MBA programs, teach them about the medical device industry, regulatory policy and the FDA and have them work closely with the professional, clinical, and product teams to develop a social media strategy. You don’t necessarily need a lot of resources. You need effective guerillas here.
But it’s a different way to do business. You need different skills than traditional medical device marketers possessed. You must be able to establish newer, more contemporary product ideation processes, do qualitative and quantitative market research with focus groups, and create a new set of disciplines across the business
MassDevice.com: It sounds like traditional medtech companies can learn a lot from looking at Align. They can’t copy the blueprint, maybe use it as a guide?
TP:When I went to my MBA program I was working with GE Medical and I had friends that were brand managers for Gatorade and P&G. A lot of the good marketing processes came out of those companies: ideation for product development, qualitative and quantitative research in a scalable way. Many medical device marketers and product developers are used to dealing with scientific or clinical advisory boards to identify and focus upon unmet needs, followed by the race to first-in-man and dealing with the FDA and CMS. That’s the journey and they’re primarily focused on unmet needs – principally from the doctor or provider.
When you start to deal with the consumer, it is far more difficult to establish needs, map those to potential benefits, and determine how to best tap into that to create demand.
I have learned to appreciate the model developed by the great leaders in consumer marketing and would suggest taking what you can, learn what you can from those businesses.If you want to start going after the consumer you must hire the people with that background and bring them in. If they don’t have a medical device background, teach them medical device. But encourage them to bring that approach, technique, discipline. You have no shot at the consumer if you don’t have those skills in the company and you are likely to waste both time and money.
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