In the eight years that Breg, Inc., the world’s second largest bracing company, was part of Orthofix, it grew about 32% (from $70 million to about $90 million). In the three years since it left, Breg has doubled in size.
What happened and where is this leading bracing company heading?
Brad Lee, Breg’s CEO, sat down with OTW at this past American Academy of Orthopaedic Surgeons (AAOS) annual meeting and described for the first time in public how Breg, the venerable company founded by Brad Mason in 1989, had somehow found the religion of growth since leaving Orthofix.
Orthofix and Breg: A Little Background
Breg was acquired by Orthofix in 2004.
At the time, Orthofix CEO Charlie Federico said:
“The proposed acquisition broadens our product lines, reducing our reliance on the success of any single product, and enlarges channel opportunities for Orthofix almost immediately—we now become a distribution leader in the office-based and post-operative markets, and will seek opportunities for cross-selling products as opposed to sales force integration and reductions. Any emerging-technology firm looking for distribution into the office-care environment will see Orthofix as an excellent strategic partner.”
Breg founder and CEO Brad Mason, said:
“Having known Charlie and his senior management team for nearly 20 years and having worked closely together for the past 2 years, we know Orthofix is an outstanding partner. In addition to the strategic benefits, we are particularly excited about the sales opportunities outside of the United States, which currently accounts for only seven percent of our sales. With Orthofix’s international infrastructure, we should see a positive effect going forward.”
The year before becoming part of Orthofix, Breg sold about $68 million of braces and other rehab equipment. The hallmark of Breg under Mason and his team was a very high level of customer service combined with solid sales and marketing. This was clearly the culture that Federico wanted to bring into Orthofix.
Two years after buying Breg in 2004, Charlie Federico retired. He’d been Orthofix’s President or CEO for 10 years. Brad Mason, who’d joined Orthofix when Breg was acquired also retired—leaving in 2010.
Federico’s replacement as CEO was Alan Milinazzo. He stayed five years. Orthofix’s next CEO was Robert Vaters. He stayed two years.
Then in 2013 Orthofix’s board of directors recruited a new CEO out of retirement….it was Brad Mason, the founder of Breg.
But Breg was no longer part of Orthofix when Mason rejoined.
Under former Orthofix CEO Bob Vaters, Orthofix had sold Breg in 2012 for $158 million to Water Street Healthcare Partners, a strategic private equity firm focused exclusively on the health care industry. Charlie Federico bought Breg in 2004 for $159 million. Which means that Vaters sold a 32% larger Breg eight years later for $1 million less than Federico paid for it.
It would not be an exaggeration to say that one of the reasons former Orthofix CEO Bob Vaters and several members of his executive team are no longer at Orthofix is the Breg divestiture.
Post-Orthofix Breg
Leaving Orthofix has been good for Breg.
Between 2012 and 2016 Breg’s revenues have more than doubled—growing at twice the industry average. A big part of that growth came from seven acquisitions including the transformational acquisition of Bledsoe Brace Systems in the fall of 2014. Breg also signed key distribution agreements with Aspen Medical Products in July 2013 to provide premium spine bracing, and with FastForm Medical in October 2015 to bring to the market an innovative alternative to plaster casting.
Aspen Medical, by the way, is a winner of the Spine New technology award in 2013.
In the U.S. Breg is partner to 6, 000 orthopedic surgeons, works with 90% of the 1, 700 Integrated Delivery Networks and provides sports medicine and rehabilitation products to over one million patients every year.
The Breg Legacy
Service as a point of differentiation—that’s really the legacy of the team which Brad Mason built at Breg (and is now building at Orthofix) and which Brad Lee wielded to transform Breg into an orthopedic growth company.
But service at Breg is different than service at other orthopedic firms. Under Lee’s direction, it’s become a platform upon which Breg has overlaid its acquisitions and distribution agreements.
So, for example, when a physician orders a cold therapy or bracing or other product, Breg starts working on 360o of patient care which, from the clinics perspective, helps manage their costs and generate ancillary revenue. Breg’s clinically trained consultants help customers set up and manage in-house DMEPOS (Durable Medical Equipment, Prosthetics, Orthotics and Supplies) including Medicare compliance and audit preparation.
Breg Vision and Cloud Connect technologies streamline patient workflow management and integrate with clinic electronic medical records and patient management systems. Breg Billing Services help customers manage billing, from specific aspects of the billing process or end-to-end—whatever customers need.
