Entrepreneurship in the Academic Radiology Environment Jason N. Itri, MD, PhD, David H. Ballard, MS, Stamatis Kantartzis, MD, Joseph C. Sullivan, MD, Jeffery A. Weisman, JD, MS, Daniel J. Durand, MD, Sayed Ali, MD, Akash P. Kansagra, MD, MS Rationale and Objectives: Innovation and entrepreneurship in health care can help solve the current health care crisis by creating products and services that improve quality and convenience while reducing costs. Materials and Methods: To effectively drive innovation and entrepreneurship within the current health care delivery environment, academic institutions will need to provide education, promote networking across disciplines, align incentives, and adapt institutional cultures. This article provides a general review of entrepreneurship and commercialization from the perspective of academic radiology departments, drawing on information sources in several disciplines including radiology, medicine, law, and business. Conclusions: Our review will discuss the role of universities in supporting academic entrepreneurship, identify drivers of entrepreneurship, detail opportunities for academic radiologists, and outline key strategies that foster greater involvement of radiologists in entrepreneurial efforts and encourage leadership to embrace and support entrepreneurship. Key Words: Entrepreneurship; commercialization; academic radiologists. ªAUR, 2015

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ealth care innovation offers incredible potential for solving many of the complex and pressing problems that physicians are facing today, such as an increasing proportion of patients with chronic diseases, childhood and adult obesity, and an aging population. New diagnostic and treatment paradigms in the United States spurred a 4% increase in life expectancy, 16% decrease in annual mortality rates, and 25% decline in disability rates for the elderly from 1980 to 2000 (1). However, the cost of delivering health care in the United States has increased at an alarming rate with many health policy analysts indicating that the adoption of new and advanced health care technologies is one of the primary drivers (2). Moreover, advanced diagnostic imaging modalities such as computed tomography (CT), magnetic resonance imaging (MRI), and positron emission tomography have been targeted as expensive health care technologies responsible for driving up costs, despite their integral role in producing substantially better health care. As a result, the

Acad Radiol 2015; 22:14–24 From the Department of Radiology, University of Cincinnati Medical Center, 234 Goodman Street ML 0761, Cincinnati, OH 45267-0761 (J.N.I.); Department of Radiology, Louisiana State University Health, Shreveport, Louisiana (D.H.B., J.A.W.); Louisiana State University Health School of Medicine, Shreveport, Louisiana (D.H.B., J.A.W.); Department of Radiology, University of Pittsburgh Medical Center, Pittsburgh, Pennsylvania (S.K.); Department of Radiology, The University of Alabama at Birmingham, Birmingham, Alabama (J.C.S.); Evolent Health, Arlington, Virginia (D.J.D.); Department of Radiology, Temple University Hospital, Philadelphia, Pennsylvania (S.A.); and Department of Radiology and Biomedical Imaging, University of California, San Francisco, San Francisco, California (A.P.K.). Received July 25, 2014; accepted August 31, 2014. Address correspondence to: J.N.I. e-mail: [email protected] ªAUR, 2015 http://dx.doi.org/10.1016/j.acra.2014.08.010

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field of radiology has been significantly impacted by decreases in reimbursement and a prolonged decline in imaging volume (3). The critical role of innovation in health care is relevant to academic radiologists for two reasons. First, as a result of the current health care crisis, academic radiology departments are likely to experience further declines in reimbursement and volume without broadly applicable strategies to compensate for financial losses that will eventually (if not already) impact the academic mission. Second, given that imaging is widely used and plays an integral role in patient care, entrepreneurial radiologists are well positioned to drive innovation in imaging technologies and services. The purpose of this article was to provide a general review of entrepreneurship and commercialization in the academic setting in an effort to increase awareness, foster greater involvement of radiologists in entrepreneurial efforts at their institutions, and encourage leadership to embrace and support entrepreneurship. This review provided by the Entrepreneurship and Commercialization Task Force draws on information sources in several disciplines including radiology, medicine, law, and business. Although written specifically for radiologists in academia, several sections provide a broader perspective because of a relative paucity of information specific to academic entrepreneurship for radiologists.

