Chuck Masek: At War with the Big Dogs (Part 2)

John Farrell: When did you first realize that being an entrepreneur was your true calling?

Chuck Masek: I don’t know that I ever realized that. I always thought an entrepreneur was someone who couldn’t keep a job, but I realized something about myself. I would look at things saying, “I can do that better.” Now, maybe I could, maybe I couldn’t, but I thought I could, and as a man thinketh, so he is.

When I got to Vanguard, my last one, I realized, “I probably am an entrepreneur.” But again, I never thought of myself as being an entrepreneur. I just thought of myself as someone trying to get ahead.

People tell me, “Chuck, people will follow you.” I never thought about that. One of the things about talents is that a person sometimes doesn’t recognize it as a talent because it comes so natural to them, but when you ask other people what you’re good at, they’ll tell you, “You’re good at this.” You may not even recognize it.

It turns out I’m good at leadership. People will follow me for whatever reason. I think a lot of it’s because they trust me. I try to do things that are honorable and right and always be fair to people, maybe above and beyond the call of duty.

JF: What advice would you offer to someone interested in becoming an entrepreneur?

Chuck: I get asked this question by young people and when I say, “young people,” I mean anybody from 25 to 50. They’ll say, “I want to be an entrepreneur like you.” I say, “First thing first, you have to find out what you’re good at. That’s called a talent.” Most say, “How do you do that?” I say, “That’s the easy part.”

It says in the counsel of many is wisdom. If you ask enough people, you’ll find out. Ask your mother, your father, your siblings, your pastor, your boss, the guy who serves you coffee at Starbucks. “What am I good at?” If you listen to them, you’ll find out you’re good at this and whatever that is, pursue that because if you pursue that, you’ll go to joy every day. You won’t go to work.

A lot of people are frustrated by trying to do something they can’t do. If I wanted to be an opera singer and I worked my whole life to be an opera singer, I’d never be an opera singer, but it turns out I’m good at leading people. That’s my talent, if you will.

Everybody has different talents. Find out what you’re good at and then pursue that.

Reprocessing Single-Use Devices

JF: Explain to me what a SUD is and what led you to start processing them?

Chuck: The FDA coined that term, believe it or not. It stands for “Single-Use Device.” In 1965 and prior to that, everything was reusable. When Medicare passed the Medicare Act—I think it was ’65—in the ‘70s everything started going toward disposables for a couple of reasons. Number one, the manufacturer had less liability. Number two, it’s very convenient because it reduces infection rate. Between the ‘70s and ‘80s they became an expensive part of the hospital.

Then the government passed DRGs—Diagnostic Related Groupings. It basically said, “Hey, Mr. Hospital, we’ve been paying you whatever you spend in the OR; we’re not doing that anymore. We’re going to pay you a flat fee—let’s say $500 for a gallbladder. If you spend more, too bad so sad.” All of a sudden, the hospitals had become fiscally responsible and there was a big knee-jerk reaction to stop using SUDs. At least as many as they could.

I realized, “Wait a second. What if you reprocessed them?” Because these things are not so single-use. There’s no such thing as single-use. There’s a thing called “consumable.” If something gets consumed in the process, you can’t reprocess it. But these devices are hard plastics and stainless steels. As long as you can clean them, package them, test them, and sterilize them, it’s good for one more use.

I can assure you that the manufacturers were very upset. They’re charging $300 for a device; we’re charging the hospital $150 for the device. When you start playing in someone else’s sandbox like that, you can be assured they’re going to rain down fire on you as hard and as a fast they can.

That’s what we do. We reprocess the SUDs. We’re the first company to do it. And of course, as you probably know, at the end of the book, Stryker, one of the guys who we reprocessed their devices, bought us. They joined. It’s like years ago when generic drugs came out and drug companies fought it tooth and nail, but now every major drug company has a generic line.

Overcoming Hard Times

JF: You dealt with a lot of adversity while building Vanguard Medical Concepts. What were some of those hurdles?

Chuck: One of the hurdles was we operate under what’s called the QSR—the Quality Systems Regulation. All medical people that make medical devices operate under that. But the government has a category called 510(k). When you say to the government, “I got a product I want to bring to the market and it’s just like my competitors. I want to be cleared to do that.”

But they would not give us a 510(k). There was no place on the form for SUD reprocessing. So, it took us from 1992 to 2001 for the government to pass MDUFA (Medical Device User Fee Amendments), which basically gave us the right to file the 510(k)s and the government would accept the 510(k)s.

Prior to that, we operated like everybody else in the QSRs. Once we got the 510(k) authorized so they would accept it from us, the battle was over and the manufacturers knew it because the only thing they had against us was that we didn’t have a 510(k).

