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Contracts and kill switches: the business of reprocessing

by Lisa Chamoff , Contributing Reporter
From the January 2015 issue of DOTmed HealthCare Business News magazine

Vukelich says he worries SterilMed is using reprocessing as a marketing tactic to steer their customers to sales of new devices.

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“When reprocessing is relegated to a marketing tactic and not really being promoted, there’s no incentive to keep the other guys honest,” Vukelich says. “It’s this appearance you’re going to get the best of both worlds. We reward you with lower prices on new devices if you reprocess with us. At the end of the day, you spend more and reprocess less.”

Graesser responded by saying that SterilMed looks to maximize cost savings to hospitals with“solutions that drive economic and environmental sustainability.”

“We are proud to be the only company that can provide a unique product mix of OEM, performance-certified reprocessed and reprocessed products from over 130 OEM manufacturers to help meet our customers’ economic and sustainability needs,” Graesser said.

Kevin Liszewski, vice president of marketing at Stryker Sustainability Solutions, says that some of the facilities the company works with have made them aware of contracts that could prohibit hospitals’ right to reprocess. Clients ask questions about how the savings from reprocessing correlate to what is being offered in the new agreement. Liszewski advises hospitals put in this position to do in-depth analytics, but says that “we feel confident that in most cases we still offer greater financial benefit both short and long term.”

“Although we welcome competition and we think it’s good for the industry and hospitals, we don’t think competition that pushes reprocessing out is good for health care and hospitals,” Liszewski says.

Liszewski acknowledges that in the early days, medical device OEMs did not embrace the reprocessing of single-use medical devices.

“As the healthcare industry landscape evolved over the past decade, Stryker executives saw a need to help hospitals optimize resources to support quality care,” Liszewski says. “That’s what drove Stryker’s interest in reprocessing at an early stage, and that’s what led Stryker to become the first OEM to acquire a reprocessing company, Ascent, in January of 2010.”

OEMs have also turned to price cutting in an effort to beat back the market threat from reprocessing, for example, when Vascular Solutions partnered with NEScientific in 2012 to reprocess Covidien’s ClosureFast catheter, used to treat superficial venous insufficiency.

“Right after we launched the service, Covidien did what most OEMs do,” says Phil Nalbone, vice president of corporate development and media relations for Vascular Solutions. “They will come out and make bold assertions that it can’t be done, it shouldn’t be done.”

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