ROLE OF UNIVERSITIES IN SUPPORTING ACADEMIC ENTREPRENEURSHIP The general mission of an academic institution is twofold: to advance scientific knowledge and to share this knowledge for

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the benefit of the society. This latter ambition typically comes in the form of training students who then spread out into different sectors hosting conferences, consulting and collaborating with public and private interests, and publishing research results. Often overlooked is the intellectual property (IP) patented by academicians and licensed to private industry, a form of information transfer that can have significant societal and economic impact (4). This arrangement can have numerous beneficiaries; principals, and shareholders benefit from the direct financial success of the product, while researchers see wider and more rapid adoption of their ideas (5) and concomitant academic recognition. History

The modern era of academic commercialization in the United States traces its roots to the 1980 Bayh–Dole Act and its subsequent amendments. Before 1980, federally funded research remained the IP of the sponsoring government agency, and very little effort was directed toward commercialization. Passed in an effort to stimulate a languishing economy, the Bayh–Dole Act allowed researchers to claim ownership of an invention and subsequently commercialize it (6). This change in policy re-established interest in commercialization of academic research, and in the years since, most major research universities in the United States have established dedicated technology transfer offices (TTOs) (7) to help manage patent searches and filing, market evaluation, industry partnerships, and license negotiations. From the perspective of the university, the benefits of fostering entrepreneurship are manifold. A closer relationship with private industry can yield new sources of funding, knowledge, and access to private facilities. Building a reputation of commercialization success can potentially attract higher-caliber students and faculty who could in turn contribute further to the success of the institution. As public funding of higher education declines, additional revenue generated through licensing of technology, consulting, private donations, and the sale of spin-off companies becomes more attractive. This added revenue may be substantial; the most recent survey of the Association of University Technology Managers estimated total licensing income from US academic institutions at $2.6 billion for FY2012 (4). University Policies

As a condition of the Bayh–Dole Act, inventions resulting from federal research funding must be disclosed to the institution’s TTO. Nonfederally funded inventions must generally also be disclosed in accordance with most university policies. In the traditional model, the TTO then facilitates the licensing of the IP to a private firm. The ensuing royalty revenues are divided among multiple parties within the institution. Review of the royalty distribution policies for the top 10 patent-producing universities in the United States (Table 1) shows that the inventor’s share ranges from 15% to 50%

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(policies available online). Institutions then generally distribute the remaining share to TTOs (15%–35%); the laboratory or department of the inventor (15%–50%); and school or university system (5%–65%). Funds may also be distributed to separate patent or research funds to support future commercialization activity. The problem with the licensing model is that few inventions have the potential to cover the costs of bringing them to market. Only approximately 1% of revenue-generating licenses bring in more than $1 million per annum (4). Of that licensing income, the university receives only a fraction, typically a third, to be invested toward its academic mission and to fund the TTO (8). Once booming in the wake of the Bayh–Dole Act, TTOs have more recently been criticized as cost centers, often spending more in legal, administrative, and patent fees than the revenue brought in from licensing (8). The more profitable TTOs are part of institutions with large research budgets, to the point where more than 50% of US commercialization revenue in 2011 was captured by fewer than 15 institutions (9). Faced with limited resources, TTOs may preferentially focus on inventions deemed most likely to be commercially successful (10). The TTO then tries to maximize profit from its more limited portfolio by seeking licensing agreements with draconian provisions. Many academic entrepreneurs have reported hard-line negotiating tactics and inflexibility on the part of the TTOs (11). Such a system finds itself at odds with the guiding principle that novel ideas of academia should be readily and rapidly shared for the common good. Shifting to Start-ups

Rather than licensing technology to an existing firm, a university may choose to form a spin-off company. Typically, these start-ups are comprised of one or more of the original researchers. In this context, the role of the TTO may shift into an advisory role, helping recruit a management team, providing business and legal guidance, and attracting investors. In contrast to the licensing model, the up-front cost to the University of forming a spin-off can be defrayed by seeking financial support from the local government in exchange for building local business or from the federal government through the Small Business Technology Transfer (STTR) or Small Business Innovation Research (SBIR) programs. Friends and family can also supply seed money. The return on investment of a spin-off company to the university would be deferred as compared to a licensing arrangement; however, the knowledge could be kept in the same geographic region and help promote local economic activity, as most start-ups are formed near their parent universities (4). A successful start-up could further contribute to the research budget of the university either directly or indirectly by raising the profile and stature of the university. To wit, this alternative to the traditional licensing model has grown popular, with the number of start-ups formed annually by universities having nearly doubled in the last decade (4). 15

16 —

50% of net royalties 30% of net royalties 30% of net royalties

— —

Net royalties up to $200,000

Net royalties between $200,000 and $2 million Net royalties greater than $2 million Net royalties

University of Wisconsin Johns Hopkins University

University of Michigan

Cornell University

Columbia University

20% to the originating unit

50% of net royalties 33% of net royalties

— —

50% of net royalties

25% of net royalties

Net royalties less than $100,000

Net royalties greater than $100,000

33.3% of net royalties

20% of gross royalties 15% of net royalties

25% of net royalties



19.8% to the inventor’s research budget, subunit, and university unit 25% to the inventor’s research and innovation account 25% to the inventor’s research and innovation account; 8.5% to the inventor’s department

— 33% to the inventor’s department 15% to department 15% to inventor’s laboratory and 30% to inventor’s department 17% to the originating unit

