Kevin Liszewski
Why healthcare needs to prioritize remanufactured robotic instruments
October 06, 2023
By Kevin Liszewski
Last year, 19 hospitals filed for bankruptcy, closed or announced plans to close. And circumstances haven’t improved much in 2023. In the second quarter of this year, for-profit community health systems reported a net loss of $38 million.
At the same time, this summer, Intuitive Surgical, the leading manufacturer of surgical robotic instruments also reported its second quarter financial results. Revenues were up 15 percent year-over-year to $1.76 billion dollars, and the company expects its gross margin for 2023 to be as high as 69 percent.
There are winners and losers in all markets and industries. But when device manufacturers win big and hospitals lose big, the people who truly suffer are the patients. This is why it is critical to help our hospitals reduce costs on things like robotic procedures.
The rise of robotic procedures
In July 2000, the FDA approved the da Vinci Surgical System, the first surgical robot for general minimally invasive surgery. Since then, the number of robotic procedures has grown dramatically, and Intuitive Surgical’s da Vinci is the un-disputed market leader.
In robotic surgery, surgeons use computer-controlled machinery to perform surgical procedures. The aim of this technology is to enable less-invasive complex surgeries with greater visibility, precision, and flexibility than is possible with conventional techniques. In robotic procedures, the robot is not really doing the work. They are surgical procedures in which doctors use robots to guide their actions. One or more robotic arms may be used in robotic surgical systems, which doctors can operate remotely and accurately from a console nearby.
As an industry, we must prioritize the remanufacturing of robotic instruments as a key cost-savings measure for hospitals. Here’s why:
U.S. hospitals spend almost $14 billion on surgical robots every year, and this is growing rapidly. A surgical robot costs, on average, more than $1.5 million. However, the hospital spends almost twice as much on instruments and accessories, and services associated with the robot are about 50 percent of the acquisition price.
Why does the hospital spend so much on robotic instruments after acquiring the robot? Robotic instruments—or “arms”—often cost more than $2,000 when purchased new, and the manufacturer limits the amount of uses. After the manufacturer-imposed use-limit is reached, the hospital must buy a new instrument. With several robots and several arms on each robot, this represents a very large amount of money.
However, when a hospital uses a remanufactured robotic instrument, it saves 30-40 percent of the cost of using the instrument. This amount can make a real difference in the economics of robotic procedures—and, therefore, in the ability of the hospital to provide the best care possible.
Concerning safety with remanufactured robotic instruments
But are remanufactured robotic instruments safe, you ask?
When FDA provides a clearance for a company to sell remanufactured robotic instruments, it means that FDA has reviewed a very large amount of data that demonstrates:
1. The instrument is functionally similar to a new instrument.
2. There is no added patient risk involved in using the remanufactured instrument.
After the robotic procedure where the instrument has been used, the staff simply puts the device aside after sterilization, and collection technicians ship the instrument to the approved remanufacturing facility. There, the remanufacturing company registers the instrument in its computer system, resets the chip that controls how many times the instrument can be used, ensures sharpness and functionality of the device, and cleans it thoroughly. The instrument is then ready for more uses—at a much lower cost. All of this happens in a facility under FDA oversight and with an advanced quality system.
We have a bad habit in American healthcare: We think we protect the patient if we throw used devices and instruments away. In many cases—such as in the case of robotic instruments—they can be safely re-used, reducing procedure costs and allowing the hospital to invest in better patient care.
Manufacturers, in the meantime, are doing everything they can to maximize their profits—and a gross margin of almost 70 percent is certainly achieving that.
It would behoove hospitals to address the misalignment between manufacturer and healthcare interests and promote the re-use of instruments that have many more lives on them. This simple but meaningful shift toward more-sustainable practices represents more than just a means of saving costs. It’s a means of saving lives.
About the author: Kevin Liszewski is the CEO of Encore Medical Device Repair.
Last year, 19 hospitals filed for bankruptcy, closed or announced plans to close. And circumstances haven’t improved much in 2023. In the second quarter of this year, for-profit community health systems reported a net loss of $38 million.
At the same time, this summer, Intuitive Surgical, the leading manufacturer of surgical robotic instruments also reported its second quarter financial results. Revenues were up 15 percent year-over-year to $1.76 billion dollars, and the company expects its gross margin for 2023 to be as high as 69 percent.
There are winners and losers in all markets and industries. But when device manufacturers win big and hospitals lose big, the people who truly suffer are the patients. This is why it is critical to help our hospitals reduce costs on things like robotic procedures.
The rise of robotic procedures
In July 2000, the FDA approved the da Vinci Surgical System, the first surgical robot for general minimally invasive surgery. Since then, the number of robotic procedures has grown dramatically, and Intuitive Surgical’s da Vinci is the un-disputed market leader.
In robotic surgery, surgeons use computer-controlled machinery to perform surgical procedures. The aim of this technology is to enable less-invasive complex surgeries with greater visibility, precision, and flexibility than is possible with conventional techniques. In robotic procedures, the robot is not really doing the work. They are surgical procedures in which doctors use robots to guide their actions. One or more robotic arms may be used in robotic surgical systems, which doctors can operate remotely and accurately from a console nearby.
As an industry, we must prioritize the remanufacturing of robotic instruments as a key cost-savings measure for hospitals. Here’s why:
U.S. hospitals spend almost $14 billion on surgical robots every year, and this is growing rapidly. A surgical robot costs, on average, more than $1.5 million. However, the hospital spends almost twice as much on instruments and accessories, and services associated with the robot are about 50 percent of the acquisition price.
Why does the hospital spend so much on robotic instruments after acquiring the robot? Robotic instruments—or “arms”—often cost more than $2,000 when purchased new, and the manufacturer limits the amount of uses. After the manufacturer-imposed use-limit is reached, the hospital must buy a new instrument. With several robots and several arms on each robot, this represents a very large amount of money.
However, when a hospital uses a remanufactured robotic instrument, it saves 30-40 percent of the cost of using the instrument. This amount can make a real difference in the economics of robotic procedures—and, therefore, in the ability of the hospital to provide the best care possible.
Concerning safety with remanufactured robotic instruments
But are remanufactured robotic instruments safe, you ask?
When FDA provides a clearance for a company to sell remanufactured robotic instruments, it means that FDA has reviewed a very large amount of data that demonstrates:
1. The instrument is functionally similar to a new instrument.
2. There is no added patient risk involved in using the remanufactured instrument.
After the robotic procedure where the instrument has been used, the staff simply puts the device aside after sterilization, and collection technicians ship the instrument to the approved remanufacturing facility. There, the remanufacturing company registers the instrument in its computer system, resets the chip that controls how many times the instrument can be used, ensures sharpness and functionality of the device, and cleans it thoroughly. The instrument is then ready for more uses—at a much lower cost. All of this happens in a facility under FDA oversight and with an advanced quality system.
We have a bad habit in American healthcare: We think we protect the patient if we throw used devices and instruments away. In many cases—such as in the case of robotic instruments—they can be safely re-used, reducing procedure costs and allowing the hospital to invest in better patient care.
Manufacturers, in the meantime, are doing everything they can to maximize their profits—and a gross margin of almost 70 percent is certainly achieving that.
It would behoove hospitals to address the misalignment between manufacturer and healthcare interests and promote the re-use of instruments that have many more lives on them. This simple but meaningful shift toward more-sustainable practices represents more than just a means of saving costs. It’s a means of saving lives.
About the author: Kevin Liszewski is the CEO of Encore Medical Device Repair.