Executive Profile: Jeffrey Dunn of SI-BONE

What’s the worst thing you could say to SI-BONE, Inc. CEO, Jeffrey Dunn?

“This is how it’s done.”

That’s because Dunn, a serial and notably successful CEO, revels in productive novelty.

Dunn, who once held two CEO positions at the same time, had nothing left to prove when he received a fateful call which would result in a redefinition of spinal fusion and creation of one of the most valuable emerging growth companies in medicine.

“After building and selling several companies, including one in internet analytics and another in internet testing, I decided to take two months off to ponder my next move. It was then that I received a call from a former colleague. She had invested in Mark Reiley’s ankle company in Colorado, but things were off track. When she asked me to meet with Dr. Reiley and help out, I refused, saying ‘No, I’m taking two months off.’ Her response? ‘So how does tomorrow look?’”

Jeff Dunn met with Mark Reiley the next day and within one week he was CEO of two of Dr. Reiley’s companies.

Shuttling between Reiley Orthopaedics in Berkeley and Topaz Orthopaedics in Boulder, Dunn eventually merged the two companies to form INBONE Technologies and sold the new entity to Wright Medical Group, Inc.

It all started, as many things do, with the internet.

Before ortho, Dunn was best known for his internet, 3D graphics and software companies. “The first company that I took public was one where we invented a 3D graphics automated design system to create automobiles, medical instruments and movies,” says Dunn, who has held CEO positions 7 times over 25 years. Dunn has also led a software company, an internet performance testing software company, and an internet enablement software enterprise.

Along the way, Dunn’s business instincts were enhanced by some of those who surrounded him. “Mark Reiley taught me so much about the orthopedic world. His motto was, ‘Be brave, do the right thing, and make sure that the product works! If you have to ship something late then so be it…because it has to be perfect for the patients.’”

“John Freund, M.D., a Harvard MBA and the first professional investor in SI-BONE shared much of his wisdom, saying, ‘Don’t ever have loose ends.’”

“That was especially good advice for orthopedics because you have regulatory issues, reimbursement issues, clinical evidence, distribution channels, pricing strategy, etc. The medical device arena is vastly different because there are so many customers—patients, the FDA, CMS [Center for Medicare and Medicaid Services], hospitals, commercial payors, doctors, physician assistants, medical societies, etc.”

“In many industries you only have to worry about one customer, but in medical devices the complexity is extraordinary. So, it was very useful to have John’s advice, namely, ‘Make sure you cover every base imaginable, and try to figure out how to be important and satisfy every customer.’”

Bucking Conventional Wisdom With SI Fusion

It is human nature to find something that works and stick with it…even when it begins to lose its luster. “There are times when I have proposed an alternative way of doing things and people have said, ‘Well, this is how we do it in orthopedics.’ I ignore that kind of thinking and forge ahead with something unique and workable.”

“When people said that building a company around the SI joint was ‘nonsense’ we proved them wrong. When our detractors exclaimed, ‘You will never get exclusive reimbursement from payors’ we got 35 U.S. payors on board.”

What is Jeff Dunn’s magic wand?

Data.

“We were able to convince payors that our extensive clinical evidence shows that we deserve exclusive coverage. We have 78 peer reviewed published papers and competitors don’t even have one randomized controlled trial. That is the same in France and in the UK, where NICE [National Institute for Health and Care Excellence] has stated that only our product should be used in SI joint fusion.”

“Most people view reimbursement in orthopedics as a big negative. We turned that upside down and made it into a competitive advantage. I believed that payors were tired of covering things that didn’t work or had little clinical evidence. Things were evolving such that payors only wanted to cover things that are ‘good’…and that means things that work, work quickly, and are durable so they will not have to pay again.”

“We went to payors and said, ‘What exactly is important to you?’ They want products and procedures that have low revision rates, reduce opioid consumption, and make economic sense. I said, ‘We have studies showing that our product reduces pain rapidly and durably, reduces opioid use, etc.’”

“It was clear that we had differentiated ourselves from a product and evidence standpoint. On January 1, 2018 we obtained our most significant exclusive payor win when the Blue Cross Blue Shield Association [BCBSA] which is the franchisor to all the Blues, recommended positive coverage for SI joint fusion only when performed with our product. Most of the Blues followed the recommendation of BCBSA.”

Describing the SI-BONE brand as, “A unique product backed up by robust clinical evidence,” Jeff Dunn stated, “Over my years as a CEO the saying has been, ‘Data counts, opinions don’t matter.’ When data is good, we use it to drive a strategic agenda. And when the naysayers stated, ‘You can’t get the facility payments increased,’ we were able to do just that, with outpatient reimbursements increased 40% and Ambulatory Surgery Center reimbursements increased 60% effective January 1, 2017.”