33% of net royalties



15% to the inventor’s campus or laboratory 50% distributed among departments and centers —

Laboratory, Department, or Campus

Massachusetts Institute of Technology California Institute of Technology University of Texas Stanford University

35% of net royalties

Inventor



Royalties

University of California

University

15% to the central administration 25% to the central administration 35% to the central administration 33.3%

20% of gross royalties

20% of gross royalties

25% to the central university

8.5% to the inventor’s school and 33% to the central university

— 15% from gross royalty income — —

15% from gross royalty income —



Technology Licensing or Transfer Administrative Fee

18% to the originating school, college, division, or center 25% to the originating school, college, division, or center 35% to the originating school, college, division, or center 13.2% to the university

65% to graduate school 5% to the inventor’s school

50% to the university system 33% to the inventor’s school







School and University System

TABLE 1. Royalty Distribution Policies for the Top 10 Patent-Producing Universities and University Systems in the United States

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ENTREPRENEURSHIP AND COMMERCIALIZATION

ENTREPRENEURSHIP IN THE ACADEMIC ENVIRONMENT

working together, with successful team creation and design considered to be one of the most critical issues in successful entrepreneurship (17). A study of university commercialization efforts focusing on the preliminary stages of spin-offs initiated by faculty and students characterized four primary pathways based on the varying roles played by faculty principle investigators (PIs), experienced entrepreneurs, PhD/postdoctoral students, and business school graduate students (18). The ideal arrangement, from the perspective of most faculty members wanting to commercialize their inventions, is a partnership between a faculty PI possessing technological expertise and an entrepreneur who has the experience and network to assist in raising funds for the venture and guiding its growth. However, it is often difficult for faculty PIs to garner the interest of experienced entrepreneurs in the early stages of a venture. The most common pathway to commercialization is a partnership between faculty PIs and PhD/postdoctoral students from their laboratories. Although this arrangement has the technical expertise and motivation necessary to drive the venture, it lacks personnel with business knowledge and experience, important central determinants of entrepreneurial success. Academic radiology departments striving to increase entrepreneurial activity can either seek out experienced radiologist entrepreneurs or facilitate collaboration between radiologist and nonradiologist entrepreneurs to create teams with the necessary combination of technical expertise, business knowledge, and entrepreneurial experience.

Entrepreneurship starts with an idea or vision, occurring along a spectrum beginning at incremental improvement of an existing product or service, to a new revolutionary technology that disrupts an existing industry (12). There are many ways for an academic radiologist to proceed with a promising idea, although the first step is usually to disclose the idea with the institution’s TTO to ensure protection of IP rights. The TTO will evaluate the concept and any available data to determine whether the idea is patentable, a patent already exists, and there is sufficient opportunity to support development of the product or service. Subsequent steps include assembling the entrepreneurial team—ideally consisting of researchers, clinicians, and in later stages, business experts—and obtaining initial financial support (12,13). Two critical factors driving entrepreneurship and innovation in the academic environment are the individual entrepreneur and the institutional environment within which entrepreneurs and their teams operate. These are important topics for academic radiologists who have the desire to innovate but have limited experience in entrepreneurship and hospital and departmental leadership that supports these activities. Entrepreneurs

Entrepreneurs play a key role driving innovation in the academic environment (7,14), and several individual-level attributes predict entrepreneurial activity. Opportunity recognition, the capacity to identify, recognize, and absorb opportunities, is the single most important quality explaining individual involvement in entrepreneurial activities. Similar to many other skills, opportunity recognition can be learned through experience and training. Prior entrepreneurial experience is also a strong predictor of subsequent entrepreneurial activity (15) with ‘‘fail until you succeed’’ being a common mantra among successful entrepreneurs. Entrepreneurial self-efficacy, which is the belief one has in his/her own competencies to start a company, is a reliable predictor of the intent people have to become entrepreneurs or engage in entrepreneurial activities (16). Finally, confidence is a strong driver of the probability that one will undertake entrepreneurial activities. These individual-level attributes drive academics to start new ventures but do not necessarily predict the success of entrepreneurial endeavors. Entrepreneurs and Their Teams

If a radiologist conceives a great idea but does not possess the skill set or experience of a successful entrepreneur, he or she can create a team that provides the necessary complement of skills to successfully drive an entrepreneurial venture. In fact, it is rare to find an individual possessing all the necessary qualities to be a successful entrepreneur. The more common scenario is to have several members in entrepreneurial teams

