Medical Devices in the New Economy

The United States is economically important for the introduction of new products as the world’s largest and most lucrative market for medical devices. To finance global marketing and R&D, OEMs have to be popular in America. Yet as national health spending reaches 20 percent of GDP, the U.S. is leveling out in its willingness to pay for current goods. It is a challenge for system designers to persuade cost-conscious American hospitals, clinicians, and payers to purchase new offerings and prompt OEMs to create products that reduce overall healthcare costs. Four recent products illustrate how savings can be delivered by system design.

New Ideas Applied to Old Products

Another tactic taken by manufacturers of devices was to make more use of existing goods. A good example of this is the Advance Foley catheter kit by Becton, Dickinson and Company (formerly CR Bard’s). This urinary catheter, built in 1929 and used today in the tens of millions, hasn’t changed much over the past nine decades. The Foley catheter has a documented risk of infection, although it is usually used in every hospital in the world.Hospital-acquired infections (HAI) are a financial drain on the healthcare system, costing an estimated $9.8 billion in 2015 ($1 billion of that amount was urinary tract infections). CR Bard engineers found that many infections emerged not from poorly sterilised catheters or inappropriate use of the system, but from the bacteria picked up by hospital personnel when they collected all of the components from various cabinets for a Foley catheter insertion.

The Bard’s solution was fancy. All the components needed were packaged in a single sterile tray, eliminating the contamination vector. Expensive HAIs have been reduced, making the Advance tray a smart choice both economically and medically. A new approach incorporating the need to reduce costs has resulted in a new, more efficient product while cementing the market share of Bard in urinary catheters.

Medical Devices Design and the Supply Chain

For businesses at all supply chain levels, reducing overall healthcare costs through informed medical devices design is an opportunity. With cost-saving features, design houses and contract manufacturers with design departments can focus on new products. By highlighting manufacturing changes that enhance the clinical and economic effectiveness of a device, contract manufacturers offering Design for Manufacturing services can differentiate themselves from competitors. Companies focusing on assembly, kitting, and logistics can bring existing products together in new ways to cut healthcare budget costs. While the future for cost-saving products is wealthy, suppliers will only succeed if they start talking to buyers and payers-constituencies that have been largely absent from discussions on medtech design and production.

OEMs of medical devices have long considered that healthcare consists of groups called the “5 Ps.” These groups define the healthcare market, patients, doctors, providers (hospitals and clinics), payers (insurance companies and government reimbursers), and policy makers (legislatures and government agencies). A contract manufacturer, traditionally, deals with the 5P world through the OEMs it supplies.Those players in the supply chain who have contact with healthcare organisations usually talk to doctors to gain insight into how better devices can be built. Hospital purchasing associations are never approached and there are few and far between negotiations with insurance firms and their government counterparts. Designers and manufacturers must broaden their focus to include the needs of these ever more powerful groups in order to be successful in a cost-saving world, because they see healthcare as a set of costs to be managed.

When designing a medical product, manufacturers should not only solicit physician feedback. Products were made or broken on the ability of physicians to specify the types of instruments they desired for decades. Physicians were the most relevant of the 5P classes, at least to device makers, as long as doctors were powerful in care settings and insurers might increase premiums to pay for these wish lists.In the last 15 years, purchasing control has moved away from doctors to a new paradigm where physicians and the guardians of healthcare budgets collectively make device purchases. In addition to being clinically efficient, new equipment in the treatment room and the bottom line must be demonstrably superior.

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