Dr. Jeffrey Hausfeld talks to Jen Barna M.D. about physician entrepreneurship and his journey from Otolaryngology/Facial Plastic Surgery to becoming Chairman and Founder of the Society of Physician Entrepreneurs.
“For physicians that are feeling frustrated, I would say to them, ‘Sit back. Take a breath. See really what you want and if the path of going to start a new company is what you want, then give it your full attention. And if you see you can’t give it your full attention, hook up with someone that will help you.’ Because physicians feel, ‘It’s my idea, I want to own 100% of this company.’ And my answer to them is, ‘100% of nothing is still nothing.’”
-Dr. Jeffrey Hausfeld MD, MBA (BioFactura)
How do you take an idea from scratch on a napkin to full fledged booming business? As experts in the practice, physicians and other clinicians can be key contributors to breakthroughs in the healthcare field. Today, DocWorking welcomes Dr. Jeffrey Hausfeld to the podcast, now Chairman and Founder of the Society of Physician Entrepreneurs. With cohost Dr. Jen Barna, today’s conversation focuses on how physicians can bring a business idea to fruition. In this discussion, the accomplished Dr. Hausfeld offers listeners his advice toward identifying an idea that will help people to becoming an entrepreneur, the necessary steps to start designing your product, and how to earn respect as a physician and a business operator. During their talk, both physicians reflect on their personal experiences that emphasized the importance of support networks, whether that’s through other experts in the fields, furthering your education, or learning when to take a step back. Listen to discover the benefits of working with others and establishing a network around you in order to bring your next vision from clinical idea to successful startup.
Jeffrey Hausfeld, M.D., M.B.A., F.A.C.S, has served on the national board and committees of specialty medical societies since beginning his practice in Otolaryngology/Facial Plastic Surgery in 1982. He is an Associate Clinical Professor of Surgery at George Washington University School of Health Sciences and an alumnus of the Yale University School of Medicine. Dr. Hausfeld is widely published in the medical literature, is the pioneer of innovative laser surgery techniques, is the author of a lay oriented medical book, and has appeared on numerous local and national television and radio shows as a medical expert. He has also served as a health care consultant, spokesperson, and executive coach for multi-national pharmaceutical companies, health care firms, as well as the U.S. military. Dr. Hausfeld stepped down from his clinical duties after receiving a Masters in Business Administration from Johns Hopkins University. He continued to refine his communication and team building talents by completing a graduate program in Leadership Coaching and Organizational Development at George Washington University.
Dr. Hausfeld led the field in otolaryngology/facial plastic surgery for many years and is now a business operator and entrepreneur. He invests, manages and consults to a variety of healthcare businesses, including assisted living facilities for Alzheimer’s and dementia patients, medical device companies, healthcare information technology and biotech firms, as well as syndicating and raising capital for health care related real estate ventures, including other life science entrepreneurial enterprises, both regionally and nationally. He is the Chairman and Founder of the Society of Physician Entrepreneurs (www.sopenet.org), a global network focused on educating healthcare and life science professionals in Bioentrepreneurship and Innovation. Dr. Hausfeld orchestrated the oversubscribed Series A-C Financing of BioFactura and acted as the lead investor in the A round. He serves as Chairman of the Board of BioFactura as well as their Chief Medical Officer as the company develops its Biodefense and Biosimilar platform and embarks on a Series D Financing Round.
Dr Hausfeld invites healthcare professionals to use financial information and the “science of business” as valuable tools to nurture medical innovation at their institutions and private practice, as well as to enhance the ability to promote quality patient care and improve decision-making. Dr. Hausfeld will demonstrate that power, pleasure and improved performance can result from the ability to mesh the cultures of medicine and business in a comprehensive and strategic manner. “The exciting thing about life after the practice of medicine is that now I am able to draw upon the diversified fields of medicine, business, and organizational psychology, and implement novel solutions that have an immediate impact on the organization’s bottom line.”
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Please enjoy the full transcript here
Dr. Jeffrey: For physicians that are feeling frustrated, I would say to them, “Sit back. Take a breath. See really what you want and if the path of going to, starting a new company is what you want, then give it your full attention. And if you see you can’t give it your full attention, hook up with somebody that will help you.” Because physicians feel, “It’s my idea, I want to own 100% of this company.” And my answer to them is, “100% of nothing is still nothing.”
