Was the title of the article shocking? I know, it probably was for you, but not for those in the medical devices world.
During the COVID-19 pandemic, we realize just how treasured our medical devices are. Every night we hear about the critical demand for ventilators. (Our industry says “vents” because four syllables can be a bit taxing at times.) We at reLink Medical have already heard stories of hospitals paying $50,000 per vent, which is equal to the price of brand-new ventilators and starting to literally be worth their weight in gold.
The stories around ventilators will get increasingly shocking. Here are a few:
- Doctors with COVID-19 refusing vent treatment to save patients, costing their lives
- Single vents used on multiple patients
- Veterinary vents being tried on human patients
- Vents over 50 years old being brought out of storage for use
That said, you would be shocked to know that there are thousands of vents thrown away each year. It’s a big secret, shrouded by language like “proprietary”, “confidential”, “cannot confirm safety” and other legal firewalls, but it is a reality. You may have already thrown your cell phone across the room as you are reading this, but I will show later in this article that this is seen as a business necessity when some manufacturers receive trade-ins and why you need to seek out companies like reLink Medical for your disposition needs.
We are in the medical disposition business. What is that exactly? (Asked by not many people ever…) We work with hospitals to obtain their surplus medical equipment so that we can find a new life for it somewhere else or handle its proper disposal if there is no new home to be had.
Specifically, for the instance of vents, hospitals will have a “fleet” of ventilators that are a specific brand, model, and software revision, which the hospitals refresh once every six years or so. They will buy all of them new at the same time so that every vent is exactly the same, which reduces the likelihood of user error during stressful clinical situations. The ventilators that they are transitioning out are normally “traded-in” to the manufacturer (we say “OEM” for Original Equipment Manufacturer) just like you would trade-in your car to the dealership for credit towards your next purchase.
Here are some directional market assumptions that we have used in the past:
- There are 160,000 ventilators in use at US hospitals today
- Hospitals will trade out their ventilators (on average) once every 6 years
- About 70% of the time those hospitals “trade-in” their old vents
- My napkin tells me that somewhere around 18,000 vents are traded-in each year (160K vents / 6 years) x .7
The difficult question nobody is asking: what happens to the ventilators that are traded-in?
Yeah, about that…
What is a manufacturer of ventilators to do with ventilators that they do not need? There are a couple of positive recirculation activities that are being done. The OEMs sometimes sell those vents to companies that rent them out during flu season for one.
Wait, you didn’t know that there are enough vents to get us through the common flu season? Well, yes, there are. The rental market does its job every other year so let’s stay focused on the topic at hand.
They could also sell them internationally. That’s a good thing. It makes sure that lesser development markets have access to quality ventilators, which they may not otherwise.
What the manufacturers are trying to avoid is selling those vents to someone in the US, just to have those ventilators sold later to a hospital that needs them, which puts the OEM in a position to compete against those vents in their sales efforts, which lowers the price point they can sell the new vents for. Some of those ventilators aren’t even the same brand as the OEM that is now holding them because the hospitals have changed brands to try something new. The OEM certainly does not want to sell someone else’s brand of vent in the prized US market and reduce their own “market share”.
What’s a manufacturer to do with extra ventilators they don’t need?
Throw them away.
This little tidbit of arcane knowledge is the big secret. This is what is talked about at trade shows sometimes in our industry when we feel like grumbling. The OEMs scrapping quality ventilators and other medical devices is a well-known practice that has gone on for decades. Could a manufacturer say I am wrong? Of course! I might be, I’m not perfect. I will gladly edit this later with any manufacturer that shows me where their devices went after they were traded-in. However, I would be surprised if that is ever disclosed. It is protected by those legal barriers that I mentioned above.
Let’s pull our napkin out of the trash and do some more math. If there are 18,000 ventilators in the US that are traded-in to the manufacturers of vents each year, what percent are ultimately thrown away? Could it be 80%? Could it be 60%? Maybe only 40%? Or possibly all the way down to 20%? (We’re being really generous here…)
Even if there are only 20% of the traded-in ventilators each year being thrown away, that is still 3,600 life-saving ventilators that are thrown away each year, which equates to 36,000 over a 10-year span. That is only in the US!
Where do we go from here? The practice of disposing of quality ventilators may never go away without a law by congress. Seriously. The OEMs truly can’t guarantee the safety of all of the devices that they bring in on trade-in. Selling them all internationally is still difficult because they are not in the business of selling used medical equipment. To the credit of the manufacturers, some have begun talks with us at reLink Medical to see if we control that channel for them. We have offered to sell them internationally or manage their distribution through our charitable arm; The Dalton Family Foundation. The manufacturers have taken this offer seriously, but none have signed on with us just yet.
In the near-term, we encourage all hospitals to find an organization like reLink Medical to purchase their devices that they would be trading-in instead of allowing those devices to instantly leave our country through basic business necessity. That goes for ventilators, but also every other type of medical equipment. It is very common in the infusion pump market, anesthesia market, and very common scrapping practices in the imaging market as well.
There is value in your existing fleet of medical devices. That value is not just economic. Patients and caregivers will benefit from you seeking other disposition options. Unfortunately, this will become more and more of a painful reality and a tangible realization for hospitals as the stories of this trying year unfold.
Author: Will Kinsey, VP of Partner Success at reLink Medical