While attending Health:Further in Nashville earlier in the month, we had the opportunity to meet and talk with a number of AngelMD members. Dr. Jeffrey Hausfeld is a startup owner, investor, former practicing physician, and long-time healthcare facility owner. This wide variety of activities gives him a unique aspect to the world of healthcare entrepreneurship that we wanted to share with the AngelMD network.
AMD: You bridge this gap really well between physician, and entrepreneur, and investor, and jack of all trades on the innovation side of the house. Can you tell me a little bit about the Society of Physician Entrepreneurs? What’s the history there, and what’s the goal?
DJH: Doctors in general are smart people, have great ideas, wanna help people, but are not very good in terms of understanding the business. The meshing of those two cultures is an enigma to most of us. Because we’re not wired that way.
Even though we’re not wired that way, that doesn’t mean that we can’t be trained, and taught the perspective of the business. We have to understand and respect that, just as there’s a science to medicine, there’s a science to business. So, myself and two other ENT physicians said, “Why don’t we try to teach some of our young residents about how to commercialize an idea?”
We started having these breakfast meetings at American Academy of Otolaryngology about nine years ago, now. All of a sudden, we had 150 people come out for a 7:00 AM breakfast. I said, “Gee. I guess people really do want to learn this stuff.” We took it out to the general public, and, over the last eight years, now we have probably 28,000 LinkedIn members, and 30 chapters that I have the pleasure of managing throughout the world. I get to meet people that have fantastic ideas, and great insight into unmet needs. That’s really where we fill an essential gap in the whole commercialization process.
You can have people that are really smart technicians, you can have people that are terrific marketers, but, if you’re building something without understanding that there is an unmet need in the marketplace, then you better think of something else. Because if it’s not faster, cheaper, safer, and better than what’s out there today, it’s never gonna fly. And that’s where healthcare providers can really make a big difference. Because we know what’s in our tool kit. We know what patients need, and we know what we would use. Without that essential ingredient, it really thwarts a lot of innovation, because you’re building something that’s no one gonna use.
Based on that, we decided to bring the Society of Physician Entrepreneurs to the general public, and it’s been terrific. We have these local chapters that build these small ecosystems, and they have four to six meetings a year, and we invite everyone to come to our meetings. We don’t restrict our membership to physicians. Matter of fact, probably 30 to 40% of our people are physicians, and 60% are others. Others meaning lawyers and software engineers, hardware engineers, regulatory people, and people in marketing, as well as finance, and investors. They all come to our meetings, and that’s great because it takes a community to really push innovation forward.
AMD: Is it fair to say that most physicians have a bit of an entrepreneurial side to them?
DJH: Absolutely. Every physician that is in private practice thinks of themselves as an entrepreneur. Because running a small private practice, or even being part of a large private practice, you really do have to be an entrepreneur. You have to understand that you’re taking some risks. You’re not just an employee of a larger organization, and, at the end of the day, you can either pat yourself on the back or kick yourself in the butt, but the buck ends at you. That’s the mantra of a good entrepreneur.
AMD: You’re also running your own company. Can you tell me a bit about what you’re doing there?
DJH: Beside these memory care facilities, I got introduced to a biotech company in Frederick, Maryland, by the name of BioFactura.
At a pitch event, this CEO, Darryl Sampey, he gets up and starts talking about biosimilars. This is about four years ago. I said, “Biosimilars? What the heck is a biosimilar? Never heard of it.” He explains that it’s a generic version of a biologic drug when the biologic drug comes off patent. And, I said, “Gee. That makes sense.”
I was part of the great number of physicians that had to switch patients from branded drugs to generic drugs in the 1980s. My drug reps were very good and smart, in that they came in, they made sure that I was detailed in the fact that “those generic drugs, they’re made with formaldehyde, Doc, don’t you give them to your patients or you’ll kill ’em.” Back then, we believed them. So, we would write down “DAW”, which means Dispense As Written, so that the pharmacist could not substitute a generic version of the drug for the branded drug.
Now, looking back, I recognize that I really did the patients, and society, a disservice by doing that. Because I didn’t lower healthcare costs, I didn’t increase access. I also missed a very good opportunity to make some money on the switch to generic medication.
