Physician-owned companies

Area of Science:

• Biomedical Engineering
• Medical Device Development
• Orthopedic Surgery

Background:

• Physician-influenced medical device companies require careful navigation of federal regulations, including Stark Law and anti-kickback statutes.
• Establishing a successful spinal implant company necessitates balancing financial investment with scientific expertise and ethical considerations.

Purpose of the Study:

• To detail the development of K2M, a privately owned spinal implant company.
• To examine the legal framework governing surgeon-influenced medical device companies.
• To illustrate the impact of a scientific advisory board on company strategy and product innovation.

Main Methods:

• A company was founded with minority physician financial input (less than 20%) and substantial scientific advice.
• Compliance with federal regulations, such as Stark Law (which permits up to 40% physician investment), was maintained.
• A diverse scientific advisory board was established to guide product development.

Main Results:

• K2M, a privately owned spinal implant company, was established within three years.
• Over 60% of K2M's product users are non-investor physicians, ensuring broad market acceptance.
• The scientific advisory board significantly influenced product development and company policy.

Conclusions:

• K2M's development demonstrates a model for creating a compliant, physician-advised spinal implant company.
• A recompensed scientific advisory board, compensated for effort, can effectively guide company policy and innovation.
• Adherence to federal laws is paramount for surgeon-influenced medical device ventures.