The term 510(k) comes from the chapter and verse of the code of federal regulations. It’s called a claim of substantial equivalents. It’s unlike what’s called a PMA (Pre-Market Approval). That’s when you actually have to go with a new device and it’s so new that it’s not been used on the market. So, they get pre-market approval like they’re doing with the new vaccines. When you get pre-market approval, you can actually use the word “Approved” on your label. If you have a clearance to market, you cannot use the word “Approved.” You can say it’s cleared by the FDA. It’s the legal definition.

JF: How did you win over your detractors?

Chuck: That’s a good question. What happened was the manufacturers were upset, so they said to their customers, their doctors, and nurses, “You better go down and see what they’re doing because they’re just washing it with a garden hose. These guys are crazy.”

That forced us to bring in plant tours. Very expensive. We’re flying in nurses and doctors from all over the United States, bringing them there, having dinner with them, putting them up in a hotel. But the good news was when they saw what we were doing they go, “That’s easy.” We cannot win the emotional argument, but we could win the science and the science finally won. When they came and saw what we were doing they go, “That’s no big deal.” Of the hundred plant tours, we probably converted 95% of them because once they saw what we were doing, it was all based on science.

Saving Money and Lives

JF: What are some of the cost-saving measures that healthcare providers can implement today without sacrificing patient care?

Chuck: I can speak to the medical devices: keep reprocessing medical devices. Manufacturers are now starting to make devices to be reprocessed. In fact, we’re making one right now that can save the hospital money. As far as drugs go, use more generic drugs.

Healthcare is an interesting thing because you don’t negotiate for your healthcare. When you’re sick, you want to get well. It’s a different business. So, what my wife and I try to do is every company that we’ve started, we try to provide products to the hospital that are less expensive and improve patient care. So far, we’ve been able to do that in everything we’ve done.

Even now, we have an orthopedic business making implants and we make them less expensive. They’re better technology, the patient does better, and the hospital saves money. That’s where we all as Americans pull together because we have a great healthcare system in America, but we need to pull together to make sure we find creative ways to reduce costs.

JF: Throughout your career, what principles have helped you turn adversity into success?

Chuck: It’s funny, my mother and my father were both honorable people. Forgetting the part about how hard it was being brought up, my father was a man who could not lie. He was just as ethical as the day is long, and that passed over to me.

What I’ve tried to do in business, as much as possible, is to do what’s right. To do what’s right first and what’s expedient second. Any time in my life where I’ve taken shortcuts, which I have, I have always regretted it. When I do things the right way, I don’t have to apologize for it.

I would tell anybody, first do what’s right, not what’s expedient. You’ll find out you’ll have a happier life, and you won’t be looking over your shoulder every time you’re doing something. I think ethics and morality have more to do with business than anything else. Making money is secondary to doing what’s right in my opinion.

Facing Failure

JF: At any point during your career did you experience any fear of failure? And if you did, how did you combat that fear of failure?

Chuck: Almost every day we had that. Almost every day something was going to come up that was going to kill us. What I realized is you can’t pay attention to that. You have to keep your eye on the prize.

There are two things a leader does and they’re the most important things he does. Number one, he’s a great encourager. That’s one of the most important aspects of a leader is to encourage the troops. The second thing is to make sure they always stay focused on the goal. Don’t pay attention to what’s going on down here; watch the goal. At the end of the day, my belief is that either we’re going to survive or not. It’s not going to have to do as much with us, but to do with God and who He is.

Keep your eye on the prize, encourage one another, lift one another up, and keep your nose to the grindstone. It’s as simple as that. We’re like the Israelis—our backs are to the ocean. We have no choice. We’re either going to die or we’re going to survive. There’s no negotiation. That’s a high-motivated factor. If you don’t do something, if you don’t survive, you’re going to be dead, figuratively speaking. That’s what we did.

JF: Where can people connect with you online?

Chuck: I have a website called www.chuckmasek.com. You can order the book there and you can leave me a message. I think I have some interviews up there also, but if they want the book, they can also buy it on Amazon. I also made an audio version of the book. I like audiobooks; that’s why I did it.

I would encourage people; it’s a good read and I think you’ll be blessed by reading the book. It’s an incredible story of how all these men and women came together and were able to defeat the big dogs.

JF: Is there anything else that you want to add or something that you’d perhaps like to re-emphasize?

Chuck: At the end of the day, do what’s right first, not what’s expedient. Just live your life that way, that way you’ll live your life with less regrets.

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Order your copy of At War with the Big Dogs: How One Man in Need of a Job Started a Billion Dollar Industry by Chuck Masek