Radiologist Entrepreneurs

Many radiologists find the process of entrepreneurship daunting and are often deterred from acting on their ideas for several reasons. Entrepreneurs must embrace risk and be prepared to cope with inevitable failures along the way. However, the culture of many radiology departments emphasizes accuracy and reliability, which can generate substantial risk aversion and a relatively low tolerance for failure among radiologists (12). There are limited opportunities for radiologists to develop the teamwork skills necessary to work effectively within entrepreneurial teams, as radiologists tend to perform clinical work alone or in ‘‘consultation’’ with other professionals rather than serving as a functional member of a multidisciplinary team (with notable exceptions such as interventional radiologists). Moreover, most radiologists do not work in an environment that fosters interactions with other potential team members needed to provide entrepreneurial and business expertise. Radiologists in general are taught to stay close to their work product to ensure quality, which can result in ‘‘micromanaging’’ and a limited ability to delegate tasks. Being able to delegate effectively is necessary to develop the scalable aspects of a business that often hold the most value. Finally, engaging in entrepreneurial activities often comes at the expense of traditional incentives for academic radiologists such as clinical productivity, publications, presentations, and grants (to be discussed in more detail later). To address these 17

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limitations, academic radiologists must develop nontraditional skills outside of routine clinical practice, and radiology departments must create a culture and infrastructure that facilitates multidisciplinary interaction and promotes entrepreneurism. Prospectively identifying radiologists who have the potential to be successful entrepreneurs remains a major challenge. Institutional Environment

A supportive institutional environment is another major factor that drives entrepreneurship in the academic environment. Academic culture, advancing technology, incentives for IP development, and the desire to increase revenues have led many universities to aggressively pursue entrepreneurship and commercialization (19). A successful radiologist entrepreneur will analyze the external and internal environments of an institution to determine if they are conducive to entrepreneurial endeavors and use all the available tools to increase the chances of a successful venture. Today, universities have a number of factors that make up this complex ecosystem, which can be viewed by the radiologist entrepreneur as conducive, counterproductive, or somewhere in between. How conducive an environment is can be predicted by an institution’s efforts to increase awareness of availability and support for such activities. External Factors

Academic radiologists should consider fundamental external aspects of the community and institution, particularly if they cannot be changed. These factors include geographic location, affiliations with other system schools, size of the current city, distance to larger cities, and the availability of local investors. These are important for an academic radiologist to evaluate before signing an employment contract and should be specific to the type of entrepreneurial activity. Overcoming barriers related to these aspects is possible, and there are success stories of new technologies arising from unlikely places. A key factor in determining success is an early understanding and preparation for how specific institutional aspects will affect a company, business, or market in the future. This preparation could range from meeting with local investors, to attending national biotechnology investor conferences to recruiting faculty or students years before a business venture’s initiation. Internal Factors

The internal environment of an institution will largely depend on the core infrastructure coupled with social factors. The size and type of the institution will influence its internal environment. Although there can be large differences in the environment based on institutional structure, a large flagship university with undergraduate, engineering, law, business, and medical school will clearly be very different from a regional academic medical center that may only have graduate 18

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medical and health sciences programs. Core research facilities and the availability of equipment for product design and testing will likely be the largest difference. Both large and small universities will have their challenges, however. A regional center may have to find collaborators at other institutions, whereas some institutions can be so large that the availability of local expertise or needed analytical devices can be difficult to find. The size of the institution will usually correlate with the number of staff personnel and students interested in entrepreneurship. An affiliated large business school can have entire degree programs devoted to student entrepreneurship, where there will be people on campus actively seeking out new projects. An institution may even have an affiliated venture fund that is actively seeking to fund faculty projects with commercial potential. Some institutions may have official business incubator buildings on campus with reduced rents and available wet laboratory/office configurations. A larger technology transfer office can also have streamlined protocols because they deal with licensing on a daily basis (19). Knowledge and Experiential Programs

Knowledge-based programs include cross-disciplinary seminars and courses typically offered through the office of academic development or TTO. These are usually nondegree and can be as simple as bringing in speakers from industry, to having business, engineering, or law faculty teach a dedicated course with a project and presentation. Academic radiologists often have limited time and flexibility compared to the general university faculty, making online learning options an attractive alternative to traditional courses. Participating in experiential programs is a way to test and develop skills as most schools have business plan competitions, entrepreneurial boot camps, and classes for business students to try to commercialize faculty technology. Institutional Culture

Institutions or departments that do not have a history of entrepreneurship are less likely to foster commercialization, as academics are more likely to engage in entrepreneurial activities if they are surrounded by successful entrepreneurs (14). If there is a lack of an entrepreneurial culture, the easiest solution is that of professional collaborations with individuals at institutions with stronger entrepreneurial traditions (20). Leadership and academic radiologists together can start building an entrepreneurial culture by planning multidisciplinary seminars or conferences with departmental or institutional support. Mentoring medical and graduate students can similarly be of value for fostering entrepreneurial research (18). Although every institution is unique and will provide a set of challenges and opportunities, one of the best universal starting points to discover and evaluate the environment at any institution is through the TTO. They should be able to provide an overview of the educational and experiential