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Jen: Welcome to DocWorking: The Whole Physician Podcast. I’m Dr. Jen Barna, co-host of the podcast. I’m thrilled to have you with me here today for this conversation with the Founder of the Society of Physician Entrepreneurs, Dr. Jeffrey Hausfeld. Dr. Hausfeld is an otolaryngologist turned entrepreneur, whose expertise includes areas of medicine, biopharmaceuticals, biosimilars, healthcare and life science innovation, Alzheimer’s and dementia care as well as healthcare-related real estate investment. He’s both an entrepreneur and an investor. His level of expertise will be particularly interesting to our audience, because the majority of breakthroughs in the health sciences come from clinicians, who see a problem in the field and have an idea of a way to solve that problem. If you’re a budding entrepreneur or you’re already a successful entrepreneur, it may be an interesting conversation for you. With that in mind, let’s introduce, Dr. Jeffrey Hausfeld, welcome to DocWorking: The Whole Physician Podcast.
Dr. Jeffrey: A pleasure to be with you today.
Jen: Thank you so much for joining me. I’d love to hear about your career and how you have ended up as a very successful leader in the field of physician entrepreneurship.
Dr. Jeffrey: Oh, thank you. I grew up in Brooklyn, New York and went to the City University of New York. And from there, went to Yale University for my medical school and surgical training. I trained at the Yale-New Haven Hospital in Otolaryngology and Facial Plastic Surgery and moved down to the Washington DC area to be close to my family. My brother and my sister moved down here. So, it was natural for me to move here.
I practiced my surgical skills here for about 23 years at which time I said, “Okay, what’s next?” At that point, my 22-year-old son said to me, “Dad, I want to get an MBA.” I said, “Good, go get an MBA. I’ll pay for it. My parents paid for my medical school. I’ll pay for your MBA.” Little did I know that prices went from $10,000 to $65,000 over that period of time but I said, “Not a problem.” He goes, and he tries to find an MBA, and he comes back with one from Johns Hopkins, and he said, “Dad, I like this one, but it really is for doctors, not for people like me who’s in finance. You think they would take us if we went together?”
We went and we applied to the program together. We were the first father-son combination that got accepted into the Johns Hopkins Carey Business School and we got our MBAs together at Johns Hopkins. That was 20 years ago. So, he’s been a very successful business person in the field of healthcare, real estate. And it so happens that when I retired from my surgical career about 16, 17 years ago, he was one who introduced me to my first business partners in the Midwest. These were gentlemen who built assisted living facilities and I wanted to do something like this because my father-in-law suffered from Alzheimer’s. We got to see firsthand how horrible that disease is and how devastating it is for the family and for the patient. And how the places where they were residing were not nurturing, were not places of security and comfort. I said, “We could do better.”
He introduced me to these two developers in the Midwest, and we hit it off, and we formed a syndication, and that was my first foray into the business side of medicine. We now have six facilities in Illinois and Indiana that are assisted living facilities specifically for Alzheimer’s and dementia care patients. I’m very proud of the work we do there. When I visit the facilities and the children of the parents who are there come over and say, “Doc, thank you. I know mom is being taken care of. I know dad is being taken care of. It really makes us feel very good that they’re in a place like this.” That’s one of those priceless moments that go along with the mantra of doing well by doing good. You live for the moment where you get the hug of the patient that you’ve operated on, and has a new face after reconstructive surgery, and they’ve just gone to the high school prom looking wonderful. That hug means so much for them and for the physician that helped them get there.
Those kinds of moments and that experience made me understand that while physicians are smart and can earn a good living at their practice, they’re not as smart when it comes to innovation, when it comes to commercializing new ideas. Because we’re not wired that way for the most part. We don’t have the expertise or the experience in really bridging the medical arts with the business arts. And those that don’t think that business is a science should think again, because as much as you think that it doesn’t take a lot of brain power to understand business, it really takes a lot of thought, a lot of study, a lot of concentration in order to learn the nuances and speak the language of business. Only then will you be able to mesh the culture of caring for patients, medical expertise, medical informatics with what is needed in the marketplace and be successful at it.
