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Voice of Industry

Biomet Founder Dane Miller Remembered for His Innovations and Leadership

We’re saddened to know that orthopaedics lost an industry pioneer in early February with the passing of Dane A. Miller, Ph.D., one of four Biomet founders and CEO of the company from 1977 to 2006. He was 69.

His legacy is one of a technology innovator in the advancement of biomaterials and implant designs, and as a loyal leader who fostered an ownership culture among thousands of Biomet team members. Under his leadership, Biomet grew from $17,000 in revenue in 1978, its first fiscal year in operation, to more than $2 billion in 2006.

Miller’s business philosophy and industry predictions were highlighted in a 2004 interview with ORTHOKNOW. Many of his points continue to resonate today. We’ve republished most of the conversation below.

ORTHOKNOW: The Biomet story is an inspiration to many: the little guy taking on the giants and prospering against the odds. What basic advice would you give a start-up in the orthopaedic market today?

Dane Miller (DM): A couple of things. First, many people say that companies fail because of a lack of capital, but rather, they fail because of improper utilization of capital. After all, you can start a business with $10 if you’re delivering newspapers. The company’s plans and objectives must carefully account for the way funds will be spent and the investments made.

Secondly, take small steps, don’t cut corners, learn by experience. If you take big steps, you’re more likely to fail. If you do things, you will make mistakes, but the key is to learn from your mistakes. When things go wrong, you must step back and look honestly at what happened and determine what to do to fix the issue. If companies lose that ability (to allow mistakes), politics creep in and people begin pointing fingers and looking for people to blame, rather than diagnosing what went wrong and then trying to fix it.

ORTHOKNOW: How does a company prevent that from happening?

DM: A lot of hard work is necessary to prevent that from happening. I believe in organizational entropy (if left alone, the organization creeps toward disorder). You must stay on top of things. I tell people that I report to more people than anyone else in the company (because I am responsible for all in the company). A big part of my job is environmental engineering—ensuring that we have an environment that allows mistakes and encourages employees to step out of the box and not fear reprisal.

ORTHOKNOW: What, do you predict, will be the financial impact of the introduction of increasingly expensive technology into the orthopaedic market, and how do you see global healthcare systems absorbing the impact?

DM: First, (you) must carefully separate the cost of new technology from the (cost of) increased utilization of new technology. Most of the focus in orthopaedics is on the cost of the implant. But, for example, there are low revision rates in total joint replacement, which is favorable, but the cost of a revision is high. So, the additional cost of new technology to reduce revision rates (further) is (a) good investment, as it leads to a total reduction in cost to the (healthcare) system. We are interested in the cost associated with the patient as they go in the front door and out the back door (of the hospital). So, an additional $100 cost to the implant might save the $500 to the system.

ORTHOKNOW: Does everyone understand that distinction?

DM: The understanding of this issue is improving but is still not very good. Here at Biomet, we have very sophisticated cost accounting systems that allow us to know precisely the cost of each machine (and our operations), but the sophistication of cost accounting systems in a hospital is poor. If you ask a hospital administrator how much it costs to do a total joint in his hospital, he will tell you $8,256, but if you ask him to explain how he got that number, he will admit that he called the OR supervisor and that is what she told him. (They use) a cost build up (wherein they add up the equipment costs).

There’s a real good argument that the only way to control costs is through technology. You can shave the doctors’ income, you can shave payments to the hospital, but that won’t get the job done.

ORTHOKNOW: What about the industry is fundamentally different now from what it was in 1977? What key things have not changed?

DM: When we started Biomet, (it seemed clear that) there was room in the market for a firm like Biomet. The orthopaedic industry (in the late seventies) was a two-tier market; there were four firms that were all owned by pharmaceutical companies (Zimmer was owned by Bristol Myers, Howmedica was owned by Pfizer, DePuy was owned by Boehringer Manheim, Richards Medical—now Smith & Nephew—was owned by Rorer Group). There was room for an aggressive company not affected by the pharmaceutical market. The difference now is that there are many ‘pure-play’ orthopaedic companies.

Many of the predicted changes (for the orthopaedic market) haven’t happened. For example, it was predicted that orthopaedic implants would simply be shipped to a hospital in the same manner as other surgical supplies, such as gloves, without a sales rep to assist. But orthopaedics is still driven by the surgeon, (and a) big part (of the success of the implant) is installation. The reps are required for proper training of the surgeon and the OR staff. (The specifics of each product’s instrumentation system are) not taught in any medical school, residency or fellowship program. It could be said that the raw material that arrives in the Biomet box is incidental to the overall service provided by the representative.

ORTHOKNOW: What potential political or government actions (regulatory, reimbursement, etc.) are most critical to the future of the U.S. musculoskeletal industry over the next five to ten years?

DM: I co-authored an FDA whitepaper which represents FDA’s internal opinion that while there is still a rapid expansion of research into new technology, there is (in the U.S.) a slowdown of translation of those technologies into treatments, because of the large regulatory burden. In most other countries, it is the responsibility of the manufacturer to demonstrate the safety of the product or treatment. In the U.S., the manufacturer must demonstrate (not only) the safety, (but also) the efficacy of the device. Other countries believe that the market forces will drive out ineffective products.

ORTHOKNOW: How do you think the public perceives the orthopaedic/musculoskeletal industry today? Are you concerned about the medical device industry being portrayed unfairly in the press?

DM: There is a far better understanding than there was ten to 20 years ago, but unless they (the general public) have had specific experience with some (musculoskeletal) condition, they have limited knowledge of orthopaedics. Unfortunately, the only source (for orthopaedic information) for many is the media. I have never turned on my T.V. and heard a story (about a failed implant) that also provides the total number of implants used or the number of successful implants. Never is the denominator mentioned. For example, with the Centerpulse issue, it would have been nice to know that, for the 15,000 or so implants affected, that 200,000 or 500,000 successful implants were put in.

(This has) a secondary (negative) effect on engineers, as they are portrayed as if they deliberately designed a poor implant or were negligent. It all adds inefficiency and cost to the system.

ORTHOKNOW: Take us ten years down the road. What will orthopaedic technology be like?

DM: Well first, I’ll describe what I think a total knee will look like in 2024. (The surgeon) will open a box containing some chemicals and a couple of membranes. The surgeon will shape the surfaces of the bone ends using precision-controlled minimally invasive instrumentation, and the two membranes will be placed in the knee: one on the patella and one on the tibia. The membranes will be composed of a self-curing, high wear-performance polymer. Then, the surgeon will use a sheet from a roll of memory metal and insert it into the joint, and it will be reconfigured with wire. All of this will be done via small arthroscopic portals that will then be closed with a single stitch or glue. The patient will wake up from anesthesia, will smile, shake the surgeon’s hand and happily go home (immediately) after the procedure.

Minimally invasive unicompartmental knees are an example of an interim step (to the futuristic knee). Sure, the patients don’t wake up and go right home, but it’s a brief hospital stay. We are moving in that direction. (Thus far), the limiting factors to minimally invasive surgery are not the tools, but the size of the implants. Modular implants can be placed using smaller incisions and we’ll use computer-driven instrument sets.

The full executive summary can be found here.