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programs, policies and procedures, support, and resources both within and outside the institution. Although the institutional environment plays a major role in promoting and supporting entrepreneurial ventures, ultimately, it is up to the individual to initiative projects. Institutional Policies Affecting Entrepreneurship and IP Protection

Institutional policies and employment contracts usually define nonclinical time, incentives, ownership, and restrictions related to entrepreneurial activities. Although protected time for research and entrepreneurial activities can be included in employment contracts, these provisions often come with reduced salary, and protected academic time in general is becoming scarcer (21). From a departmental perspective, providing support in the form of protected time and salary for entrepreneurial activities that will more than likely be unsuccessful can be cost prohibitive in the current economic environment. The traditional incentives for advancement through the academic ranks (publications, presentations, and grant funding) are not aligned with entrepreneurial activities. In the United States, public disclosures made before filing a patent application—even if done to satisfy departmental expectations for academic productivity—can undermine IP protection. Before engaging in an entrepreneurial activity, it is critically important for academic radiologists to review their employment contracts and all relevant departmental and institutional policies regarding IP rights and royalty distribution policies. Academic radiologists should consult with colleagues and support staff from their TTOs to gain a better understanding of IP rights/protection well before moving forward with an entrepreneurial endeavor. Incentives for Entrepreneurial Academic Radiologists

Entrepreneurial radiologists in the academic environment can be motivated using a variety of methods. Sponsored research grants are particularly favored by academics because they may continue research that is relevant to the commercial activity, thereby hedging against ‘‘the downside risk of lost academic opportunity which occurs if commercial pursuits are not aligned with academic pursuits and time is allocated towards the new venture as opposed to academic research’’ (22). One disadvantage of this approach is that corporatesponsored grants are usually directed and may divert effort away from more basic or pure academic research. Another drawback is that this arrangement provides weak incentives and may be insufficient when knowledge is tacit, requiring excessive effort or time for the academic to effectively communicate relevant information to the sponsoring firm. In this situation, sponsored research should be supplemented by other incentive arrangements. Consulting relationships can be used independently or as a complement to sponsored research to stimulate involvement in entrepreneurial activity. In these arrangements, academics

ENTREPRENEURSHIP AND COMMERCIALIZATION

may spend a limited amount of time working for a company or serving on its board of directors. Alternatively, academics may decide to spin off a new company. Although the role that academics play in these spin-offs may be similar to those of a consultant, the nature of the relationship is fundamentally different as academics generally have a significant equity position when starting new firms. Commercialization revenue to the academician can take the form of salary, royalties, or equity compensation. The weakest incentive for the commercialization of inventions is salary because the reward is not directly linked to the outcomes of the entrepreneurial venture. From this perspective, royalties and equity compensation are considered better incentives, but royalty arrangements only work if IP rights can be asserted (22). If IP rights are weak, the more effective incentive arrangement is equity compensation. Inventions may also be licensed directly to inventors given the high level of risk to the university. Academic Affiliation for Entrepreneurial Radiologists

Entrepreneurial academic radiologists may leave academia and become full-time entrepreneurs because many business ideas are simply too consuming or time sensitive to pursue part time. In this scenario, an important consideration is whether to maintain a formal university affiliation. There are several trade-offs inherent in this decision. One of the foremost benefits of an academic affiliation is that it provides credibility and an open living connection to a center of thought leadership in radiology and medicine at large. Typically, affiliation means having access to meetings and conferences on campus and online access to journal articles and other electronic media. It also means having access to the dynamic clinical practice environment of academic medicine, where opportunities and challenges often arise years in advance. Together, these factors can provide entrepreneurs with an ‘‘insider’s edge’’ in understanding how to refine their products or services in a manner that will maximize future demand. Furthermore, maintaining an active affiliation makes it easier to leverage contacts within the university setting, both within and outside the institutions. Finally, universities are generally more open to the part-time practice of medicine and tend to have the necessary infrastructure to support these arrangements—university faculty are often provided 20%– 80% of their time for nonclinical pursuits and it is easier to blend in as a part-time clinical practitioner pursuing entrepreneurship. Although part-time or adjunct affiliations tend to be less demanding than full-time arrangements, these affiliations still have requirements, some of which can be substantial. Most such arrangements still require a certain number of service hours which can detract from entrepreneurial efforts. Another requirement of most academic affiliations is the disclosure of all potential conflicts of interest, including business affiliations and stock ownership. Conflicts related to physician entrepreneurship have been described elsewhere (5). Depending on 19

