On March 1, 2023 cultivate(MD) Capital Funds LP, funds that are focused on investments into early-stage healthcare companies with innovative technologies, announced one of their portfolio companies, Grand Rapids-based SPDx hired Julius Heil in the role of CEO. Mr. Heil brings over 30 years of experience in healthcare and logistics with deep expertise in supply chain management, operations, and asset management. Most recently, Mr. Heil served as President and CEO of Intalere, a leading national group purchasing organization (GPO).
We recently had the opportunity to interview Julius Heil and learn more about his background and experiences that led him to this opportunity. An edited version of our interview led by R. Sean Churchill, MD follows.
R. Sean Churchill, MD:
Thank you Julius for joining us. Would you share a little bit about your personal and professional background and what led you into the world of health care?
Of course, I started out loading trucks while I was in college for UPS and eventually worked my way up into management with UPS. By the time I left there, I was running a district for them. I left UPS, and with one of the founders of XL Logistics, named Andy Wood, we turned a household goods mover, Burnham into a third-party logistics company. We sold that to outside investors and moved from there to a company called Geo Logistics. It was a Global Freight Forwarder that we turned into a third-party logistics company on a global scale and ended up selling that to PwC. I left from there went to a company called Trans Fontaine, which was a $12 billion dollar oil company, and built out a mobile refueling operational component for them which we sold to Morgan Stanley. After that, I went to CHEP Commonwealth Handling Equipment Pool and was the SVP of logistics for the Americas. Following that, I went to a company called Preferred Freezer Services, and we built out freezers all over the United States as well as a couple in China.
Now, my wife had been sick for years, which progressively had become worse, so I ended up having to leave that position. I spent a few years being her healthcare advocate and doing independent consulting, as it gave me more flexibility. I ended up losing her in 2017, and that kind of sparked my desire to get into healthcare because from 18 years of being her advocate, I saw some really, really good things in medicine, and I also saw a lot of things that really needed to change for all of us because we’re all customers of the healthcare industry. For example, there are a lot of supply chain related things, non-medicine related things, that really need to improve in healthcare. So, I decided to get involved and see if I could make a difference. So for the last eight years, I’ve been involved in healthcare.
R. Sean Churchill, MD:
I’m so sorry to hear that about your wife. Obviously, that kind of leads to what attracted you to SPDx. How did the company even come to be on your radar, Julius?
Well, it’s interesting because back when I was with CHEP, CHEP had acquired Lean Logistics. Matt Ahearn, who is on the Board of SPDx, was the Chief Operating Officer at LeanLogistics. During the due diligence process, when we purchased them, I became pretty good friends with Matt (Ahearn), Dan Dershem, who was the CEO at the time, as well as Chris Johnson, who was on the Board of SPDx. They got to know me very well in my operational execution capabilities, engineering, construction, and all those various things that I know how to do and learned how to do over the years.
Matt reached out to me, and the timing was just really good. We had sold Intalere, which was my last company to Vizient in August 2022. So, he reached out to me shortly after that went through, and I was done being an advisor (a deal advisor on the close) and said, “I’ve got an opportunity here that I’d like you to think about.” After some conversations about SPDx, I really liked the concept. I liked the fact that it’s an altruistic model and is patient-focused. It’s the first line of defense. Truthfully, it kind of tugged at my heartstrings because it wasn’t cancer that killed my wife – it was a hospital acquired infection. I thought, “You know, what better to be part of my legacy than to get involved with growing a company that can actually keep that from happening to somebody else.”
R. Sean Churchill, MD:
Well, you definitely hit the nail on the head because the focus of SPDx is really on patient care. They are a patient care company for sure. Let’s break it down because there seems to be a tremendous opportunity to enhance patient care relative to hospitals, ASC’s, and even medical device manufacturers. Where are the areas of opportunity that you feel SPDx really lends itself in those areas?
Well, there’s a huge shift in healthcare in this country, especially with things going on right now, like with COVID, pandemics, and hospital-acquired infections. People want choices as to where they receive their healthcare. We kind of owe it to them to give them patient care where they want it, whether that’s a hospital or ASC.
I’ve always referred to the patient as the customer because, to me, there is no difference, and we have to start thinking like that. Healthcare is not a “you take it our way, or you don’t get it.” The mentality is shifting towards their customers, and we have to take care of them. We have to meet them where they want us to provide the service.
The ASC’s in particular, are doing a fantastic job of doing that. This model facilitates helping them do that by taking the sterilization process out of a very small space that they have in an ASC, and moving factory work to where factory efficiencies can actually be achieved. So, our ability to do this one thing all day, every day, will make us better at it. Our systems, our logistics capabilities, our ability to be able to pick the product up after the surgery, get it back here, get it sterilized, introduce it to our inventory, and have it ready for the next surgery, wherever that may be. In this market, it’s a very positive thing.
The other thing we’re looking at from the OEM perspective is the manufacturers. They’re willing to invest in the convenience of having this inventory stored in our location and be able to get it out to where it needs to be used to put their implants in place.
So, if you look at the payers, they benefit from the standpoint that the patient is closer to home, and there are less out of pocket costs. The patients benefit from being closer to home and having a safe environment in which to have this surgery done, where they’re not going to be mixed in with a bunch of other cases. If you look at the OEM’s, they have their inventory stored and staged, and ready to go. All they have to do is tell us where they need it and when. So, everybody in this model benefits, and that’s something that is truly remarkable about it. It was very appealing to me to come in as a CEO.
R. Sean Churchill, MD:
Well stated. So, looking forward, 2023 is poised to be a pretty exciting year for the company. What are some of the initial opportunities and strengths that you see going into this year and then even beyond?
Well, it’s growth. We have a lot of people here in Phoenix that are very interested in our first facility. We have a couple of customers here, big customers like Banner, Atlas Gateway, and others that are very interested in having us perform these services for them to drive the logistics convenience. We’re seeing a lot of interest outside of this market as well, both from investors and other people who want to open surgery centers or have existing surgery centers that are looking for this type of service. So, I think the horizon looks really good for us. The fact that we’re going to be able to choose the geographies that we are able to go out and deploy our services and service model in. We just have to get the secret sauce perfected here in Phoenix. Then once we get that model perfected, we can roll it out in multiple cities at the same time, only to the limit of the funding we’re able to achieve.
R. Sean Churchill, MD:
Excellent. Is there anything else that you wanted to add?
Other than the fact that I’m excited to be here, I’m thrilled to death about this Board. It has a wealth of knowledge in various areas. That was one of my deciding factors. The team sat down and figured out that it has 90 years of total joints, sterilization, and logistics experience. And I’m just very proud to be leading the team, and I think we’ve got the right team and the right Board to make this model work.
SPDx is creating a network of purpose-built facilities to provide surgery centers and hospitals with off-site sterilization and logistics services that are powered by world-class technicians, IT systems, and the latest sterilization technologies and methods. Their services are expected to increase revenue and asset use for facilities while lowering costs, as well as reducing risks of healthcare-acquired infections for patients.
To learn more about SPDx, please visit us at https://sterileprocessingexpress.com/ To contact Mr. Heil directly, please send an email to julius.heil[at]sterileprocessingexpress.com