Got your number. Unique numbers for all medical devices is the Holy Grail for some healthcare supply chain executives. But not all manufacturers see it that way. Something for everybody. Manufacturers who work closely with specialty sales and marketing organizations will get some breakout time of their own at the 2007 IMDA Annual Conference and Manufacturers Forum. Materials managers weigh in on GPOs. Amid the criticism of group purchasing organizations voiced over the past five or six years, one voice has been largely missing – until now. Unbundled. GPOs have faced some heat for bundling products in their contracts. This summer, a major manufacturer of hospital and specialty beds took a little of its own. Delicate balance. Successful selling to clinical departments is a three-legged stool: surgeon, materials manager, supplier. Have it your way. Contract manufacturers are offering medical device companies a crucial choice: Do they want their devices manufactured in the United States or somewhere else? Ten innovative products. BusinessWeek picks their Top 10 devices of the year.
Unique numbers for all medical devices is the Holy Grail for some healthcare supply chain executives. The Food and Drug Administration has stoked the flames by calling for public comments on how a universal numbering system could reduce medical errors, facilitate device recalls and improve medical-device adverse-event reporting. The comments will be used to help the FDA determine what steps should be taken to implement what it calls a unique device identifier (UDI) system for medical devices. "Much like the bar code rule for drugs and biological products, unique identifiers for medical devices could have many potential benefits for improving the quality of care for patients," says Daniel Schultz, M.D., director of the agency’s Center for Devices and Radiological Health. During the comment period, FDA wants to learn about the feasibility, utility, benefits and costs associated with developing and implementing a UDI system. In addition, the agency wants to hear about automatic identification technologies, such as bar code and radiofrequency, which could be used with a UDI. Enthusiastic support? The level of support for such a universal numbering system varies, depending on who you’re talking to. The FDA says that many stakeholders recognize the value of a UDI in improving patient safety as well as the purchase, distribution and use of medical devices. But manufacturers aren’t so sure that the benefits of such a system would outweigh the costs. “The biggest obstacle is the lack of a clearly articulated, comprehensive description of what patient safety benefits will flow from a mandatory UDI,” says Mark Brager, director of communications for AdvaMed, the Advanced Medical Technology Association, Washington, D.C. “The biggest technical obstacle is the lack of a standard nomenclature and data structure for UDI, Brager told IMDA Update. On the other hand, the Health Industry Business Communications Council, an industry standards-making group based in Phoenix, Ariz., would support a mandate, provided it incorporated existing number systems, either HIBCC’s Universal Product Number system or GS1’s standards, says HIBCC President and CEO Robert Hankin. (GS1 is the name for the former Uniform Code Council, developer of the Universal Product Code, or UPC .) HIBCC’s UPN already accommodates most of the data that the FDA is talking about, including lot, batch, serial number and expiration date, says Hankin. At the same time, HIBCC – which, at press time, was preparing its comments to the FDA notice – acknowledges that a number system for medical products would have to be cost-effective. Many manufacturers already affix unique product numbers (often in the form of a bar code) to cases and boxes of products, says Hankin. But affixing numbers to unit-of-use packages is more expensive. “There’s no sense in spending 50 cents on a one-cent item to avoid [an incident] that is highly improbable,” he says, referring to life-threatening medical errors. “The FDA should be very thorough in issuing regulations to make sure they don’t create more burden than benefit.” To read the FDA notice in the Federal Register, visit http://www.fda.gov/OHRMS/DOCKETS/98fr/06-6870.htm. To submit electronic comments, visit www.fda.gov/dockets/ecomments. Written comments may be sent to: Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD, 20852. Comments must be received by Nov. 9 and include the docket number 2006N-0292.