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the scope of entrepreneurial involvement, these disclosures can create a great deal of paperwork that would be a poor use of the radiologist entrepreneur’s limited time. Finally, some may choose to leave academia entirely because of the difficulty of balancing entrepreneurship and clinical work, feeling frustration with the inability to fully devote him or herself to either activity. Radiologist entrepreneurs who fit this description should fully appraise all options for affiliation, as there are often ‘‘lite’’ versions of adjunct status with few requirements that are unlikely to derail one’s entrepreneurial ambitions. COMMERCIALIZING DISCOVERIES When an academic radiologist has an idea that merits patent protection and support for development as a product or service, a provisional patent is filed to provide IP protection. A formal patent may be filed at the same time, but more commonly, it is filed at a later date. In 2013, the United States switched from a first-to-file system to a first-inventor-to-file system, which affords the inventor a grace period of 1 year after public disclosure to file for a patent. Unfortunately, public disclosure can eliminate patent protection rights in the rest of the world. Additionally, in the United States, a researcher who builds on published work and files for a patent could be creating prior art that would invalidate the patent. For these reasons, although presentations at specialty-specific conferences can generate interest from potential industry partners, patent protection must be obtained before making a public disclosure (23). Also, under the first-inventor-to-file system, inventors must maintain thorough documentation of the development of the invention; should a dispute arise, one must prove that he or she actually invented the subject of the patent. Initial funding for preliminary work is often done out of pocket or via small grants available through the university, governmental groups (SBIR and Small Business Technology Transfer (STTR) offices) or private sponsoring entities. Approaching individual large companies is often not productive, as these companies are usually unwilling to invest capital in start-up projects that have a small chance of success. One way of fostering the relationship for early-stage development is through sponsored research discussed previously, in which a company provides funds that allow the inventor to develop the technology in the laboratory. In this scenario, the sponsor will often request a ‘‘right of first refusal’’ (23) for which the recipient institution agrees to give the sponsoring entity a finite period of time in which to opt to license any technology using the sponsoring funds. In exchange for the risk of this early-stage investment, the recipient institution accepts a lower royalty. If the right of the first refusal is exercised, the IP assets will be licensed to the sponsoring entity for further commercialization and the inventor may be retained as a scientific advisor to assist with development and production.

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There are examples in radiology where individuals have had success taking an innovative concept and directly licensing it with a company. For instance, Richard Chesbrough, MD, invented the UltraClip breast biopsy clip marker after struggling to devise a reliable method for marking breast biopsy sites for future localization. After filing a provisional patent, he pitched the concept of a preloaded sterile breast biopsy clip marker to manufacturers of similar products under the protection of confidentiality disclosure agreements that prevent those companies from using the concept without his permission. One company eventually agreed to develop the product; the UltraClip needle was commercialized within 1 year and now has annual sales of over $20 million (24). Another common method is to approach a committee of entrepreneurs/investors who may be willing to take the risk of early-stage products, often for a larger stake in the company. For example, the Ben Franklin Technology Partners in Philadelphia is dedicated to helping entrepreneurs found and grow high-tech jobs through a combination of advising, funding, and support networks (12). Similar partnerships can be found in most major cities. The funds obtained through these various avenues may be distributed to the university as a lump sum, through milestone payments or through royalties. Royalty rates are often decided as a function of exclusive versus nonexclusive rights, sales volume, product cost, and the potential for market place disruption of IP (23). For example, if a device or drug shows in vitro and in vivo promise but has not advanced to phase I or II trials, it would command a lower royalty payment. If the investor cannot obtain funds from any of these sources or is unwilling or unable to accept the terms imposed by the investors, he or she may independently form and fund a start-up company. Because the university employs the inventor, a common institutional requirement is that the inventor cedes primarily managerial control to another individual, although the inventor may remain as a comanager or an advisor. Exit Strategy

It is a well-known fact that the majority of start-up companies fail. However, if the company or product is successful, exit strategies for both the radiologist entrepreneur and the company must be considered. It is rare that an inventor can take a successful product all the way to initial public offering of the stock as a public company. The majority of start-ups in the United States instead follow other paths including a private sale to another entity in the field or keeping the company in the private domain as long as there are capital reserves and enough income to keep the company viable. Many entrepreneurs may decide to liquidate a part of the company and continue to work on a subset of their ideas in a smaller more entrepreneurial environment (12), either in the same company or a subsidiary company that retains the IP created by the entrepreneur.

