Avid Medical gives customers
a choice
by Heather B. Hayes
Virginia Business
May 2005
Michael Sahady decided seven years
ago that the trouble with the custom-procedure tray
industry was that there wasn’t any custom to
it.
The $1.5 billion industry provides ready-to-go, sterilized packs of instruments,
sutures, gowns, gauze and other necessities for surgeons. In 1998, the few
companies in the business worked off of a “self-branded” business
model, meaning that they made all of the components in the surgical packs
rather than offering other companies’ products. “I believed that
there was a true opportunity in offering customers choice,” Sahady
says.
Sahady founded AVID Medical Inc.
in 1998, with a clear mission: to put the custom
back into the custom tray business. “If a surgeon
wants Ethicon sutures in their tray, that’s
what we give them,” he says. “If they
want one component from Kimberly-Clark and another
from Johnson and Johnson, we give them that too.”
The company is shaking up the
industry. Currently growing at a rate of 30 to 35
percent each year, AVID Medical had gross revenue
of $68 million last year and that number is projected
to top $85 million this year. Sahady and Rick Setian,
the company’s president and chief operating
officer, expect the company to reach $150 million
in 24 months. AVID Medical has been profitable for
16 quarters.
One reason for the company’s
growth is experience. Sahady owned a highly successful
custom-tray company, MedSurg, for 25 years but sold
it during a wave of industry consolidation in the
early 1990s. Setian has an extensive background in
health-care management, and the company’s sales
team boasts an average of nearly 17 years experience
selling custom trays or operating-room products.
Innovative thinking is another
factor that’s providing a competitive edge.
AVID Medical, for example, uses electronic data interchange
to communicate with customers, check daily consumption
rates and build products accordingly. The company
has also formed a number of strategic alliances with
major surgical supply companies, including Valley
Labs, Microtek, Kimberly-Clark, Tyco, ConMed and
Medical Action. “It makes our sales force of
40 now a sales force of 500 to 1,000 because we’re
working together with them, and our ability to canvass
the market is much higher than it would be if we
were just on our own,” Setian says.
John Colley, a professor at the
Darden Graduate School of Business Administration
at the University of Virginia, presents a case study
on AVID Medical in his corporate strategy course.
The case study examines the company’s ability
to manage rapid growth. Colley says that AVID Medical
is able “to grow at almost any rate without
having to have additional investments of cash” through
sophisticated technology, good forecasting, favorable
payment terms from suppliers and real-time inventory
control.
Moreover, he adds, the company
excels in all areas necessary for success in manufacturing. “If
you can do it at a cost that no competitor can meet,
and you provide a quality that’s better than
anybody else, and you deliver them on time, then
you’ve got the keys to the kingdom,” Colley
says. “And they are the best I have seen.”
AVID Medical sells custom trays
for surgical, catheterization and labor-and-delivery
procedures to about 800 hospitals, ambulatory surgery
centers, government medical facilities, and organ
and tissue procurement agencies. Its largest customers
include Inova Health System in Northern Virginia,
Carilion Health Systems in Roanoke, VCU Medical Center
in Richmond, Community Health Care Systems in Indianapolis
and Beaumont Hospital in Royal Oak, Mich.
Sahady and Setian expect AVID
Medical to continue to grow at a 30 percent clip.
It has 320 employees, including 280 at its 85,000-square-foot
facility in Toano, where products are sterilized
and assembled. The executives plan to hire another
100 employees this year, including 10 to 12 salespeople,
and they propose doubling the size of their facility
within the next 24 months. “One of the things
we never lose sight of is we know what we’re
good at, and we will continue to enhance that and
try get away from any shortfalls,” Setian says.
