The demographic shift has increased the demand for surgical interventions to address age-related degenerative diseases, such as spinal fusion. Accurate placement of pedicle screws, crucial for successful spinal fusion, varies widely with physician experience. Integrating tissue sensing into spine surgical instruments allows intraoperative examination of tissue properties, providing surgeons with additional information to prevent screw misplacement. This paper introduces a handheld fiber-optic tissue sensing device for real-time bone tissue differentiation during spine surgery using Diffuse Reflectance Spectroscopy (DRS). Our prototype employs laser diodes at two distinct wavelengths for tissue illumination, eliminating the need for a spectrometer and enabling direct light collection with a photodiode. The device includes a printed circuit board (PCB) with driver circuits that are adjustable for varying laser diode output power, and signal amplification to convert the photodiode current to a measurable voltage signal. Controlled by a microcontroller, the device computes a reflectance ratio from both laser diode signals to provide real-time audio feedback to surgeons across various healthcare settings. Despite challenges in coupling efficiencies from manual fiber-coupling of the diodes, our prototype is able to emit and collect light to distinguish bone tissues with DRS, demonstrating feasibility. It is compact, made of low-cost and readily available components, and offers fast, real-time feedback, thus serving as a successful proof-of-concept for enhancing surgical accuracy during spinal fusion procedures.