Myself and two other founders started the society, Physician Entrepreneurs, in order to explain to doctors, nurses, podiatrists, dentists, anyone in the healthcare field, but we expanded it so that anyone in life sciences, so, postdocs, PhDs, anyone who is interested in research in life sciences and healthcare can join SOAP and come to our meetings. We give them a roadmap as to what are the opportunities, what are the obstacles, and don’t make the same mistakes that we’ve made. We have lots of people get up and say, “Here’s what I did. Don’t do this again.” We had lots of people get up and say, “Here’s what I did. Here’s why it works. Try this.”
It’s a great way to connect with people from all over the world. We have 32,000 LinkedIn members and about 28 chapters of local chapters with little ecosystems where people can go and meet quarterly and talk about what are their frustrations, what are their successes, share it with the community and build upon the notion of getting new ideas to patients in reality.
Jen: This is the Society of Physician Entrepreneurs and we’ll put the link in the show notes. If you’re listening, you don’t have to write this down. You can click the link in the show notes. Speaking of physicians and breakthroughs, most breakthroughs come from clinicians in healthcare. There are so many examples of successful startups and successful changes in medicine. I would love to also ask you for the Society of Physician Entrepreneurs, is that exclusively a group of entrepreneurs who are devoted to solutions in healthcare or is it people who are originating with a background in the health sciences, who have entrepreneurial ideas and startups of any type?
Dr. Jeffrey: We like to focus on healthcare. To be honest, most of the ideas that physicians and life science people come up with are healthcare life science related. It’s rare to find a physician that comes up with a new FinTech idea, although, you will see that sometimes. But our focus is really bringing new ideas for patients. There’s so much to learn in this field that it is sometimes overwhelming, which is why a lot of doctors shy away from it. The idea is to take it slowly, understand it like you would any scientific discipline, and there is a path forward so that you too can become an expert in a different field.
I did, in healthcare real estate with my assisted living facilities. Not only am I proud of the work that we do, but my investors are very pleased that they’re getting a great return over the last 10, 11 years and will continue to do so as we grow the business. It was at a SOAP-related meeting about nine years ago that I met a CEO of a local biotech company called BioFactura. The CEO’s name was Darryl Sampey and he started talking about biosimilars. I said, “Great, what’s that?” Because as a surgeon, you never really gave biologics to patients back then and no one ever heard of biosimilars before. So, he explained to me, “This was the generic version of very complex biologic drugs and that these drugs are really game changers when it comes to quality of life for cancer, for rheumatoid arthritis, for psoriasis, for a number of autoimmune diseases.”
Some of these novel drugs are coming off patent and they have the ability of making generic versions, or biosimilars, of these reference products. I said, “Gee that makes sense.” I was part of the cadre of doctors that had to switch patients from their branded drugs to generics in the 1980s. And no one was happy. Doctors were unhappy because it took us more time to explain to the patient what you were doing. Patients were unhappy, because they were convinced they were getting an inferior product, and the most unhappy was your local drug rep who lost their business. But here I said, “If we can produce drugs that are costing not hundreds of dollars a year, but hundreds of thousands of dollars a year, and do it better because our technology has become so much better over the last 20 years since these drugs came to market, that fits my mantra of doing well by doing good. I’m interested in learning more.” So, I learned more about the opportunity and became part of his management team. Eventually, I took on the role of Chairman of the Board and Chief Medical Officer. And basically, Darryl and I co-managed the company together.
I was the fourth employee when I joined. We now have over 40 employees. We recently received a $68 million dollar contract from BARDA, the United States Government Biomedical Research Division to do research and to manufacture an antibody cocktail against smallpox, which has become more relevant with monkeypox coming around naturally, and with the war in Ukraine because we know that Russia does have stockpiles of the smallpox virus, and it can be used as a terrorist threat. So, this is a highly sophisticated medical countermeasure that really works very well against smallpox, which is disease that has a 30% mortality, not a 1% mortality like COVID. So, that’s been a fantastic learning curve in terms of, “how do you make a drug? What are the steps? What are the regulatory hurdles? What are the manufacturing hurdles? What are the supply chain difficulties since COVID?” have all been part of this journey, since I’ve joined them over the last nine to 10 years? Along with that we’re making biosimilars, these drugs that are coming to market at a significantly reduced price and that will allow so many more people to access them and use them and use them well.