Manufacturers who work closely with specialty sales and marketing organizations will get some breakout time of their own at the 2007 IMDA Annual Conference and Manufacturers Forum, June 3-5, in Coeur d’Alene, Idaho. While specialty distributors convene for breakout sessions on topics of importance to them, manufacturers will have the opportunity to do the same, according to conference co-chairs Tom Birmingham of Bay State Anesthesia and Bruce Brierley of Maxtec Inc. Topics for last year’s sessions for IMDA members included “Beating a Path to Your Customer’s Door,” “Beyond the Traditional Sales Call” and “Build and Diversify Your Business.” The decision to tailor breakout sessions specifically for manufacturers will enhance the value of the Conference and Manufacturers Forum for them, according to Birmingham and Brierley. In addition to having the opportunity to explore business opportunities with new specialty dealers and reps and to conduct sales meetings with existing partners, manufacturers will be able to network with peers on how they can build their businesses, they said. Location, location, location The conference will be held at the Coeur d’Alene Golf & Spa Resort, approximately 31 miles east of Spokane, Wash., and 100 miles south of the Canadian border. The resort overlooks Lake Coeur d’Alene, whose golf course is the home of the world’s only floating green (on the 14th hole). IMDA members and manufacturers are encouraged to bring their families. The resort is 20 miles away from the Silverwood Theme Park, the Northwest’s largest amusement park. The resort can help attendees rent (or take a tour) in an all-terrain vehicle, go fly fishing or whitewater rafting, take a ride in a helicopter, go horseback riding, or hike or mountain-bike through some beautiful country. For those whose interests lie in the great indoors, there’s gambling (the closest casino is the Coeur d’Alene Tribal Casino, 23 miles south of the resort), antique shopping, and fine dining. For more information, visit the resort’s website at www.cdaresort.com. And stay tuned to IMDA Update for more information on the program content.
Amid the criticism of group purchasing organizations voiced over the past five or six years, one voice has been largely missing – that of the hospital materials and purchasing managers who use their contracts. At least, that was the opinion of Lawton Burns, Ph.D., director of the Wharton Center for Health Management and Economics at the University of Pennsylvania, and author of the 2002 book The Health Care Value Chain: Producers, Purchasers and Providers Approximately four years ago, while participating in a panel discussion regarding GPOs, Burns heard two health system materials executives on the panel talking amongst themselves. “They were saying, ‘What’s the big deal? If we want stuff, we get it; the GPO doesn’t tell us what to buy,’” Burns recalls. “There was a big disconnect between what [GPO detractors] were saying and what hospitals were saying.” It was at that point that he decided to find out how hospitals really felt about their GPOs. After searching for a suitable database of materials managers, he asked seven GPOs – Amerinet, Broadlane, Consorta, HealthTrust Purchasing Group, MedAssets, Novation and Premier – for their membership lists. With a seed grant from Owens & Minor and a large grant from the National Science Foundation (which had underwritten Burns’s healthcare value chain book), he proceeded to survey hospitals about their perception of the value that GPOs bring them. The survey was initiated in November 2005 and concluded in April. Burns says that the details of the survey will be published in the journal Health Affairs. That said, he reports that the majority of hospital respondents believe that GPOs provide “demonstrable cost savings,” primarily through lower pricing. In addition, the majority take issue with the statement “GPOs have hindered your access to information about innovative products or manufacturers.” “I’ve talked to heads of materials management, and I’ve read a lot of their statements,” says Burns. “In my opinion, the problems small firms face is not the GPO, but the fact that they don’t have a big enough sales force and can’t get in front of the clinician.”
GPOs have faced some heat for bundling products in their contracts. This summer, a major manufacturer of hospital and specialty beds took a little of its own. In June, Batesville, Ind.-based Hillenbrand Industries and its Hill-Rom Inc. and Hill-Rom Company subsidiaries paid plaintiffs a total of $337.5 million to settle antitrust class-action litigation brought against it two years earlier by Spartanburg (South Carolina) Regional Healthcare System. In the suit, filed in the United States District Court for the District of South Carolina, Spartanburg Regional alleged that beginning in 1990, Hill-Rom engaged in anti-competitive actions by offering discounts on its standard beds and in-room products to customers who also agreed to rent Hill-Rom or SSI specialty beds. The hospital system alleged that Hill-Rom attempted to monopolize the market for specialty beds by using its market power in standard beds and in-room products. Spartanburg charged that as a result of the bundling, Hill-Rom’s customers paid higher prices for the company’s products than they would have in the absence of the bundling agreements. The providers alleged that had Hill-Rom not engaged in this conduct, its competitors would have gained greater market share, ultimately resulting in lower overall market prices and higher-quality products. Hill-Rom proclaimed its innocence to the end. “As we have said before, we believe the claims in this case are without merit, but we also believe it is in our company's and customers' best interests to put this matter behind us,” said Hillenbrand Industries and Hill-Rom President and Chief Executive Officer Peter Soderberg. The company said that its discounts were a legitimate means of competing and that they benefited customers. That said, Hill-Rom said it had discontinued bundling its standard and specialty beds in 2002. Terms of the settlement call for it to refrain from bundling until at least 2009. Although Spartanburg purchased Hill-Rom products through Premier contracts, Premier was not involved in the lawsuit or settlement. Spartanburg Regional President and CEO Ingo Angermeier reportedly was emboldened to file the class action suit by a September 2002 federal court decision ordering Hill-Rom to pay $173 million to Kinetic Concepts of San Antonio, Texas. In that case, which KCI originally filed in 1995, KCI charged Hill-Rom with using product bundling for anticompetitive purposes.
