Lars Thording, Innovative Health
“Single-use” medical device reprocessing has long been a divisive issue in the medical technology industry. Some large original equipment manufacturers (OEMs) have viewed reprocessing as a drain on their revenues that challenges profitability and hence investment in R&D and innovation. However, many hospitals have been facing a financial crisis that is forcing them to rethink what innovation in medical technology is and should be, and reprocessing has a critical role to play.
The origins of single-use devices
In the 1980s, medical device manufacturers discovered a fundamental problem in their marketing of medical devices. The devices were too good, and as a result, they were used by the hospital again and again. In response, manufacturers began labeling devices “single-use”, which meant that they stopped assuming any liability for devices in reuse, didn’t have to issue cleaning instructions, and could make the devices less durable. And hospitals had to procure a new device for every single use. However, in response, many hospitals simply started cleaning and reusing these “single-use” devices.
As a consequence, FDA brought its oversight and legislation to the table. By 2000, this regulation effectively removed “single-use” device reprocessing from the hospital and placed it in the hands of reprocessing companies with the regulatory and technological wherewithal to achieve clearances from FDA to reprocess “single-use” devices.
As one might expect, this validation of reprocessing by FDA was not necessarily welcome news for OEMs. Since then, there has been a bit of a David-and-Goliath scenario in the medical device industry. Large, global medical device companies are utilizing their massive R&D and marketing engines to design and market smaller reprocessors out of the hospitals. However, these organizations are overlooking a key fact — that reprocessing can actually play a key role in device innovation.
Shortened technology lifecycles
Reprocessing accelerates the speed of commoditization. When reprocessors get clearance for a device and offer it to providers at 50% of the price of an original device, manufacturers have historically responded by lowering the price of a new device to help narrow this pricing gap. Classic examples are biopsy forceps and trocars, whose prices have gone down rapidly and substantially after reprocessors grabbed as much as 30% market share. In technologies used for high-volume procedure types, manufacturers respond to this commoditization by increasing the speed of innovation so that premium prices can be demanded on “new-and-improved” devices.
As long as this “new-and-improved” status actually means better patient care or overall value, the role that reprocessors play in commoditization actually drives faster technology innovation. However, the reverse situation is all too common. For example, in cardiology, some of the work-horse catheters are more than 20 years old, because reprocessors have not yet set their sights on these and manufacturers have not seen the (economical) need to innovate.
The student teaching the teacher
Medical device reprocessors with the technological and regulatory wherewithal to achieve FDA clearances are today highly advanced companies with sophisticated R&D departments. They pursue increasingly complex devices and technologies, study the devices in clinical use, reverse engineer devices mechanically and electronically, build instruments to increase the life of the device, study novel techniques for cleaning impossible-to-clean devices, etc.
Reprocessors become the experts in the characteristics, limitations and opportunities of the devices post-usage. Medical device manufacturers can learn a lot from reprocessors about these aspects of their device technologies and put it to work in their innovation on new devices, whether designed for reuse or single use.
Affordability meets innovation
The financial challenges faced by hospitals and hospital systems today is about to create major changes in their procurement philosophy. There are only two types of costs a hospital can truly control short term: labor costs and supplies. Better control of the supply spend is increasingly becoming the only pathway for financial survival. As a result, device manufacturers can’t continue on their current trajectory — rapidly launching new devices that produce an upward cost spiral for the hospital without addressing value and adoption. Today, many hospitals simply reject the adoption of new technologies because they cannot afford them. Instead of adopting the newest ultrasound catheters, they stick with older generation devices that are more affordable and can be reprocessed.
In industries like EP/Cardiology, the question of making innovative technologies more affordable is becoming more difficult to answer as procedure volume grows and hospitals experience increasing cost pressure. Aligning with reprocessors to launch devices that are reprocessable may reduce the volume of devices sold, but it will ensure broader adoption — while allowing the manufacturer to do so without the liability associated with reusables. Reprocessing accelerates innovation because adoption will be faster if designs are aligned with reprocessing.
Grabbing market share
Hospitals are increasingly demanding a focus on value for their device investment, and reprocessing must certainly be part of this conversation. As this happens, room is created in the marketplace for device manufacturers who dare take a more customer-centric approach and thereby capture substantial market share. This approach might include a willingness from an OEM to collaborate with reprocessors early, ensuring that devices can and will be reprocessed. Imagine the scale of innovation possible if a manufacturer invited the reprocessor in to consult and share blueprints at the beginning of a new product development process so that at product launch, the reprocessor was able to rapidly offer the devices in a reprocessed version?
In this scenario, the medical device manufacturer, through reprocessing alignment, will be able to offer new and improved technologies at a premium price, while the cost to the hospital is driven down to a reasonable level through reprocessing. How can the technology innovator that only focuses on maximizing per-device profitability compete with that? Given this potential, perhaps it’s time to rethink the idea that OEMs and reprocessors should be at odds in the area of single-use device reprocessing, and instead recognize their joint role in driving innovation.
Lars Thording, PhD, has a background in academia, consulting and industry leadership and has taught at universities in Denmark, Ireland and the United States. He currently serves as the VP, marketing & public affairs, for Innovative Health (Scottsdale, Ariz.), a medical device reprocessing company specializing in electrophysiology and cardiology technology.
The opinions expressed in this blog post are the author’s only and do not necessarily reflect those of MedicalDesignandOutsourcing.com or its employees.