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OPPORTUNITIES FOR ENTREPRENEURIAL ACADEMIC RADIOLOGISTS Information Technology

Background. Radiologists were among the earliest adopters of information technology (IT) tools in clinical practice (25). Over the past 20 years, these technologies have been widely accepted and revolutionized the practice of radiology (26). However, these tools continue to improve as the underlying technologies mature and as the health care system at large embraces a digitized workflow. For the interested radiologist, this environment creates numerous opportunities for entrepreneurial activity. Opportunities. Opportunities for innovation in radiology IT can be roughly partitioned according to the distinct phases of the modern radiology workflow (27). These opportunities may involve the development of tools that improve how studies are selected and performed, such as robust computerized decision support systems or tools to reliably and efficiently protocol examinations. Other tools may support data-gathering operations, such as clinical data mining of electronic health records, or ‘‘just-in-time’’ knowledge databases that provide immediate and intelligent access to educational material at the moment the radiologist needs it. There is also a growing need for sophisticated and welldeveloped image display and storage technologies, such as cloud-based picture archiving and communication system (PACS), vendor neutral archives, or mobile display. These technologies can be supplemented with tools that improve how images are analyzed and interpreted, such as computeraided detection of breast lesions or lung nodules or threedimensional tools for CT colonography or enterography. Radiologists would also likely benefit from improved utilities for structured reporting and communication of critical results. The newest workflows in radiology present many of the greatest opportunities for innovation. Tools to share studies between geographically distinct sites, such as the RSNA Image Share project, are not yet mature or widely used (28). Also needed is software to facilitate quality assurance programs or automated clinical follow-up of patients who undergo imaging and technologies to facilitate research and education. Unique Characteristics. In most medical fields, ‘‘research and development’’ refers to two distinct phases in the product cycle, with the former based on science and the latter based on engineering. Such is not the case in medical IT and software development, where research and development are often indistinguishable, making it easier for academics to cross the chasm into entrepreneurship. Software and IT development is also unique in that it often requires minimal start-up capital. As such, there is less need for collaboration with large organizations during early-stage development, thereby creating opportunities to make independent progress without commercial backing. This ‘‘do-ityourself ’’ approach may also avoid IP conflicts that may arise

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in the course of joint ventures between academic institutions and industry partners. Although financial support of established commercial entities is often not required, collaboration may be an important means to access intellectual capital. Specifically, IT development relies on specific technical knowledge that is not part of conventional clinical training. Although many academic physicians do indeed possess the necessary technical background, such skills are by no means universal. Medical Devices

Background. Medical device development is perhaps the most traditional avenue to entrepreneurship in academic radiology and other procedural specialties, and physician entrepreneurs already play an outsized role in the development of new devices (29,30). Given the pace of technological progress and improvement in our understanding of disease, opportunities for innovative and entrepreneurial physicians in the medical device sector are likely to grow further. Opportunities. Intracorporeal medical devices already represent an enormous market that is only likely to become larger as minimally invasive image-guided therapies grow in popularity. Many of these devices—such as endovascular stents and coils, retrieval devices, catheters, and filters—are already familiar to radiologists. Much of the ongoing innovation in this arena involves incremental improvements in safety, efficacy, and usability. Because physicians are best qualified to judge these improvements, they are likely to play an important role in the development of the next generation of intracorporeal medical devices. There is also considerable opportunity to develop diagnostic and procedural tools. These tools span the gamut from the pedestrian (eg, needle guides for use during CTguided procedures) to the revolutionary (eg, MRI-guided high-intensity–focused ultrasound), but all are likely to be important for delivering higher-quality and more costconscious patient care. One of the more interesting trends in recent years is the emergence of point-of-care ultrasound devices. As these portable devices strive for progressively higher standards of sophistication and technical quality, radiologists can serve a useful role in device design and clinical testing. Finally, there is room for innovation in areas not typically regarded as radiology-centric medical devices. Some of these, such as improved or mobile-enabled PACS displays, occur in the IT arena and are discussed in the previous section. Others, such as intelligent biophysical sensors (31), may fall into the sphere of radiology if they are to be implanted by modern interventional radiology techniques. Unique Characteristics. Given the high cost of development for most medical devices, the required initial capital investment can be high (32), which almost immediately argues for finding industrial partners that can help to shoulder these

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costs. Such partnerships also afford access to expertise in navigating the numerous regulatory requirements, such as 510(k) approval from the US Food and Drug Administration (33,34), and specific technical expertise than can allow physicians to be meaningful participants in the development process even if they themselves do not possess engineering talent. However, it is important to note that some institutions may limit the types of industrial partnerships that can be established (30). Even if such partnerships are permitted, they may complicate assignment of IP to the various stakeholders. Pharmaceuticals