By Laura Thill IMDA members know that most surgeons regard their relationships with their vendors as valuable educational opportunities. Surgeons rely on suppliers, especially specialty distributors and reps, to introduce new technologies and demonstrate their proper usage. Many materials managers resent these relationships, which, they say, interfere with the orderly introduction of new technologies into their facilities. But others have come to accept them, all the while keeping an anxious eye on surgeon-supplier interactions. At the same time, surgeons appear to be more sensitive than ever to the need to balance their desire for new technology with the hospital’s need to control costs. “It’s nice to be able to offer your physicians a choice,” says Don Millbauer, director of perioperative service at Seattle, WA-based Harborview Medical Center. “As a teaching hospital, we have to be flexible and provide our surgeons with [a variety of] experiences.” Still, the facility cannot do that at the expense of its financial well-being, he adds. Successful model “A successful model for achieving an amicable relationship between the physician and the hospital must preserve the surgeon’s ability to choose products that he or she is comfortable with, while controlling costs for the hospital,” says Freddy A. Achecar, Jr., M.D., an orthopedic surgeon affiliated with the Wellstar Health System, a five-hospital system in the Atlanta, Ga., area. “We surgeons are always looking at new products and technologies to improve the outcomes of our surgical procedures,” he says. Ultimately, medical costs will decrease as the clinical outcomes associated with emerging technologies improve. “The only con, as I see it, is when technology is rushed too quickly to the market without adequate scientific evidence to validate its use.” Indeed, the operating room is a resource-intensive department, says Ed Robinson, system vice president, supply chain services at OhioHealth, Columbus, Ohio. “The dollars under contract [in the OR] are usually much more significant than most other departments,” he says. “Savings opportunities of several hundred thousand dollars annually are frequently identified and have much higher visibility within the organization.” Nature of the beast The value of a healthy relationship between the surgeon and the vendor should not be underestimated, says Robinson. “The best sales reps are highly responsive, provide educational expertise and always come through with products and instrumentation in a pinch. “At OhioHealth, we want to utilize the expertise of sales reps in an appropriate manner that complements our internal processes and structure, but does not create a critical dependency,” he says. “Most important, we must remain market competitive by ensuring [that we receive] the best pricing for products and services.” Cheryl Harelstad, vice president of supply chain management at Minneapolis, Minn.-based Allina Hospitals and Clinics, accepts that close relationships between physicians and suppliers are “the nature of the beast.” Vendors can be informative and play an educational role, she points out. Even so, materials managers are more comfortable if they can coordinate vendor-physician interactions. “From a patient-outcomes perspective, we want our doctors to have access to the best devices,” says Harelstad. At the same time, technology assessment must consider the needs of the hospital system. “We want to ensure that all aspects of our business are involved,” she says. “We look at new products in terms of quality, compliance, inventory and training.” Easier said than done Few would dispute that the best results – from an economic and patient care standpoint – occur when supply chain executives work closely with their clinicians in the introduction of new technologies. But many concede that actually doing so is easier said than done. A big reason is that physicians simply don’t have enough time to get involved. “As physicians [continue to] see dramatic reductions in reimbursement, increased demands on their time and growth in patient and procedure volumes, they must limit their involvement in meetings and other hospital-based activities,” says John McGuire president and CEO of Surgical Implant Services LLC, a Jacksonville, Fla.-based GPO that establishes local physician-owned companies that work together to standardize on surgical implants. “Clinical review committees potentially can be very time consuming, thus decreasing the ability for a busy surgeon to participate,” Achecar adds. Should surgeons be paid to participate in clinical review committees? That depends. “Compensation for clinical review committee participation should not lead to problems or ethical conflict for the participating physicians, but it could lead to discontent [among those] physicians not asked to participate,” says Achecar. McGuire agrees. “Selection of certain physicians and the exclusion of others would likely heighten conflicts and competitive issues among staff members and further reduce compliance,” he says. “To sustain participation [in technology committee meetings], the physician must derive value from his or her involvement,” says Robinson. “This includes providing input into product selection decisions as well as the capital justification and acquisition process for the related specialty.” Yet, the hours a physician dedicates to contracting and supply chain initiatives are hours not spent with patients, he continues. “I believe physicians should be compensated on a fair market basis for such participation,” so long as payment policies have been appropriately reviewed and approved by legal counsel. Lessons learned Some supply chain executives have grown to understand that they need to be in frequent contact with surgeons and other clinicians in order to generate the best results for both sides. “Doctors are data-driven,” says Harelstad. “So we [administrators] must get our information out there.” “Physicians want a place to practice medicine that is safe, efficient, user-friendly and provides a healing environment,” adds Robinson. This means providing them with a greater say in how the organization is run. “A contracting decision that saves money but decreases physician satisfaction and makes it more difficult for a physician to practice medicine is in clear conflict with our vision.”
