Mark Briesacher: Hi. I'm Mark Briesacher. I'm the Chief Physician Executive at Intermountain Healthcare. And today I'm really happy to be joined by Caleb Frischknecht. Caleb is our Intellectual Property Director. He's also a lawyer. We hang out with lawyers every now and then Caleb, so I'm glad you're here.
Caleb Frischknecht: I'm thrilled to be here Mark, thanks.
Mark Briesacher: And Dr. Mark Ott. Mark is our Medical Director at Intermountain Medical Center and a surgeon there. So Mark it's really good to see you again.
Mark Ott: Thanks for letting me be here.
Mark Briesacher: Well so we are talking about intellectual property today and the reason I'm really thankful the two of you are here is because first of all there's been a lot of work and a lot of improvement I think in this area and there are some new things so I thought it would be good to have a conversation and raise awareness amongst our physicians and caregivers who are I think some of the most innovative people in healthcare. And that's across the board from kind of smaller ideas, small innovations that just help daily practice flow in the ED, better care in our operating rooms, and then there are those times where the small idea grows into the big idea. In fact it's so big that it turns out that there is a commercial opportunity where we can take our intellectual property and build a business around that. And so I'm wondering Caleb, even the term intellectual property is maybe not something that everybody thinks about on any given day. What's our definition of intellectual property?
Caleb Frischknecht: Intellectual property at its heart is an intangible property right. That means a lot of things to lawyers but maybe not so much to the rest of the world and it's better understood in what it protects. It protects inventions, it protects proprietary materials and it protects brands. Inventions are ideas, ways to do things better. It could be as sophisticated as a new product, it could be as simple as a new algorithm or a new method for administering a drug or performing a procedure, that's an invention. A proprietary material is typically a document or an illustration or something that we create while we're sitting at a computer. And a brand is Intermountain Healthcare or Select Health or Healing For Life.
Intellectual property which is what we're concerned about is a statutory right that's available for inventions, proprietary materials or brands. And if we can go get that statutory right in the form of a patent or a trademark or a trade secret then we have the ability to control how that invention or brand or proprietary material is used and distributed which provides us with the ability to ensure we can use that item here at Intermountain and that we can control how it's used outside of Intermountain which brings a stream of value back to us.
Mark Briesacher: And it strikes me as I think about that definition, there's an extraordinary amount of copyright or trade secrets or ideas that Intermountain has decided to share in very open ways with our colleagues across the country. I'm thinking about things like a care process model where we have been very generous with sharing what we've learned and kind of really view that as part of being a model health system is being that model for others and helping them come along. Is that fair to say?
Caleb Frischknecht: Absolutely. In fact, recognizing who we are and what our mission is we don't treat all intellectual property rights the same. Some intellectual assets are public IP just like a care process model that we make publicly available for use in connection with helping people live the healthiest lives possible.
Mark Briesacher: And by IP you're referring to intellectual property.
Caleb Frischknecht: I'm glad you caught me on that. Yes I might use that abbreviation throughout the podcast today. Then we have a class of intellectual assets that as you mentioned derive value just because of what they are. And because we've poured enough resources into those our expectation is that Intermountain is a nonprofit healthcare system will receive appropriate remuneration back when we allow other health systems to use that intellectual property so that we can offer better healthcare services at a better cost at Intermountain because of the revenue that's coming back.
Mark Briesacher: So Mark you with others had this really great idea a number of years ago can you. Can you tell us about that?
Mark Ott: Sure. Yeah. We had when healthcare was changing there was this opportunity through CMS Challenge Innovation Grants to apply for funding to do projects that would change healthcare and hopefully deliver greater value. And the group that I was with was Surgical Services, applied for one of those grants and like all good grants you get turned down. But it was a really good idea that we were excited about because Intermountain had done some work in this space and we knew we could do this. And so I had some initial funding that Intermountain Healthcare had given me when I came here that we used to develop this idea around how to get physicians information about what things cost and let them decide what was valuable and what wasn't. And that first year was just a human, a young man, going into ORs and sitting in ORs and just sharing that information with physicians we were able to show the physicians this information and they changed what they did and saved two million dollars in healthcare costs which was pretty good.
