One of the most common names on the resumes of medical technology executives here: Baxter.
Baxter International Inc., the Chicago-area healthcare company, left behind a cadre of bosses running some of the biggest medical companies here, as well as some promising startups.
Baxter, once one of the largest medical device employers here, doesn’t have operations in Orange County anymore after spinning off Irvine-based Edwards Lifesciences Corp. in 2000.
But its impact on the local medical technology industry is rivaled only by that of Beckman Coulter Inc., the Fullerton maker of medical testing gear that moved here in the 1950s.
Baxter and its acquisitions, chiefly heart valve maker Edwards and American Hospital Supply Corp., spawned a fraternity of executives who say their time at those companies was critical to what they’re doing now.
“Baxter was an excellent training ground for managers,” said Kenneth Charhut, chief executive of Orqis Medical Corp., a Lake Forest maker of heart devices. “The ethics of the company, the performance results required, served as an excellent kind of workplace to hone your skills.”
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Making valves at Edwards: business spanned both American Hospital, Baxter |
Management training and bringing out new products were key, Charhut said of his experience at Baxter. Charhut spent more than 16 years with Baxter, including four years running Bentley Laboratories Inc., an acquisition that made products used in heart surgery.
“There only can be one president of a division in a large company, so you’ve got a highly talented management team behind that,” Charhut said. “It stands to reason that some will stay and others will go out on their own to be their own top person.”
The Acquisitions
Baxter’s biggest legacy here is Edwards. The company got its start in the early 1960s as Edwards Laboratories, spearheaded by Miles “Lowell” Edwards, inventor of the first artificial heart valve.
American Hospital Supply Corp. bought Edwards Laboratories in 1966. Then Baxter bought American Hospital in a major acquisition in 1985.
There has been a theme going back to the early days of Edwards Laboratories of attracting talented executives, said Michael Mussallem, Edwards Lifesciences’ chief executive, who joined Edwards as part of Baxter.
“That kind of strong talent became an important resource for other innovation in the county,” Mussallem said. “The people who came from the company had a chance to experience what it was like to manage a leader and sort of learn the formula.”
Other key OC executives hail from the American Hospital supply side of Baxter. They include Scott Garrett, chief executive of Beckman Coulter, and Floyd Pickrell Jr., head of Newport Beach-based Sybron Dental Specialties Inc.
“The American Hospital experience was unique,” said Michael Quinn, chief executive of Cardiogenesis Corp., a heart device maker in Foothill Ranch.
Quinn spent 15 years with American Hospital, including serving as president of a $250 million division at the age of 33 in the late 1970s.
“Karl Bays (American Hospital’s former chief executive) believed in hiring good people and letting his horses run,” Quinn said. “He would rather have you make mistakes than not make a decision that would benefit the company.”
A common American Hospital trait, according to Quinn: focusing on customers.
“They really had a sales and marketing background,you really don’t have a lot of people coming out of operations or R & D; or anything like that,” he said.
Many of the managers who came out of American Hospital and later Baxter weren’t products of business schools, Quinn said.
American Hospital, a diversified healthcare company that was based out of Evanston, Ill., was highlighted in a newsletter published last year by headhunter Korn/Ferry International.
The company itself spawned more than 150 healthcare chief executives and general managers, the report said.
“We are not aware of any other ‘academy company’ in the industry that has generated so many great leaders,” Korn/Ferry partners Richard Arons and Robert Ruh wrote.
American Hospital also existed in another time, said Ruh, a former OC resident who worked at American Hospital from 1975 and stayed on with Baxter for another five years.
“This was prior to cost containment initiatives in healthcare,” he said. “It was post-Medicare. So there was a lot of money being spent in healthcare. That helped.”
At one point, American Hospital had 36 divisions,it supplied hospitals with everything from bedpans and surgical instruments to laboratory gear and supplies. The company fell upon hard times in the mid-1980s, when reimbursement restrictions and other pressures led to the end of the company’s go-go years.
“The reason that American and eventually Baxter became such feeders is that they emphasized recruiting, looking for leadership and taking chances,” said Steve Bacich, chief executive of Arbor Surgical Technologies Inc., an Irvine-based heart valve developer. Bacich is an American Hospital alumnus.
“The fact that they gave very young people responsibility was not the norm,” said Bacich, who said he “was running very large programs” at American Hospital when he was in his 20s.
“It was either sink or swim,” he said. “I have a great deal of gratitude to the bosses I had who gave me that rope. They were the first ones to tell us, ‘This rope I’m giving you, you can either make things happen or you’re going to hang from it.'”
Baxter’s executive spinoff story also has deep roots in Edwards Laboratories, said Don Milder, a managing director in the Newport Beach office of healthcare venture capital firm Versant Ventures.
“Back then, it was a different world for medical devices,” he said. “The FDA was not as rigorous. Basically, you could start a med device company in your back yard or your garage.”
Other venture capital investors with roots in Baxter and American Hospital include William Link, Milder’s Versant colleague, and Olav Bergheim, a Laguna Hills-based general partner with Domain Associates LLC, a venture capital firm that funds device and drug makers.
Link founded and served as president of American Medical Optics, an American Hospital division that was sold to Allergan Inc. of Irvine for $165 million in 1986. American Medical eventually evolved into what’s now Advanced Medical Optics Inc. in Santa Ana.
Bergheim spent 18 years at Baxter before going to Domain in 1995. His jobs included serving as a corporate group vice president, as well as president of what eventually evolved into Edwards.
The Alums
From the Baxter side, other device leaders include Walter Cuevas, chief executive of Lake Forest heart valve startup 3F Therapeutics Inc. and Scott Huennekens, chief executive of Volcano Medical Corp., which started in OC but moved to the Sacramento area.
Other American Hospital alumni who are running or have run OC device companies include James Corbett, chairman of Micro Therapeutics Inc.; Steven Gex, chief executive of BioLucent Inc., an Aliso Viejo company that makes a mammogram pad; and Said Hilal, chief executive of Applied Medical Resources Corp., a Rancho Santa Margarita company that makes medical devices used in minimally invasive surgeries.
The list continues:
n Randy Bailey, chief executive of Advanced Refractive Technologies, an Irvine maker of laser eye devices.
n Roger Stoll, chief executive of Irvine’s Cortex Pharmaceuticals Inc.
n Bill Worthen, who heads Alsius Corp. of Irvine, a maker of catheters and body temperature monitors.
n Rob Michiels, chief operating officer of CoreValve, a French heart valve company that has operations in Irvine.