Contract manufacturers are offering medical device companies a crucial choice: Do they want their devices manufactured in the United States or somewhere else? It’s part of a broader, cross-industry trend, according to a recent article in The Wall Street Journal (“Made in USA? Now Customers Get to Choose,” Aug. 9, 2006). Companies cited from the medical arena include Pacific Plastics & Engineering, Soquel, Calif.; United Plastics Group Inc., Oak Brook, Ill.; and the Tech Group division of West Pharmaceutical Services Inc., Lionville, Pa. Pacific Plastics & Engineering builds parts and finished products for a variety of companies, ranging from start-ups to Boston Scientific. The company reportedly quoted Cannuflow Inc. two prices for the mold of the handle for the Extravastat EntreVu, a fluid-drainage device that reduces swelling during shoulder surgery: $23,500 for the made-in-the-USA mold, and $14,500 for the made-in-Taiwan model. Another component – a complex tube that manages the flow of fluids – will be made in the United States. "The simpler stuff we did offshore; the stuff that needed more talented tool making, we did locally," Ted Kucklick, chief technology officer at Cannuflow, was quoted as saying. Added Kucklick, any stigma associated with overseas production is rapidly disappearing. “Nobody looks for a ‘Made in the USA’ label anymore. With the customers we have, the sensitivity is to price.”
Some call it a growth spurt. Others call it incremental improvement. Whatever the case, innovation in medical devices and technologies is alive and well. In its Aug. 16, 2006, edition, BusinessWeek highlighted 10 innovative medical products, some designed for healthcare facilities, some for home use. They are OmniPod insulin management system (Insulet). The digitally controlled pod is filled with up to three days' worth of insulin and then attached to the abdomen by its adhesive border. The pod contains a small cannula that enters the skin and delivers the drug on command at the press of a button. Lighted ear curette (Bionix Development). For years, doctors have removed ear wax with the help of a hot-water gun or a disposable swab. The Bionix curette adds an LED diode to a plastic ear swab, allowing physicians to see inside the ear canal. Impact solar-powered hearing-aid-battery recharger (Project Impact). Hearing-aid batteries cost a lot and need frequent replacement. This inexpensive charger could help solve the problem, says the manufacturer. Birmingham Hip resurfacing system (Smith & Nephew). Coating the hip socket and femur with a high carbide cobalt chrome conserves a patient's natural bone and is said to offer 98 percent more wear resistance than the metal-on-plastic-joint of traditional replacements. CereTom mobile computed tomography scanner (NeuroLogica). The scanner is said to be the first portable, lightweight (740 pounds), low-cost ($250,000) CT scanner. QuikClot Advance Sponge (Z-Medica). The sponge builds upon Z-Medica's wound-clotting crystals -- powder that quickly stops bleeding by removing water from blood and allowing platelets to accumulate. After soldiers who tested the powder in Iraq reported difficulty handling the crystals in battleground conditions, the company developed the sponge. Somatom Senation 64 CT scanner (Siemens Medical Solutions). Said to be the world’s fastest CT scanner, the Somatom can freeze a heart in motion. It also offers doctors unprecedented clarity, says BusinessWeek. And because it works so quickly, it exposes patients to fewer X-rays.
360° Fascia Closure Device (SuturTek). The device is
said to offer a safe, fast, and easy alternative to
hand-suturing. The stylus Implantable ventricular assist device (Thoratec). Introduced in 2003, the IVAD remains the only FDA-approved implantable device that can provide cardiac left, right, or biventricular support, says BusinessWeek. In addition to its use as a preoperative stand-in, the device can serve as post-surgery aid to a heart or chamber as it recovers from trauma. LifePort (Organ Recovery Systems). Unlike the low-tech Igloo cooler, the LifePort is said to support and monitor an organ throughout transport. The manufacturer cites studies showing LifePort kidneys survive at least 17 hours longer than kidneys transported the standard way, doubling viability time.
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