HL20: David Green—Disruptive Innovator Touches Millions of Lives

David Green might be the most disruptive force in medical devices today. Green's startup companies are revolutionizing the high-end hearing-aid market and the intraocular-lens market for correcting the vision of cataract patients.

This profile was published in the December, 2013 issue of HealthLeaders magazine.

David Green might be the most disruptive force in medical devices today.

Green's startup companies are disrupting the high-end hearing-aid market and the intraocular-lens market for correcting the vision of cataract patients.

The truest form of Green's disruptive thinking is the way he proved it could be done profitably with broad implications for making medical devices more affordable for people who cannot afford them.

Green's achievements, featured on National Public Radio and elsewhere, originated in developing countries but are now coming to his native United States.

"I'm helping to set up an eye hospital in San Francisco that will take what we've learned in emerging markets and transfer it here to create a revenue model where the enterprise uses its profit and production capacity to serve uninsured Medi-Cal dual-eligible and undocumented" patients, Green says.

The story begins in 1992 when Green started Aurolab, a company dedicated to making price-busting intraocular lenses, sutures, and pharmaceuticals. The artificial lenses implanted during cataract surgery then cost $300. Countries such as India performed only 800,000 cataract surgeries annually. Working with Aravind Hospital in India, Aurolab initially offered a $10 artificial lens, and India's implant volume skyrocketed to 5 million in 2001. Today, the average price of the same implant is $3 to $4 and can be as low as $2.

"It created a whole price-competitive ophthalmic industry, not just for intraocular lenses, but for all the consumables and equipment used in ophthalmology," Green says. For instance, Aurolab's suture manufacturing lowered the cost of a box of ophthalmic suture from a "monopoly competitor" price of approximately $240 to Aurolab's $23.

Green's next startup, Sound World Solutions, has begun marketing an innovative, aggressively priced hearing aid developed by partner Stavros Basseas. The device will cost a couple hundred dollars, far less than comparable high-end hearing aids.

Now Green is about to market a high-end retinal imaging system, which usually costs around $22,000, for only $5,000 to serve low-income populations. This third company, Brien Holden Vision Diagnostics, will also bring to market a highly affordable device to detect and measure brain concussion, glaucoma, and various neurological disorders.

Although Green's innovations require plenty of inventions and patents, his real strength is in redesigning the supply chains that often add excessive margin at every step of bringing a medical device to market. By analyzing and reimagining these supply chains, Green targets ways to remove "non-value-added-margin" to keep products affordable.

"If you reach the low-income strata in a meaningful way, it increases the volume of people coming who pay the higher-margin prices, and that's what makes these programs viable and sustainable," Green says. "That's what enables them to generate the margin to be profitable and to be able to do cross-subsidization, so it's all kind of like a whole virtuous ecosystem, which is in marked contrast to the present non-virtuous ecosystems that you find in most medical ecosystems where basically you're trying to maximize return on investment at all costs."

Device makers are paying attention. In India, Medtronic is working with consulting firm Innosight to market lower-cost pacemakers through the Healthy Heart for all initiative. "I'm sort of the architect behind that," Green says. "I helped them figure out how to take a Medtronic product with different branding, and how to create a different supply chain pathway to reach lower-income patients who were qualified to be below a certain income with an affordably priced pacemaker."

The lesson Medtronic and others are learning from Green: If you reach the lower economic strata in a meaningful way, it will increase the device maker's volume of higher-margin patients as well.

Unlike the world view of various nonprofit foundations and non-governmental organizations, Green believes in the free market's ability to innovate even among vast populations afflicted by poverty.

"Where I intervene is I address the pricing disparity," Green says "How do you make sight or hearing or life itself affordable and accessible to low-income people? Everything I do, it's using the tools of capitalism. I've learned just by trial and error that the tools of capitalism work to convert need into demand and to be market driving, whereas charity doesn't work."

Green draws upon a degree in health behavior, health education, and a master's degree in public health from the University of Michigan. He has no formal engineering or economics background. "I find people with extreme technical competence in whatever the arena is, and then I work with them," he says. "I assemble teams and craft business models."

Lately, Green also arranges a fair amount of financing for startups following his startup methodologies, financing such as helping Deutsche Bank create a fund that provides debt financing for eye care programs. "The whole thing about self-financing, if you're generating more money than you're spending with the social twist, that means that you're being very efficient and effective in what you're doing," he says. "You're reaching the market with something that they want. You're creating demand. They're marching to your doorstep because of accessibility and quality, and again, that's what changed the competitive landscape."

Both Sound World Solutions and Brien Holden Vision Diagnostics were capitalized in the $10 million to $12.5 million range. "A lot of the social investing funds out there are risk-averse and only put money into revenue-generating entities," he says. "It was a lot of work to capitalize those companies, and I'd like to see funds that are more into early stage risk capital for pre-revenue for companies that can be transformative in the healthcare space. That's a really big issue."

Meanwhile, Green's innovations have touched the lives of millions of people already. "Aurolab has helped 18 million people see, and that's just with the lenses," he says. "The eye care programs that I helped develop, collectively they do something like 800,000 surgeries a year, and treat 6 million people a year."

But Green hastens to add: "It's not just me, but it's all the different groups that I've helped develop and help direct how they scale, which is really an economic model, rather than a donation model."