I said, I’m not gonna do that again. Because this is the next big wave of the potential to really reduce healthcare costs, and bring products to patients that will be even better than their branded drug. The manufacturing progress that we’ve made in the last 20 years has increased access tremendously. This has been exemplified in the European models where they’ve had a 400% increase in the use of these biologics and all the while the price came down.
AMD: That’s an incredible opportunity, and now you’re in on it.
DJH: I’m in on it, I’m the chairman of their board, I’m their chief medical officer, and I’m the largest investor of BioFactura.
AMD: In that regard, you’re not just an advisor, you’re also practicing entrepreneurship. But this is far from the first foray that you’ve had. You talked about the memory care facilities, and you’ve done some other entrepreneurial activities as well.
DJH: Oh, yeah. I serve on several boards of other companies, and I’m an angel investor in a healthcare startup.
AMD: What do you wish that more physicians knew when it comes to entrepreneurship?
DJH: I guess what they have to understand is that physicians fail in their attempts to create a new venture, or a new device, because of a few different things.
Most of the time, it’s arrogance. I hate to say that about my colleagues, but sometimes they’re just not smart in terms of accepting advice from others. Understanding that, at this moment, they’re not the smartest person in the room.
There is a low emotional intelligence quotient. They have to understand that if you’re going to build a company that is producing a product or a service, other than your own medical office, you have to make the environment right for bees to make honey. That means you have to empower your employees, and you have to nurture them, and exemplify their strengths. That’s the way you get productivity and accountability, in terms of manufacturing and innovation, in your own business.
When you’re bootstrapping a business, and when you’re dealing with other people’s money, especially angel money, you have to have that fiduciary responsibility that it’s other people’s money, I need to make sure that I’m spending it wisely.
Just the understanding that there’s a science to business, and respecting that, and learning that, is probably the biggest hurdle. That’s what SoPE tries to do.
AMD: I think it’s interesting that when I asked you about other entrepreneurial activities, that you discuss being an advisor, and being on these boards. I think that that’s something a lot of physicians miss is that being an entrepreneur is not always necessarily about “let’s go start this new company.”
DJH: That’s exactly right. But, most times, they don’t want to be in the CEO position. They want to be, but they don’t want to be. They have an idea, they’ve even gotten to the point of getting a patent on that idea, and they want to be the sole owner and steward of that idea as it goes through the process of regulatory and finance.
The problem with that is…just that. They have a day job as a physician, and in their free time, they’re going to try to raise money from angels to work on their project. What I tell them is that I never invest in a company where I don’t have a full-time, totally devoted employee to make sure that this project goes forward.
Because, at the end of the day, patients come first; and their loyalty will be their patients. It should be to their patients, and, if it’s not to their patients, they’re not the kind of person I want to invest in anyway.
AMD: What’s surprising you in the world of entrepreneurship today?
DJH: I see more and more young physicians finish medical school, maybe do a year of training, and then leave. That is a trend that is much more popular today than it was when I was in practice. As surprised as I was, I’m not surprised anymore. Because these young people are making a good deal of money in being advisors to companies, and being analysts for research firms, and for investment banks, and they’re making their contribution in their own way.
It’s not seen as — you’re a pariah, you’re leaving the force — you’re just doing things in a different way, to help society and to further your own career. It’s just a matter of young people looking at potential opportunities. Often times, they look at medicine, and they look at the changes in the patient/provider relationship that over the last 20 years. They said, you know what? This is not what I want to do. I don’t want to be in an employed physician, which is what most physicians that come out of medical school now are. They don’t want to be looking at an EHR on a laptop instead taking care of patients, and be on the timer that they have to look at every 10 minutes to see somebody else. So they say, what’s an alternative?
AMD: Final question for you. Why are we seeing a shift toward entrepreneurship today?
DJH: For those that have been in practice for so many years, and they see that their incomes are steadily declining, and they’re expenses are steadily increasing, they’re looking for alternative revenue stream. They can leverage their years of practice and experience. Innovation and commercialization of products become another aspect of what they could do, we just have to teach them how to do it.
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