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Money Health - Acquisition signals big win for the future of smart health care delivery

by Lars Thording, Senior Director of Public Affair, Stryker Sustainability Solutions | November 26, 2011
From the November 2011 issue of HealthCare Business News magazine

In September, Ethicon-Endo Surgery (EES) announced plans to acquire medical device reprocessor SterilMed. Meanwhile, Stryker Corporation acquired the nation’s largest third-party reprocessor, formerly Ascent Healthcare Solutions, in January 2010. So what’s behind the trend and what does it mean for hospitals?

Value for Hospitals
Hospitals are saving hundreds of millions of dollars each year through reprocessing programs; for most of them, this enables the reallocation of scarce financial resources to initiatives -- such as hiring more nurses or purchasing much-needed equipment -- that enhance patient care.

Reprocessing not only supports financial viability, it’s also the right thing to do for the environment — its programs help U.S. hospitals divert millions of pounds of medical waste from landfills each year.

Today, all 17 hospitals on the U.S. News & World Report’s “Honor Roll” list use reprocessed medical devices, according to the Association of Medical Device Reprocessors (AMDR). The reprocessing industry’s compelling value proposition has not only caught the attention of leading hospitals, but also that of OEMs.

A Critic’s Change of Heart
Until recently, partnerships between OEMs and reprocessors were unheard of, because most OEMs historically campaigned against reprocessing. EES’ acquisition announcement was particularly surprising because the company has been one of the reprocessing industry’s toughest critics, with numerous campaigns that disputed the safety and performance of reprocessed medical devices. As recently as February, EES offered a sole distributorship contract to Cardinal Health for its Harmonic scalpels on the condition that Cardinal Health would no longer sell reprocessed devices.

That EES has now embraced reprocessing as both symbolic in its irony and a significant leap forward for the future of smart health care. We at Stryker are pleased that another dominant OEM has decided to join our pursuit of hospital-centered, sustainable medical device solutions. The biggest beneficiaries of EES’ acquisition will likely be the nation’s hospital systems who will seemingly have greater access to cost-saving solutions in order to support quality care.

The Next Chapter
While the rapid growth of the reprocessing industry has been impressive, there’s more work to be done. AMDR estimates that if just 1 or 2 percent of all medical devices labeled “single-use” by the manufacturer were reprocessed, the health care industry would save almost $2 billion each year. Imagine what $2 billion could do for the future of the health care industry. In order to realize this great potential, Stryker is partnering with hospitals to increase program engagement through education. Optimizing reprocessing results requires a daily focus on best practices such as collections compliance and a seamless integration of reprocessing into a hospital’s existing processes.

Finally, it’s our hope that the reprocessing industry’s focus on health care sustainability will serve as an example for other suppliers. Hospitals need more innovative cost-saving solutions that support quality care. Medical device companies can no longer sell to sell; now we must all sell to solve. At Stryker, we believe an industry-wide effort is necessary to develop products, services and comprehensive programs that support the conservation of environmental and hospital resources. Suppliers that respond to the need will be the most successful.

Lars Thording is the senior director of marketing and public affairs for Stryker Sustainability Solutions (formerly Ascent), the industry leader in third-party medical device reprocessing and remanufacturing.

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