As CEO of closely-held SIGMA Surgical, an upstart data-analytics company, Gagan Gill has a passion for entrepreneurial adventure and startup culture. After stints in sales and marketing in the medical devices sector, he jumped at the opportunity to join SIGMA and work on a business that has the potential to affect real change in healthcare efficiency. Poor communication and a lack of standardization in the way surgery is performed costs the system billions of dollars. In this interview with BioTuesdays.com, Mr. Gill discusses uncontrolled variance in surgery and SIGMA’s solution.
Let’s begin with a brief history of the company.
The seed for SIGMA was planted when Dr. Evan Garfein, chief of plastic surgery at Montefiore Medical Center in the Bronx, NY, came to the realization that throughout a surgeon’s professional life, there is no simple way to get better. From the time he or she finishes training until retirement, no one with as much or more experience would ever watch him or her in the OR. Improvement for surgeons is random, inefficient and haphazard. When we looked at the data, we realized the resulting variance for surgeons performing the same operations is enormous. When Dr. Garfein approached other surgeons, hospital administrators, quality personnel and malpractice underwriters with a simple solution to the problem, the response was unanimously positive. Thus, SIGMA Surgical was born. The other co-founders are Dr. Reza Yassari, chief of spine surgery, and Dr. Marc Gibber, assistant professor of otorhinolaryngology, both at Montefiore. The opportunity to work with this team was too exciting to pass up.
Before we get to the solution, how big of a problem is variance in surgery?
Surgical process is almost totally undefined. The result is uncontrolled variance in the way surgeons operate, and it is a major contributor to inefficiency. Outcomes vary enormously among surgeons performing the same operations. The resulting costs associated with these variable outcomes represents a $150-billion opportunity for efficiency in U.S. healthcare that nobody is looking at. Outcomes are derivative of process. It is difficult to improve a process without first defining it. Currently, there is no simple way to define and communicate the process for a given surgery.
How much variance is there in surgery?
Our analysis found that some surgeons require 90 minutes to perform an appendectomy, for example, while others do it in 30. Some surgeons use $3,000 in supplies; others use $800. The same procedure can take twice as long to perform and at twice the cost, depending on which surgeon is in the OR, and surgeons and hospitals have very little idea why. Medicare and private insurers pay the hospital a fixed amount for the appendectomy, so the hospital can be losing money with one surgeon and making money with the other surgeon.
Variances in surgery represents a $150-billion opportunity for efficiency in U.S. healthcare.
What’s the direct cost of variance at Montefiore, for example?
Looking at data from common operations, we calculated the cost of variance for the 30,000 annual procedures done at Montefiore to be $47-million. That breaks down to $28-million based on additional time spent in the OR and $19-million, representing excess cost of supplies.
And what kind of savings could you generate?
A 15% reduction in variance would save Montefiore $7-million annually, of which $4-million would be less OR time and $3-million from lower supply costs. A 15% reduction in operating time variance would allow more operations in a 10-hour day, with an estimated 7% increase in surgical volume a year. There are additional benefits of a variance reduction, including lower staff turnover, decreased malpractice premiums and marketing and PR benefits.
So what’s your product?
In order to improve a process, you must first define it. SIGMA’s web and mobile platform allows surgeons to define the steps of their common operations and communicate their surgical flight plan to the OR staff. The analysis of this data allows hospitals and surgeons to target the source of medical inefficiencies and make improvements. All of the data is stored on SIGMA’s HIPAA-compliant cloud database.
SIGMA found that some surgeons require 90 minutes to perform an appendectomy, while others do it in 30.
What’s your business model?
It’s a SAAS business model. We are providing hospitals with access to our authoring tool and basic analytics at minimal cost, which should facilitate better communication in the OR. Subscription to our advanced analytics platform is available to hospitals for a cost between $5,000 and $15,000 a month.
Do you have any commercial contracts you can discuss?
We have licensed our IP to one of the world’s leading medical technology companies, which will place our software in thousands of operating rooms. The program should be commercially ready by mid-2016. We also have a commitment from a large malpractice underwriter to place our software into 14 New York City hospitals to help reduce their malpractice burden.
What’s the market opportunity of your platform?
There are more than 9,000 hospitals and ambulatory surgical centers in the U.S. and more than 100,000 globally. In the U.S., the total addressable market is about $1.1-billion a year at our current average monthly subscription price of $10,000 per hospital.
How do you differentiate yourself from the competition?
Some companies are looking at this problem but not in the right spot. They can tell you that surgeons are different but not how they are different. And, as importantly, they don’t give hospitals and surgeons the tools to improve performance. That’s where we’re different. Other companies are looking at videotaping what’s happening in the OR, so they can analyze that data afterwards and give surgeons information on how to improve. The problem with this approach is that it’s not really scalable and it’s very labor and technology intensive.
SIGMA is currently trying to raise money. What are the proceeds earmarked for?
We have reached several major milestones; we have acquired some seed funding, built a minimum viable product, secured commitment from a large corporate customer and signed an agreement with a major medical device company. Now, we need to execute on our commercial strategy. That involves building out our commercial data-analytics platform and beefing up our database to handle the expected influx of data. We need to hire additional staff to support our commercial efforts, including a development team, data analysts and sales professionals.
According to SIGMA, the same procedure can cost twice as much to perform, depending on which surgeon is in the operating room, and surgeons and hospitals have very little idea why.
