The Reprocessing Industry is Maturing and Expanding – Room for Everybody to Grow!
Every day, I see “new”, re-canned Google reports about the growth potential in the single-use medical device reprocessing market. These reports are about yesterday’s industry, and frankly, they are not very accurate. However, a valuable take-away is that single-use device reprocessing has only just started to impact the labs and operating rooms across the country: Many more devices can be FDA cleared for reprocessing, and many hospitals can save hundreds of thousands of dollars more than they currently are – if they fix their reprocessing programs. Single-use device reprocessing remains a great potential for hospitals – not just to save a buck or two, but to radically change the economics of their device utilization and realize a potential for service-line profitability that couldn’t be realized otherwise. Reprocessing is still a #1 financial sustainability solution, with device cost reduction of up to 30% per case, which – I know because I see hospital financial data – can mean the difference between a profitable and an un-profitable service line.
Reprocessing is still a #1 financial sustainability solution, with device cost reduction of up to 30% per case...
Forget about the growth potential of the industry - what does it take for hospitals to realize these promises? This remains a challenge. Many more hospitals have to implement stronger, more manufacturer-independent supply-chain programs, so that they can reprocess all the devices that are available. More physician education is still needed, to ensure that they become more involved in healthcare economics and start value-based device utilization practices: Use what makes financial sense, don’t use the newest technology just because it is the newest. And most importantly: Supply chain and service line leaders need to become active participants in the arguable highest-yield savings program on the docket. I know that all of us reprocessors will be able to get you better results, if we can achieve these three things.
2018 has been an important year in single-use device reprocessing. I know that some of my direct competitors don’t like to hear this, but the year has shown us that the industry has room for reprocessors with different strategies. There isn’t just one way of being a successful reprocessor. There is room for everybody. Some will focus on mature products and volume-driven savings; others on new, high-value specialty devices. Some will focus on specific service lines; others will have broad coverage. These models all work, and everybody can grow, provided the market lines up with reprocessing as a key cost reduction strategy (see above).
There isn’t just one way of being a successful reprocessor. There is room for everybody. Some will focus on mature products and volume-driven savings; others on new, high-value specialty devices. Some will focus on specific service lines; others will have broad coverage.
In November, the Association of Medical Device Reprocessors (AMDR) met in Washington, D.C. for its annual board meeting. AMDR had invited a number of companies that wanted to be part of the industry to participate. There were as many new organizations as legacy reprocessors around the table! Cardinal Health recently joined AMDR, and a handful (at least) of companies are waiting to join. The industry is expanding – which means reprocessing is taking hold as a legitimate and powerful approach to providing value-based device solutions to hospitals. Some are single-product focused, others are integrating a new device program with a reprocessing solution. Given that AMDR is the trusted organizer of safe and regulated single-use device reprocessing, I am personally excited to see some of these organizations join and expand the industry.
The industry is expanding – which means reprocessing is taking hold as a legitimate and powerful approach to providing value-based device solutions to hospitals.
So, the industry is maturing, and the practice of single-use device reprocessing is expanding – just like the industry reports predict. Here are three things we should be looking for in 2019: Firstly, we will see AMDR becoming a broader association with participation in more device categories and from countries around the world (I see countries from three new continents joining AMDR), cementing AMDR’s position as the international single-use device reprocessing association. Secondly, we will see further differentiation in the industry, with more reprocessors offering distinct programs with different benefits – ultimately giving our hospital partners more choice, and giving all reprocessors room to grow. And thirdly, we might see one or two major medical device manufacturers actually integrating reprocessing as a value-based approach to gain competitive strength and to improve hospital relations - not as a necessary evil. This one may be a longer shot, but it is over-due. We have seen it done the wrong way, but the strategy is still viable and will ultimately benefit our hospital partners’ ability to deliver patient care.
Happy Holidays and Happy New Year!