On September 20, 2007, Sermo’s founder and CEO Dr. Daniel Palestrant stepped up to the podium at the Health 2.0 conference in San Francisco and in less than three minutes summarized how his brainchild, an online community for physicians launched just a year earlier, has forever changed the healthcare media landscape.

Palestrant directed the audience’s attention to a screen at the front of the room displaying a recent Sermo post from an ER doctor. The physician was trying to find his way around a puzzling clinical situation, how to remove an angled serrated saw blade from a patient’s hand. “There was a long debate about what to do,” Palestrant said. “Do you push the blade through? Do you pull it out?”

The online community of physicians pondered the issue and through empiric response over a short period of time, an ER doctor devised a method of using a drinking straw whereby the straw is slit along its side and placed underneath the serration of the blade, almost like a shoe horn. “By doing so, you can pull the blade out without damaging the finger.” Palestrant said. “This is what we are here to do today. It is this which is going to improve our patients.” 

It was almost two years ago, while as a surgical resident at Harvard’s Beth Israel Deaconess that Pales-trant began noticing that docs would talk about certain bedside medical topics months before they would be discussed in medical journals and in the mainstream press. It was the type of information that one might not find in a textbook or even online.

“What I was really intrigued by is how to capture that information, the stuff doctors were talking about, and turn it into useable information,” he says. “I wasn’t sure what the best approach would be or exactly what the path to it was, but I knew it would be valuable to lots of different parties, for lots of different reasons.”

A nagging back pain Palestrant had been ignoring for months ended up being a herniated disc and put him “out of action for a while,” he says. The situation gave him time to consider whether he really wanted to continue his career as a surgeon or give more thought to “this idea that I had been having,” he says.

That idea became the Sermo business model.

“We didn’t want to charge the doctors anything,” Palestrant says, “we didn’t want to advertise to them, we realized we could take the information that this community created and, in a way that didn’t compromise the physician’s anonymity, allow third parties to see that information.”

That idea, a little over a year later, has blossomed into a “phenomenon” Palestrant says, consisting of an online community that is 40,000 doctors strong.

“A lot of that has to do with the hard work and people who have brought great passion and their dreams to Sermo, but a lot of it has also been that the company has been at the right place at the right time.”

According to Sermo’s director of communications Greg Shenk, physicians aren’t necessarily as well connected as they used to be. “They are working in more rural areas, they are not working in the hospitals as much and they need this connectedness.”

Shenk said he became aware of this at the company’s first conference simply by the number of physicians coming by and signing up for Sermo. “I think we tapped into something even bigger than we thought it was when we started.”

Gina Ashe, chief marketing officer, adds that Sermo should not be perceived as your average social network. “It’s not just a bunch of doctors who come together to hook up, or to have some fun. This is becoming the way that they collaborate,” she says. “It’s their new decision support. They assess best practices for drugs, devices, treatments and protocols. It’s now extending into their offline lives. It’s becoming much more their economic and their knowledge engine. It is where they are asking us to help facilitate their voice.”

That voice is one that companies continue to want to learn more about. Sermo has met and exceeded revenue goals for 2007, Ashe says. “We didn’t expect to make any money at all. It’s about right time, right place. Both sides have fueled the other side,” she says.

Sermo makes money by allowing financial institutions and government agencies to view the discussion that takes place between doctors.

“We are not an ad-based model,” Ashe says. “We were selling an opportunity to be a fly on the wall to hedge funds, analysts and portfolio managers.”

Sermo formed a partnership with the American Medical Association in early 2007. And in October, Sermo inked a deal with Pfizer as its first pharmaceutical client.

Palestrant says, “I think that what’s interesting about our business and our good fortune is that our product is intrinsically feedback. The community talks and all that we have to do is listen.”

And since physicians have never before been able to talk with a unified voice in such impressive numbers, sharing observations and insight about treatments, drugs, devices and biologics, we expect Sermo to continue to rock the pharma marketing world for some time to come.