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Future of Health Care – The medical device outlook

by Philip F. Jacobus, CEO | May 20, 2016
Philip F. Jacobus
From the May 2016 issue of HealthCare Business News magazine

A great many people have called me and written to me about the FDA docket requesting comments on refurbishing, servicing and reselling used medical equipment. If you have not yet seen this FDA document, here is the gist of it — take a look and you will understand why so many people have such a keen interest in it:

The FDA is requesting information and comments from anyone in the medical device industry and health care community with insights regarding the refurbishing, reconditioning, rebuilding, remarketing, remanufacturing, service, and repair of medical devices including radiation-emitting devices. The FDA is taking this action, in part, because various stakeholders have expressed concerns about the quality, safety, and continued effectiveness of medical devices that have been subject to one or more of these activities that are performed by both original equipment manufacturers (OEM) and third-parties, including health care establishments.

Some in-house HTM departments are concerned that the docket is a sign that new regulations will be put in place that make it harder for them to continue to service equipment. Some independent or so-called third-party companies are also concerned that regulations will be put in place that will make it difficult for them to remain in business. Indeed, there are health care providers that are also worried about the fate of independent service companies because they depend on those companies to maintain their devices and keep costs down.

It is important to note that not all independent service companies are created equal, and neither are all in-house HTM staffs. For that matter, not every OEM service engineer is equally qualified. In my view, a growing and aging population is going to require that we all work together. There is too much to do, not enough people to do it and costs continue to rise. It is my prediction that in the future the OEMs, the independent service companies and the in-house service teams will coexist because this will bring the industry closer to value-based care.

I predict that the FDA goes with the flow on this because it is what is best for the patient and because to do anything else will upset the delicate balance of equipment maintenance that exists today. Some may point to other countries around the world that restrict the import of used American equipment, but I think this is more about national pride and the protection of local markets and local manufacturing than it is about quality concerns.

Still, what applies to equipment sales is not applicable to service. Remember, many OEMs originally built their businesses by utilizing independent dealers and distributors to not only sell their products, but provide service. I believe outside the United States you will see growth in independent service just as we saw here in the U.S. If we can ever get our political and economic act together, and if our political leaders can go back to cooperating with each other as they did in the ‘60s, the ‘70s and the ‘80s, and to some extent even in the ‘90s, it is my prediction that the economy — both in the United States and the world — will rebound, and one of the first places money will be spent is replacing long-in-the-tooth capital equipment in our hospitals.

Did I mention that we have succeeded in making people live longer and there are more and more people alive every year? As a result of this growing population we are not only going to need more equipment, but we are going to need more service. In my view of the future, there is going to be a place for OEM service, for in-house service and for independent service. I am sure that these three groups will work together more efficiently than our elected officials. I am sure of this because over the years, I have learned that most of the people I have come in contact with in health care are more concerned about providing better patient outcomes than feathering their own nests.

Philip F. Jacobus is the president of DOTmed.com, Inc. and publisher of HealthCare Business News magazine.

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