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Reprocessing medical devices can result in significant savings for hospitals

Hospitals are nipping and tucking their supply chain spend by opting for half-price, reprocessed items like cardiology catheters.

Jeff Lagasse, Associate Editor

Hospitals, especially the ones operating on thin margins, are often looking to cut into their spend in order to realize savings. Finding those savings in the supply chain can be a challenge, but one common practice that can improve an organization's financial health is the reprocessing of medical devices -- essentially having them sterilized and cleaned to prep them for re-use.

Companies that perform reprocessing have to submit to regulatory oversight from the Food and Drug Administration, ensuring the quality and clinical safety of reprocessed devices such as catheters.

That means patients are assured of the same clinical quality whether the device in question is new or reprocessed. It also means the hospital can buy back the reprocessed device for about half the cost of a new one. Those savings can make all the difference when it comes to tightening their belts.

PROPOSAL

"For years, the focus has been on the pharmaceutical space and some regulation of manufacturers in that area, but when it comes to medical device spend there has been a lot less attention paid there," said Lars Thording, PhD, vice president of marketing and public affairs for device reprocessor Innovative Health.

The first step in beginning to reprocess medical devices is creating transparency around the supply chain situation, and making sure all of the stakeholders, from leadership to clinical staff, are on the same page and aware of the strategy and its benefits.The second step is to research and understand the market.

"The medical device space is dominated by very few players," said Thording. "One of the things organizations ought to start with, after creating transparency, is figuring out what are the market shares of these medical device companies, and how to get the best prices and best deals without relying on one company."

A lot of these devices -- catheters, for example -- are designed to be disposable, and many are indeed thrown out. But reprocessing companies can seek FDA approval to collect these single-use catheters, reprocess them and make them available for future use. This is done by sending them to a plant for FDA-monitored cleaning and testing, and then selling it back to the hospital at half price.

Depending on the device, the cleaning process may be either chemical or manual in nature. Electrical devices such as cardiology catheters have to be tested to determine if the sensors are still working, and then they get packed up, put through a sterilization round, and then a testing round, a process that varies in length but typically takes about four days.

RESULTS

Since reprocessed items are basically half-price, it can be very impactful in terms of finances.

"If you're operating with a two percent margin, that would be equivalent to a hospital adding $50 million to the top line," said Thording.

"In electrophysiology, we saved $500,000 last year reprocessing these catheters," he said, "but new technology development is so rapid, and there's still a lot of room for new technologies that improve the efficacy of these procedures. The savings can be seen as a means of being able to use new technology; maybe you can start by using more expensive devices due to the cost savings from other reprocessed items."

Due to regulatory scrutiny, the performance of such items is the same as if they were new, and there's no added cost to the patient. If anything, the hospital's freed-up funds increase the likelihood that the patient will benefit from more modern and effective technologies.

One snag is that many medical device manufacturers, in general, aren't hue fans of reprocessing. And it's easy to see why: If a hospital is getting a second use out of a reprocessed device, that means it isn't paying a manufacturer full price for a new device. Thording said some manufacturers use market pressures to convince a hospital not to reprocess.

The strategy doesn't seem to be working though. Thording estimates that about three out of four hospitals do reprocessing in some form; the remaining one out of four are often reticent because they feel reprocessed items are somehow less safe or fail more often -- a concern Thording said is unfounded.

"For the future, I think if hospitals are successful in convincing manufacturers that these cost savings are necessary, reprocessing will continue to flourish and grow over the next several years," said Thording. "The sky's the limit with the savings hospitals can have."

Twitter: @JELagasse

Email the writer: jeff.lagasse@himssmedia.com

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