Every medical device that passes the FDA seal of approval exists to achieve the benefit of making someone who is ill achieve wellness. The average cost to market a device under the FDA 510(k) process is $31M. A lot of time and energy goes into making up that margin and many lives benefit from it. But what happens after a medical device is no longer needed by the end-user, the hospital?
Hospital Supply Chain Spend $$$.
I recently read a study that showed the average supply cost for a patient admission is around $4,500 while the average overspend per hospital is $11M per year. As Supply Chain Managers respond to pressures from CFOs, the drive for hospitals to reduce the amount of waste in their Supply Chain will continue to dictate their purchasing decisions. Now factor in operational margins of only 2-3% and you can see why it is critical to understand the value of every piece of equipment used to care for patients.
Often, hospitals experience changes in reimbursement, technology, and service providers. All these changes pose a threat to how their current medical devices are used. If a new surgeon is recruited to a hospital, they often demand specific equipment that allows them to perform at their best. On the other hand, when a surgeon leaves, the equipment once used can become an item tucked away into a storage room for months or even years. There lies the question: Do you decide to keep the device and wait for another surgeon to need it, or dispose of it? Often overlooked is the value of the device in the secondary market. Selling it means it’s gone but holding onto it long past its tangible usability does nothing more than waste its value.
Consider what it would be like to manage both the front-end and the back-end of a device’s lifecycle. It’s 100% possible to create a workflow that maximizes the value of assets where the result can make an immediate impact on operational revenue. For example, a hospital with an operational margin of 3% needs $3.3M in revenue to equal $100,000 gained. A hospital with a reproducible equipment disposition program can generate the equivalent of $3.3M in revenue by effectively managing the sale of unwanted medical equipment worth $100K. Why not maximize the back-end revenue by planning for it on the front-end?
I’ll leave you with this. I’ve worked in the medical device industry for 20 years and have been at both ends of the device lifecycle. I’ve worked with surgeons to develop their dreams into life-improving devices and helped hospitals solve challenging problems on what to do once those devices have lost their usefulness. I welcome what’s ahead, and I know I’m with the right team. Together we’ll help hospitals and suppliers build a process to reduce costs, increase revenue, and most importantly take care of people.
Contact reLink Medical to learn how we can help your hospital reduce costs and better manage the disposition of your medical equipment.
Author: Scott Leube, Director of Business Development at reLink Medical