A Global Healthcare Giant Engineers and Builds New In Connecticut
By Mitchell Young
NORTH HAVEN: Leon Hirsch was hoping to get his entrepreneurial dreams flying in 1963 in the helicopter parts business, when he came across a device described as a “surgical stapler” in a meeting at a patent broker.
The device seemed poorly designed to Hirsch, but he quickly understood its utility in providing a surgeon an alternative to sutures and “needle and thread” stitching.
Soon Hirsch had outfitted a prototype in his basement, and in 1964, he started the fledgling United States Surgical Corporation with four employees.
Hirsch’s early innovation helped to change how surgeries were performed, and his company, would become one of Connecticut’s most successful "start-ups” ever.
More than four decades later the “company” has stitched together its accumulated knowledge of Minimally Invasive Surgery MIS, [entering the body cavity through small incisions or even existing orifices], with advanced engineering, electronics and manufacturing techniques.
Today’s innovation is an entirely new device with the introduction of a new generation of surgical stapler – The Signia (TM) Stapling System, built by the successor company Medtronic.
USS grew to about $1 million in sales by 1967, but demand for the new approach would continue and by 1983, the company was capturing $160 million in sales and playing an important role in how surgeons were revolutionizing many surgeries.
The company’s fortunes in 1983 were already well set, but they were about to take off as MIS was emerging as a preferred approach around the world.
The use of some minimally invasive techniques can be traced back to Hippocrates, but widespread usage began in the 1980s. Today from Cancer to Bariatric to Gall Bladder surgery, minimally invasive surgeries, typically referred to as laparoscopic are nearly always the preferred option.
For example, more than 600,000 laparoscopic Gall Bladder surgeries are performed in the U.S. alone each year and the company’s surgical staplers for closing wounds became an essential tool for the new MIS surgery techniques.
By 1998 Tyco then primarily a “security” systems company was moving into Healthcare and it purchased USS then with revenue of approximately $1.7 billion for $3.3 billion.
|Manual Medtronic Surgical Stapler||Powered Medtronic Signia Surgical Stapler|
TYCO would spin out its healthcare business in 2007 forming Covidien and basing it in Ireland.
Covidien is a corporate name well known in Connecticut and the company and its employees have been cited numerous times for their community support efforts, earning in 2013 a Citizenship award from Business New Haven as a Healthcare Hero in greater New Haven. The North Haven operations continued to grow as Covidien as it developed its stapler and MIS group in North Haven.
In 2015 Medtronic (NYSE: MDT) purchased Covidien for nearly $50 billion.
With each acquisition, concerns were raised in Connecticut about the durability of the company’s operations in the Nutmeg State. Covidien has become a major and signature employer in Connecticut, but Dublin based Medtronic with more than 90,000 employees world-wide would seem to have many options for growing the company.
The story of the Medtronic’s Signia (TM) Stapling System will give some pause to those concerns. Medtronic has just about 50% of the world-wide surgical stapler market, and until now the vast majority of those staplers have been mechanical devices. Additionally given the rigors and rules of healthcare procedure, each would be disposed of after a single use, an anathema in today’s growing “sustainability” culture.
We talked with Ethan Loiselle Senior Director Powered & Open Surgical Staplers at Medtronic in North Haven. He told us that, “ninety five percent of Medtronic customers are still using a mechanical manual surgical stapling device,” the current devices are more advanced but essentially similar to the simpler devices used in 1993, he added “it has been the standard for more than twenty years.”
The Signia System is a total departure, explained Loiselle, “this is a handheld computer, it has memory, microchips, motors, it is all a self contained device and it can be used for 300 procedures”, adding “it replaces a device good for only one procedure and then it is thrown out, because it is not steralizable.”
One of the important innovations, is simply placing the electronic stapler into a sterile shell, [see video] while the shell also can’t be sterilized, it is an inexpensive part and allows for the powered stapler itself, to be reused.
Loiselle explained that the company is constantly taking input from surgeons and that guided the development of the new product. For example with the new system, feedback is provided that tells the surgeon about the tissue within the “jaws” of the device. In a manual stapler, the surgeon would make a judgment on the tissue, based on what they saw on a video monitor or a cue from how the device handle felt when they squeezed it.
The surgeon can also control the full operation of the stapler with one finger and rotate the “head”, it is an important ergonomic improvement. Many surgeons are doing a high volume of operations over many years, the mechanical devices can have an effect over time on the surgeon’s own hands, as they have to squeeze down to make a mechanical staple.
The mechanical devices also require both hands to operate, now one hand is free for something else.
“The benefits from MIS are great for patients but from a surgical perspective in some cases, it can be little more complicated, what Signia does is give that feedback on the tissue thickness, that they never had before in a manual device,” explained Loiselle.
|Loiselle and Chow in the development lab at Medtronic's North Haven campus|
Engineered and Built in Connecticut
“We manufacture here in Connecticut but sell it around the world, and this [product] costs a tremendous amount more to manufacture than the old standard,” says Loiselle, but he adds “because it is good for three hundred cases, it allows us to amortize [the costs] over its life. And our goal, is that over time surgeons can do more with it, different and more surgeries.”
Although some on Wall Street refer to certain Medtronic products as healthcare “widgets” the demands on surgical instruments place them in a different category than many products.
According to Yee Chow, Manager, Advanced Manufacturing Engineering, reliability testing is a core issue, and it is at the heart of the groups manufacturing and design efforts. He explained , “initially the device was accepted for two hundred uses, and now it has received clearance for three hundred. The adapter is good for twenty uses, but the engineering team is aiming for fifty uses.”
The Signia only first came unto the market in the US, Europe and Japan this past November . According to Loiselle, adoption of new devices among surgeons typically takes time, “those that have taken a shot are happy, what we’ve seen is that surgeons say, [at first] this may take ten or fifteen cases for me to understand, but they use it in two or three cases and say ‘this is much easier,’ there is very little learning curve.”
Chow explained how the Connecticut group developed the product, “It started in 2009, we acquired a first generation device from a small company and we manufactured that in house with a very small group. This [Signia] is in essence a third generation product, now we have the skill sets in soldering, putting the electronics together and in testing. It’s been more than seven years, we started back in ’09, in the warehouse”.
Loiselle adds, “when we started in power, we were definitely the entrepreneurial group within. We ship about five million of the standard units, you can imagine the scale of that manufacturing.”
Chow said “we had a small team here and a small team in manufacturing, doing things that were very highly skilled, that we had never done before.” He also explained that the group engineered the product, but they also designed and built many of the machines that assemble and test the device as well.
In a demonstration this reporter watched, every part and assembly was tested as the product moved through the manufacturing process. One test that caught our attention, a small part was weighed to be sure the proper amount of grease had been added.
“At the time  the [leadership] decided they wanted to have the competencies here. We started on a smaller scale developing the skill sets and branching out. This lab and [manufacturing unit] and our reliability lab that was a decision to have that expertise here. The skill sets we needed were skills you can get in a lot of places. Being able to manufacture a stapler is a skill set you can’t get anywhere else,” said Chow.
Loiselle added, “we and one other company make 95% of the [surgical] staplers used around the world, now we have a center of excellence for power”, adding, “we expect the [power] products to be the majority of our business in the next five to ten years.”
Both Chow and Loiselle emphasized that the company understood and supported their efforts.
Loiselle explained, Medtronic [executives] have said ‘whatever you’ve been doing as Covidien, you’ve been doing it well and right, just let us know if you need help’, holistically there hasn’t been a lot of change.”