Jen: That is tremendous work and exciting to hear you describe, it’s because they’re so life changing. What would you say are the three steps that you might use to describe the pathway from concept to successful business in a startup? Regulatory, legal, and finance, how would you describe those steps to someone who’s just getting started?
Dr. Jeffrey: The first thing to do is understand whether it’s a viable idea. Doctors are pretty good at this. Because we know what’s in our toolkit, we know what’s missing from our toolkit, and we also know what patients will use and what patients won’t use. Once you’ve identified something that you think is a need in the market, then is the time that you have to go out and confirm your suspicion and you do that by doing lots of interviews. Doctors don’t like doing this, because it exposes them for potentially a lack of expertise or you’re giving away your idea. But this is part of the process is you have to do some market research to see whether or not your idea really will fly, and how much is needed, and by what segment of the market it’s needed.
Then, what you have to look at is legally, can you get intellectual property protection on your idea? Can you create a patent around your idea? Patent attorneys are one of the first people we talked to, and attorneys in general just to set up a corporation, and to do it in a way that makes sense, so that you will be able to grow that corporation without having difficulties with other founders, who want a bigger portion or a portion of the equity even after they leave. Those are all things that doctors don’t understand or really don’t know about because we haven’t been there. But once you’ve seen it a few times, you’ll know that a good attorney will help you through that and it will be worth the time and the money spent.
The setting up of the organization correctly, the establishing of an IP portfolio, if you can, the discussion with regulatory consultants to see what is the regulatory pathway? How do I get this medical device, or this IT app, or this biopharmaceutical from this napkin sketch to a real product? What am I going to need in terms of money, in terms of people, in terms of employees versus outside consultants, in terms of partners, other people that I may have to join to the hip with in order to get this commercially launched? Those are all key questions that really require some study, some understanding, and just the love of learning. That’s really what we try to promote at SOAP is, if you love to learn about things, this is a great place to go.
Jen: If someone is at the napkin stage, what would you say is the first step? Is the first step the hundred interviews or is there a step prior to that that you would recommend?
Dr. Jeffrey: I think the first step is the hundred interviews. That way you have solidified in your mind and you may want to talk to someone who has done this before to create and craft the questions correctly. Because if it’s your baby, you’re going to bias those questions in a way that may not give you the actual market opportunity. Go to someone, see if you’re crafting the questions correctly and then go out, ask those questions, compile it, and speak to somebody who has been there and done that before.
Jen: And this is an opportunity, I would think as a member in the Society of Physician Entrepreneurs, this is where the society would really be extremely useful.
Dr. Jeffrey: Correct. Because it’s nice to be able to go and have an ecosystem of like-minded people that have been down this road, that can point you in the right direction either to hire a consultant or to mentor you, or to give you some free advice and to say, “Hmm, here’s what I think you may want to do next or I know somebody who’s doing something similar in Australia, let’s make a connection.”
Jen: Can you tell me a little bit about some of the resources that members have in the society?
Dr. Jeffrey: I think the biggest resource is the local ecosystem that we set up. Because that really is like a safe place, where people can go, discuss their ideas, discuss their frustrations, discuss their successes. This is not an easy road. This takes a lot of wherewithal to really get a new product to commercial launch. I’m learning this with the biodefense and the biosimilar assets that we’re working on. Raising funds is not for the faint of heart, especially in an environment like we’re in now. So, there’s a whole science and art to fundraising. And whether or not you as the inventor of the idea, are you the best fundraiser to do this? Doctors don’t like to hear that they’re not the best sometimes, but that’s part of this journey is to understand, it takes more than one person and you have to really accept and nurture talent, and other really smart people who may be smarter than you to join your force, so that you can create something that’s greater than a sum of one or two.
Jen: Really being a top recruiter, I think is an important skill in entrepreneurs.
Dr. Jeffrey: Yes. Yes, it is.
Jen: Do you have any advice for someone who may be feeling overwhelmed at the beginning of the process in terms of how to carry the process forward? I hear people say this fairly often that they have an idea, but they’re so overwhelmed by the concept of all these different pieces that you’re explaining now. Do you need an MBA to step into this arena?