Background. Outside of a few specific markets, the specialty of radiology has not historically played a major role in the pharmaceutical development. This lack of involvement presumably reflects the fact that radiology is oriented more toward diagnosis than therapy compared to most other specialties in medicine. Nevertheless, entrepreneurship is enormously important in the development of novel pharmaceutical agents (35), and the emergence of new frontiers in diagnostic and therapeutic radiology creates avenues for radiologists to become involved. Opportunities. A role for radiologists in the development of diagnostically oriented pharmaceutical agents is already well established. Radiologists have been instrumental in the development of contrast agents for all modalities, including iodinate- and barium-based agents for radiographic imaging (36), magnetically active agents for MRI (37), and microbubble agents for ultrasound (38). Despite the long history of development in each of these areas, there remain opportunities to develop agents that are tailored for specific tasks (39). The emerging molecular imaging revolution will also necessitate development of new molecular imaging agents to probe cellular processes at the molecular level. Indeed, pharmaceutical agents for radiology are not limited to strictly diagnostic agents, as there are opportunities to develop therapeutically oriented pharmaceutical agents, particularly for use in interventional radiology applications (40). There is also an emerging role for academic radiologists in the development of pharmaceutical agents not directly related to radiology practice. The US Food and Drug Administration has established the Critical Path Initiative that emphasizes the role of molecular imaging in drug development (41). Molecular imaging—whether through conventional agents such as fluorodeoxyglucose or other novel molecular probes—can aid drug development through proper patient selection and objective monitoring of treatment response and potential adverse effects (42). Unique Characteristics. A defining feature of pharmaceutical development is the enormous cost required to develop a drug and bring it to market. The total investment required to bring a drug to market is estimated to be as much as $200 million for imaging agents (43) and as much as $800 million for therapeutic agents (44). These costs are too high for 22

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most start-up companies and academic institutions and essentially require corporate sponsorship in the late stage of drug development, although early-stage drug development can be performed without sponsorship. Entrepreneurs in the pharmaceutical development sector also face enormous regulatory requirements (42). These requirements are far more extensive than those in place for the medical device industry. Prospective new drugs must undergo phase I, II, and III testing of safety and efficacy before approval. Even after approval, the safety of new pharmaceuticals must be monitored continuously. These requirements require a large research and clinical network generally not accessible without the assistance of contract research organizations or the American College of Radiology Imaging Network. Disruptive Innovations

The concept of disruptive innovation has been proffered as an opportunity to solve the current health care crisis by improving quality and controlling costs (45). Disruptive innovations are ‘‘cheaper, simpler, more convenient products or services that start by meeting the needs of less-demanding customers’’ (46), with examples in health care including coronary angioplasty (supplanting bypass surgery), the rise of ambulatory surgery centers, and the expanding roles of nurse practitioners and physician assistants (45,47). Many of the innovations in imaging are sustaining innovations—new and more advanced products that serve the more sophisticated customers at the high end of the market, such as 320detector row CT scanners and 3T MRI machines. Although these technologies represent important developments that advance the field and improve patient care, they are costly and do not address the needs of the majority of patients nor do they address the problems of limited accessibility and affordability of health care (47). Disruptive innovations are relevant to entrepreneurial radiologists because they offer substantial opportunity to develop products and services that ‘‘provide the health care that most of us need most of the time in a way that is simpler, more convenient, and less costly’’ (45). However, negative impacts on profitability create barriers to the broad acceptance of disruptive innovations. How would radiologists and radiology leadership react if a new computer-aided detection software program was developed that could interpret imaging studies more accurately than radiologists at a fraction of the cost? Although this technology might improve quality and reduce costs, it would disenfranchise nearly the entire specialty and fundamentally change the practice of radiology. Because of the radical changes resulting from disruptive innovations, it is important for academic radiologists and radiology leadership to recognize that the strategies for responding to disruptive innovations are distinct, including: 1) the development of strategic options for future exercise (eg, evaluating and selling off parts of the business), 2) a focus on reaching the endgame position (with respect to either the mature technology or the entire business), 3) avoidance of overinvestment in the ‘‘old’’

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business, 4) the development of new core competencies and assets, and 5) timing incremental change in older businesses with investment in new ones (48).

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9. 10.

CONCLUSIONS Entrepreneurship in the academic environment offers incredible potential to solve many of the pressing problems currently facing health care in the United States, while simultaneously fulfilling the mission of academic institutions to create and disseminate knowledge for social gain. Entrepreneurs are the driving force behind innovation and the commercialization of research discoveries, with academic radiologists possessing many of the skills needed for successful entrepreneurship. However, purposeful effort will be needed to develop additional requisite entrepreneurial skills. Institutions that support entrepreneurs with the necessary educational and technical resources to support entrepreneurial efforts can promote commercialization and monetization of academic research, the proceeds from which can be used to further support the academic mission. Aligning incentives for all involved parties—institutions, departments, and researchers—can help to relieve obstacles to entrepreneurship. Once a supportive environment is established, academic radiologists can get to work addressing needs in IT, medical device development, and drug discovery, areas that will define the future of our specialty.

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ACKNOWLEDGMENTS The authors thank Niraj Muni, Office of Technology Commercialization, Temple University. A.P.K. was supported by National Institutes of Health (T32 EB001631).

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Entrepreneurship in the academic radiology environment.

Innovation and entrepreneurship in health care can help solve the current health care crisis by creating products and services that improve quality an...
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