And then I went back to Intermountain Healthcare and said we can do this better if we can automate it. And they gave us additional funding and we turned that into a fully electronic process that could then be used across the whole system. And that led to tens and tens of millions of dollars of savings when we'd magnified that across our system. And that ultimately turned into something that Intermountain Healthcare could develop into a separate entity.
Mark Briesacher: It's a brilliant idea by the way. I mean it was first called-
Mark Ott: It was first called Spring then it became ProComp and now it's Empiric Health.
Mark Briesacher: That's right. So it really was you pitching your idea to Charles Sorenson, to Bert Zimmerli, our Chief Financial Officer, to other leaders in clinical programs, to Brent Wallace who was the Chief Medical Officer at that time. And was it their sponsorship that resulted in the funding?
Mark Ott: Yes and to be honest it was amazingly easy. Usually people think about it's really hard to get money out of anybody. And it was really kind of almost like a handshake and "Yeah, this is a good idea. We're going to pursue it."
Mark Briesacher: So Mark you just summarize years and years of work, work that really is still ongoing through a company called Empiric which Intermountain is an owner of. At what point in time in your process did discussions around we've got something pretty cool here and we should go ahead and move forward with putting some protections around this idea?
Mark Ott: I think that for most clinicians they never start these projects with an idea that this is going to be a company, an entity, that it's going to make money. It's just it's a good idea, it would make my life and healthcare better. So we didn't start out that way but as we could see how it was benefiting us within Intermountain Healthcare and as we presented it to leadership at Intermountain Healthcare some really smart people in Intermountain said "You know what, this would be beneficial beyond this. And let's make sure we have some protections around it." And so they started helping us gain that vision of this could be more than just a nice thing for Intermountain Healthcare.
Mark Briesacher: Now I'm thinking about the innovator that's out there right now today who they're working on something and somebody on the team says "Wow, look at the results were getting, this could be something that others would find value in and there'd be a market around that." So as soon as someone thinks that, what should they do?
Caleb Frischknecht: The first thing is to come to the Intellectual Property Office or to business development, there's two ways to get inside the system, and come and tell us about it. We call that the disclosure process. And really Mark is a champion in that he endured a system that wasn't as organized as we are now. And fortunately we had great people who were working with Mark as he mentioned, one of whom is my colleague Mike Mayor in the Intellectual Property Office to say "Hey you've got something here. We ought to take a look at what we might be able to do from an intellectual property perspective to take your idea and give it a competitive advantage so that we can maximize the commercial potential associated with it to give it the broadest reach of making an impact in actual hospital systems around the country."
And so in that regard we worked with Mark and four other inventors to file a patent which application hopefully will be resolved next year and it will result in an issued patent around ProComp that enables Empiric Health to now do what it does. And it can do it on a bigger scale that makes sense to attract investors and ultimately take this wonderful idea that started as a collaboration between a number of individuals and a grant application and has now turned into a sophisticated product that's actually moving the needle, not only with respect to costs but outcomes. In surgery and a number of other applications.
Mark Briesacher: So Caleb it seems to me that after discovery there's two pathways or two answers that you might get back. "Yes. This idea has merit and we're going to move forward." Or "Yes, this is a great idea but not something that we would apply for additional protections around." So in the case of "Hey this is a great idea, we're going to start the process to apply or protect this intellectual property." What happens at that point?
Caleb Frischknecht: So when we receive a disclosure there is a time period within which we do a more comprehensive evaluation. And that's not just from an intellectual property standpoint. We also partner closely with business development and other organizations to take a close look at ideas from a clinical standpoint as to whether or not it works and really moves the needle from a marketing and commercialization standpoint. From an intellectual property standpoint not only is it protectable but will those protections actually be helpful to us or can somebody circumvent them easily.
If we decide to go forward with a project then resources are allocated and currently we're building out, working closely with business development to build out a more robust invention commercialization stream that gets farther up. And the idea is that there will be stages along the line and proof points for each one of those inventions. So the first proof point would be really simple. What are the critical assumptions around this idea. The most obvious one is does it actually solve a problem. So let's list what those critical assumptions are and then let's go and prove them. And if it passes that critical assumption test then we're going to move on to the next stage. And at Intermountain we're now developing a system of funding associated with each one of those stages. The Intellectual Property Office has a seat at that table to help shape the innovation in a way that can be protected under intellectual property principles. So that's the next step.