Dr. Jeffrey: You don’t need an MBA to step into the arena, unless you’re leaving your practice. This is what you’re going to do as a full-time position. That’s what I decided to do. I’m happy that I got the MBA, not that I’m sitting there looking at spreadsheets all day. But if I need to, I understand the language and it allows me to see what I know and what I don’t know to ask the questions. For that purpose, an MBA is really essential. But if you’re going to continue practicing, then you don’t need to spend the time getting an MBA, you need to really hire an MBA to help you with the business development of your idea. It depends on what that physician wants to do with their life. If they’re happy practicing and that gives them joy and fulfillment? Absolutely, they should continue.
Straddling both worlds is where frustration comes in sometimes because if you’re the kind of physician that really puts your patients first, it’s going to be very hard for you to focus on developing that idea and developing that business. There will always be conflicts. If you’re conflicted, you’re not acting as a good broker. In order to be really true to investors that are investing in you, investing in your idea, you have to give it your all. If you want to continue practicing, then that’s what you should be focusing on. That’s where a lot of frustration comes in, because doctors are overwhelmed because they can’t spin all the plates at the same time.
I’m a professional plate spinner at this point. [laughs] I don’t know if you remember The Ed Sullivan Show, where they used to have this guy get on with wooden sticks and ceramic plates. And he used to go around spinning the plates and eventually, when a couple of plates would fall. I spin many plates because I wear so many hats in doing what I do. But unless you’re of that ilk, it sometimes gets frustrating.
For physicians that are feeling frustrated, I would say to them, “Sit back, take a breath, see really what you want and if the path of going to, starting a new company is what you want, then give it your full attention. If you see that you can’t give it your full attention, hook up with somebody that will help you.” Because physicians feel, “It’s my idea. I want to own 100% of this company.” My answer to them is, 100% of nothing is still nothing.” Sometimes you have to give up a little bit of your equity in order to move the needle forward and not be frustrated in the process.
Jen: Have you found coaching to be a value in that process?
Dr. Jeffrey: What I forgot to tell you was that after I did the MBA, I also got a graduate degree in leadership coaching and organizational development from George Washington University. It is tremendously helpful in talking to entrepreneurs, in talking to employees, just in terms of emotional intelligence, and how to show empathy, and how to understand what other people are thinking and how they are perceiving your words. If you can do that, it makes you so much more successful and well liked, but still able to get the job done.
Doctors have a hard time, especially when they’re fundraising, and I did, too, because people silo us. “You’re a healthcare provider. What are you doing asking me for money?” When I was winding down my practice and telling people that I’m leaving the practice of medicine to go into a business, the business world of medicine, many of them said to me, “Doc, you’ve been great. You saved my life. You made me look great, whatever. Whatever you do, you call me, I’m going to invest in whatever project you’re doing.” It’s so great. Well, I left, and I call them, and uniformly they said, “Well, doc, how many times have you done this before and do you have a track record? This is really not your expertise, is it?”
They put us in silos, and they keep us there, and breaking out of that is humbling and extremely frustrating sometimes, but you just have to keep working at it, you have to keep understanding what are the objections that you’re hearing, address them appropriately, accurately, so that people can feel you’re going to work for them. And that’s what I’ve tried to do, and with that I’ve been able to raise money for the memory care facilities and raise over $15 million for the BioFactura Initiative and it’s worked very well.
Jen: If you’re listening, and you’re a physician, and you’re wondering about how to overcome these hurdles, really, when you hit a wall like this in business, remember what you’ve already overcome to become a specialist in your practice, you know that you can scale the next wall, and the next wall, and the next wall. So, it does serve you in that way to help you to know that you already have a history of hitting walls and scaling them over and over again. This has been an inspiring conversation and I really appreciate you coming on to the podcast. If someone wants to reach you, what are the best ways for them to reach out to you?
Dr. Jeffrey: They can reach me at my BioFactura, email is [email protected]. You can reach out to me on LinkedIn as well. Thanks, Jen. I appreciate the time. I appreciate the introduction to your audience. I hope that someone out there is listening that got something out of this today.
Jen: I hope so, too. I think your expertise is very valuable. Listening to an example of someone who has achieved what you have achieved is inspiring to all of us.
Dr. Jeffrey: My pleasure.
Jen: Thank you so much. Dr. Jeffery Hausfeld, thank you for joining me today on DocWorking: The Whole Physician Podcast.
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