According to research released in the Journal of the
American Medical Association last year, hospitals in 2010 performed 243,802 knee replacement surgeries, up from 93,230 in 1991. According to the study, annual demand for knee replacement surgeries could reach 3.5 million by 2030. The researchers attribute the potential increase to various factors, including aging baby boomers.
The popularity of the procedure and the price of knee replacement devices are contributing to rising health care costs, says Harold Linville, co-founder and chairman of Dayton’s
NovoSource.
“The market for knee replacement devices is dominated by three or four companies,” he explains. “They provide great products that produce excellent results, but their overhead is huge, with large facilities, big staffs, expensive advertising and a costly distribution system.”
NovoSource is introducing its own knee replacement device. “It’s being manufactured by one of the companies the big players use to make their products,” he says. “Our device is made of the exact same materials and has the exact same functionality. The quality is the same. The difference is that ours will be much less expensive.”
The reason, according to Linville, is NovoSource’s streamlined business model.
“We have a significantly lower overhead, with fewer employees and one sales person,” he says. “We also have better supply chain management because we’re working with our suppliers to establish long-term manufacturing agreements. Our approach also means we can maintain a lower inventory without tying up money.”
The company won’t be doing any advertising and will sell directly to hospitals and surgeons. “In terms of overcoming skepticism about considering our device, we’re able to provide data to prove that the quality of our product is just as good as anything else available on the market,” he states.
NovoSource’s knee replacement device is under final review by the FDA, and results are expected soon. The company plans to start distribution in Florida with the surgeons it worked with to develop the product.
NovoSource received $1.2 million in funding from the Dayton Development Coalition, with the rest coming from angel investors.
Source: Harold Linville, NovoSource
Writer: Lynne Meyer