Mark Briesacher: And what I really like about this is the fact that you don't have to have a business degree. You don't have to have a legal degree. You just reach out for help from you and business development and then they step in and help you with the things like completing that business canvas to determine do we think there's a market there or not. And funding in supporting that through the process. And in the meantime as a clinician it sounds like I and the whole team we can just be focused on continuing to refine and make the idea, make the product better at that point in time.
Caleb Frischknecht: That's right. The caregiver's investment is their time and their energy and their passion for the solution that they've created to whatever problem it was they were intending to solve. But we take care of the rest. We provide experts who can help with business model canvassing. They don't need to hire a patent attorney and spend the 30 to 50 thousand dollars necessary to get through that process. Intermountain is willing to invest in those ideas that are aligned with our mission and ultimately will help us to provide better care to the communities that we serve.
Mark Briesacher: When you use the words, describe things in terms of the caregiver's time and energy and passion I mean Mark I just think about the way you talked about this. The time and energy you gave from a leadership perspective to share this idea and how it helped patients and how it helped make healthcare more affordable. And so I have a question really for the both of you and Mark if it's okay I'll start with Caleb. I'm just wondering Caleb how does Intermountain approach recognizing a caregiver who has come up with this idea and has given that much time and energy and passion to it?
Caleb Frischknecht: We want to share with them in the upside. We took a really hard look at what our peers do in this area and we had two different pathways that we could have taken. We could have viewed ourselves like large tech companies and others who have substantial IP portfolios or we could decide to be more like an academic institution. The large tech companies and others like them might give an inventor a plaque or a $500 bonus.
We decided we're a whole lot more like academia. We took a look at the Mayo Clinic and Cleveland Clinic, Geisinger, Kaiser Permanente, partners, academic institutions like Stanford, MIT, University of Utah and said we want to be like them in that regard. So we benchmarked their policies and ultimately believed that Stanford had the very best model out there. They're the most successful tech transfer office in the world. So we essentially copied their way of doing this. We share 35 percent of invention income with the creator or group of creators who create an invention that we've successfully commercialized. What that actually means is when we get money in exchange for licensing and invention we reimburse Intermountain its direct costs, its out-of-pocket costs.
We take a 15 percent administrative fee to help us cover our overhead because our non-profit healthcare system shouldn't be burdened by the overhead associated with these programs. And then a third, 35 percent, of the rest is going to go to the creator or creators. And we do that by contract so that it's not tied to their ongoing relationship with Intermountain. So that it's fully enforceable and that will last for as long as Intermountain receives money for licensing that invention. And we think that that is a great way to incentivize our caregivers to continue to innovate and do it in ways that will be helpful to Intermountain and also to recognize them for all of that time and energy. And I think about the years and years of effort that Mark put into, and his colleagues put into Spring and ProComp and then eventually helping us get Empiric off the ground and I think it's a very nice way to say thank you.
Mark Briesacher: So this is why I invited both of you because now Mark I'm wondering did you get a plaque or did you get a percentage of the upside?
Mark Ott: I got the latter. And I have to admit, I had to smile when Caleb said the plaque thing because I'm sure none of you know this but about 30 years ago when I was in my training I was at a very famous institution training and I spent a couple of years in the lab and I actually in the laboratory doing research invented a process that changed how we could grow cells instead of just in Petri dishes but in dialysis cartridges so that we could grow tens and hundreds of billions of cells and we could get what they were producing out of these cartridges and it was way better than the Petri dish method. And I remember one day a couple of people who I didn't know in suits showed up and they handed me some papers and said "Here, sign this." It was an intellectual property right that this institution then took and they handed me a dollar bill and said "This is in recognition of your efforts and we'll get back to you if we need more." And that was my signing away of that process that I developed in that particular laboratory. Kind of a, it wasn't painful but compared to what it was really worth wasn't really the value of it. So I still have that dollar bill and I smile at it every time I look at it.
Mark Briesacher: Framed in your office.
Mark Ott: Yeah, again it's fine. But that's not how it should be done.
Caleb Frischknecht: The suits was your first clue. As soon as they came in suits.