In a changing healthcare world, service and logistics are value drivers.
If Staples hadn’t branded the “easy” button, Brad Lee told us, Breg would have.
Brad Lee
Lee is president and CEO of Breg. He led the divestiture of Breg from Orthofix in 2012.
Under his leadership and that of Water Street Healthcare Partners, Breg now employs 1, 200 people all over the world. In 2015, Breg received the National Business Research Institute’s “Circle of Excellence” award in 2015. This honor recognizes organizational leadership which places high value on employee engagement and customer satisfaction. Breg was also selected as one of San Diego’s top workplaces by the San Diego Union-Tribune in 2014.
Prior to his career with Breg, Brad led business development for the orthopedics, biologics and sports medicine divisions of Orthofix. He also held senior-level positions with Biosite, a cardiovascular diagnostic testing company and LMA North America, a company specializing in anesthesia airway products.
Brad’s bachelor’s degree in chemical engineering is from North Carolina State University and his master’s in business administration is from Duke University.
Breg’s News at AAOS: VPULSE, FastForm and Dynamic Bracing
Breg had three strong new products this year at AAOS—VPULSE, FastForm and Dynamic Bracing.
VPULSE was probably the most unusual and is a true two-fer. In the clinical setting VPULSE® is the only hospital-to-home device for deep vein thrombosis (DVT) prevention which delivers BOTH motorized cold therapy and wound compression.
“Breg’s new VPULSE therapy device provides three major benefits to health care organizations, ” said Mark Snyder, M.D., medical director of the orthopedic center of excellence at Good Samaritan Hospital, Cincinnati, Ohio. “It has been shown to help decrease readmissions related to blood clots. Physicians are also reassured that total hip and knee replacement patients will continue to be protected from DVT at home, enabling expedited hospital discharge. Finally, the use of VPULSE in combination with aspirin may reduce expenses associated with anticoagulant medications.”
In addition to VPULSE, Breg showed its new FastForm bracing at AAOS. FastForm is an alternative to plaster or fiberglass casting, gives patients a highly customized fit that is lightweight, water resistant, radiolucent and biodegradable. When heated, FastForm’s PolyTrexX polymer becomes pliable and conformable. Once molded to the patient’s anatomy, the brace cures to a high strength, ventilated immobilization orthosis. FastForm is also easy to remove and it can be reheated and reformed to match the patient’s care cycle. The integrated DermaWick liner wicks moisture away, keeping skin dry and reducing itch and odor.
Also introduced at AAOS was Breg’s Dynamic bracing, a new technology available on select knee braces that uses the body’s own movement to provide force only when needed.
“The technological innovation in these three new products and our Dynamic bracing exemplifies our ‘total solutions’ offering for the orthopedic practice, ” said Brad Lee. “Our products and services help lower costs and enhance patient satisfaction. We are committed to working with clinicians to design and deliver remarkably easy solutions for the challenges they face in throughout the orthopedic episode.”
Where to Now?
Given how far and how fast Breg has progressed in the last three years, it raises the tantalizing question: “Where to Now?”
We asked CEO Brad Lee that question. Naturally, he started talking about service.
“Our service infrastructure is our future. It has allowed us to add Bledsoe Brace, Aspen and expand our product offerings more aggressively since they come to our customer naturally out of our service focus. To our customers these changes just feel like we’re meeting even more of their needs within the service infrastructure, ” explained Lee.
“Building on our service culture, we will move both earlier and later in the orthopedic care continuum of care. In other words we want to be active from hurt to healthy.”
But, we pressed Lee, isn’t Breg already active in, for example, the rehab portion of orthopedic care?
Yes, he said, Breg is active in the rehab portion but the rehab part of orthopedics is probably where there is the most opportunity to improve care and cost. As Lee explained it: “In the later stages of care, patients have fewer and more sporadic interactions with care professionals. There is less information about their care and outcomes. Even though the post treatment period is one of the more expensive parts of orthopedic care, it is the least understood and documented.”
So, Lee said, as Breg moves into these other areas of the orthopedic care continuum, software, data collection and analytics will become ever more critical parts of his company.
Smart devices, real time feedback to both patient and care provider. Tailored rehab programs. Better exercise and rehab tracking, analytics and progress review.
Wow.