Tough, Rigorous, Independent – Dunn’s Standard for Clinical Evidence

When it comes to clinical studies and evidence of safety and efficacy, Dunn’s approach is to make “Rigor the order of the day, and indeed we have been quite tough on ourselves. If a surgeon loses a clinical coordinator and can’t do a proper job in the trial reporting, we ask them to drop out and that can be unpopular. In addition, we provided our raw data to the Yale University Open Data Access project without being asked.”

“We have invested heavily in clinical evidence and have encouraged researchers to do independent studies. Yes, we have funded many of the studies, but most of the data show that industry studies have superior follow-up because they have access to more resources.”

“We eat problems for breakfast!”

Dunn, who describes himself as “inquisitive” says the most fun he ever has is when he is learning and trying to solve problems. “We eat problems for breakfast,” he said. “There is nothing more fun and important than solving complex issues. The biggest challenge we faced as a company was in 2013 when the American Medical Association decided to make minimally invasive SI joint fusion a Category III procedure code, meaning that reimbursement for surgeons performing the procedure just fell apart. We had a run rate of $60 million and positive cash flow at that time.”

“We had two choices: either fold up the tent and go home or fight and use clinical evidence to further develop our reimbursement. We dove in, worked with the societies to create a new Category I code for the procedure in 2015, and then engaged with every insurer in the U.S., one-by-one, and we have tremendous coverage now as a result. From 2009-2013 we went from $0 to $60 million and were building a tremendous company that would have long term consequences for medicine. We almost lost the company in 2013 and the challenges from then until 2018 were monumental, but it’s been worth the fight. I couldn’t be more proud of the team that powered through those years, because they believed that we had what was beneficial for patients and met the challenge.”

Asked to expound on his proudest moments, Dunn told OTW, “Building SI-BONE has been an enormous source of pride. When Mark Reiley and I met Steve Garfin in 2008 he told us, ‘I don’t know what’s below L5, I don’t know how to diagnose anything down there and I don’t know how to fix anything down there…but I am willing to learn.’ It’s been astounding to go from that to building a terrific, booming company. In the end though, because of the complexity of the spine-joint and orthopedic business, much of the success comes down to building a remarkable team. No doubt, it’s a team sport and I am fortunate and proud to have a remarkable group driving our business forward to help these patients”

“The graphics company that I built in Silicon Valley is also a great source of satisfaction. It was the 8th fastest-growing public company in 1997—and that was when everyone thought you couldn’t design a car on a PC, but instead needed a $40,000 workstation.”

Then there is the time when people told him, “Jeff, why would anyone need a computer in their home? That is the stupidest thing I’ve ever heard of!” That was my first company…and it was the first personal computer software store in the U.S. Although it was a valiant effort, we were a bit before our time.”

But Dunn’s timing is much better these days, with hundreds of thousands of patients who could potentially benefit from SI-BONE’s technology.

SI-BONE’s Future, Dunn’s Future and, Indeed, the Future of Medicine Itself

“Our plans involve expansion in significant ways, both from a human resources and a revenue perspective. In 2018 we did more than 5,000 procedures in the U.S.; we think that the whole market is approximately 280,000 per year. Our goal is to build the number one franchise in the sacro-pelvic anatomy. If we can educate physicians and their healthcare teams about including the SI joint in a differential diagnosis, then that is a good thing because that joint is responsible for more than 15% of all chronic lower back pain.”

“The way I view healthcare in general is that there are lots of good solutions out there, but to date we have underinvested in prevention and diagnosis. Thus far we have invested $75 million in clinical evidence, diagnosis and reimbursement, our overarching goal being to change the landscape of healthcare by helping with better diagnosis of lower back pain.”

“To that end we will bring more solutions, increase our team, and build differentiated products. One of the challenges in spine is that a lot of products are commoditized and are not supported by clinical evidence. We are attempting to steer the ship with differentiation supported by solid clinical evidence.”

In addition to pointing the ship towards the SI joint business, Jeff Dunn is giving consideration to sending out another, synergistic, ship. “Yes, we will expand in the SIJ [sacroiliac joint] space, but we are also expanding in the adult deformity space and trauma spaces—but only when the products are complementary and synchronize with our core SIJ business.”

A self-described “opera nut,” Jeff Dunn can be found in the great halls of San Francisco, Paris, and Milan, accompanied by his wife, who is a medical device lawyer. “I am like a little kid when it comes to opera!” Dunn also loves spending time with his five children and two grandchildren.

As for his work life, the captain of the SI-BONE ship has a little reminder lest he wander off course.

“Behind my desk sits a fortune cookie that has been there for 30 years. It says, ‘The greatest pleasure in life is doing what others say you cannot do.’”