Mark Briesacher: So how do you feel about our process
Mark Ott: I think it's very fair. And I also think it's in recognition of the fact that I and the team I worked with would have never done this project without the resources of Intermountain Healthcare. I think it's a fair recognition that we can achieve greatness because of the resources we have. And that when we do something that makes a big difference we should recognize all the participants including Intermountain Healthcare because they enable our discoveries.
Mark Briesacher: So Caleb what qualifies as an Intermountain invention?
Caleb Frischknecht: This is a particularly important question Mark. One that we explain often. This program is designed to reward those who materially contribute to the creation or development of an intellectual asset. It's not intended to be a reward for doing our jobs well. We already have a number of different programs through our H.R. system that help us to reward high performing employees. This in particular is meant to be a sharing for those who materially contribute to creating intellectual property. And no doubt for example with Spring and ProComp there were large teams who helped to make this happen and many of them did that as part of their job and some went above and beyond their job. But there really was a core group of individuals who materially contributed to the intellectual property that we've successfully commercialized in the form of Empiric Health. And those are the folks who are eligible to participate in invention income sharing.
Mark Briesacher: So we've covered a lot of information here. Caleb you've used some words that I generally don't use on a daily basis and I suspect that's the case for a lot of our docs and nurses and caregivers out there. And I also know that like Mark there are teams out there that today are working on some really cool stuff. So where would they go to learn more about this whole topic?
Caleb Frischknecht: This year we've actually invested a substantial number of hours and resources into creating transparency for the organization with respect to intellectual property. One of the best places to go to get information is our Web site which is available on Intermountain.net.
Intermountain.net/IP or you can find it through the A to Z index under intellectual property. On that site there is a host of resources that are written in plain English that we've tried to draft so that anybody who's interested in learning more can understand what it is that we're talking about. There is interactive training, there's information about what our responsibilities are as caregivers with respect to intellectual property, how we reward those who participate in innovation work that results in intellectual property, when we share our intellectual assets with other organizations and when we don't, and a host of other topics. And that interactive training I think is really helpful. So go find us, Intermountain.net/IP.
Mark Ott: I would add to that that Intermountain also has its Intermountain Foundry Program which is a great way to participate. Intermountain Mountain has set up this entity that has funding, has business training, has all these supports, they have a competition every year that many of our employees and caregivers participate in and that's a great way to do it. I would say to be honest Intermountain is savvy enough at this point that if you're presenting your material in your hospital at System Things people are going to notice and they're going to come to you as well. So I think the more participatory you are in letting your teams and your hospital or clinic or whatever team that you're part of share their story you're going to get noticed.
Mark Briesacher: Caleb so now I'm curious. What happens if after the discovery your office and Intermountain says "We're not going to pursue additional protections for this idea."
Caleb Frischknecht: Would that we had unlimited resources to pursue every project. Undoubtedly there are good ideas that are disclosed to us often and we simply for one reason or another cannot pursue them. Maybe because we don't have the type of personnel that is needed to be able to develop a prototype around a device. Or maybe it's because it's not aligned with where we want to focus our innovation dollars. Sometimes that happens. Intermountain will not be the place where good ideas go to die. That is my commitment. And we've written this as a matter of policy. That if we either cannot or are not in a position to pursue an innovation our commitment is that absent extenuating circumstances we'll release that back to the inventor and the inventor can then pursue commercialization or further work on that innovation either on their own or with an external partner. And we'll even give them a signed document that says hey you've got this free and clear. Because ultimately Intermountain wants to ensure that these innovations make it to the bedside.
Mark Briesacher: Thank you very much for being here today. This is a really interesting topic. I know it's exciting to see ideas become bigger and bigger things, even becoming a new company. I suspect most of our ideas, to Mark to your point, they do this really great thing as well which is they make healthcare safer and better and make the experience of either being cared for or providing that caring better. So this is just a great program and Caleb I can't thank you enough for your work in making it easier for our caregivers to explore these ideas. And Mark it goes without saying your work as it relates to Spring, ProComp, Empiric, and all the other ideas that you have implemented across Intermountain and at Intermountain Medical Center. Too long to list or go through on a podcast like this. So I really appreciate your commitment at Intermountain Healthcare.
Mark Ott: Sure. Thank you.
Caleb Frischknecht: It's a pleasure.