Why specialty reprocessing is on the rise (and what it means for hospitals)

Why specialty reprocessing is on the rise (and what it means for hospitals)

January 03, 2020
Lars Thording
By Lars Thording

To combat rising healthcare costs, the reprocessing of single-use devices has started to expand to more advanced technologies, thereby increasing the amount of savings that reprocessing can deliver on a per-procedure basis. This notable shift has significant implications for the competitive landscape of manufacturers and reprocessors as well as for hospitals. Let’s take a look at the trend toward more-advanced device reprocessing, the related rise in specialty reprocessing, and what hospital management needs to understand about the future of this space.

The history of single-use device reprocessing

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Since around 2000, single-use device reprocessing has been targeting fairly simple, mostly commoditized devices that are labeled “single-use” by the manufacturer but reusable (due to strict FDA regulation and oversight) through third-party reprocessing companies. There have been less than a handful of reprocessing companies, and the largest ones covered all areas of reprocessable “single-use” devices: OR devices, electrophysiology (EP) devices, and commodity items used throughout the hospital, such as compression sleeves and pulse oximeters.

Around 2010, the two largest reprocessors (Ascent Healthcare Solutions and SterilMed) were acquired by large medical device companies. A few smaller reprocessors, mostly focused in the low-tech device area, survived and developed in their regional or device specialty markets. However, in the years that followed, several of these were acquired, and hospitals consequently had to run their reprocessing programs through either Stryker (Ascent Healthcare Solutions) or Johnson & Johnson (SterilMed).

Emerging trends in the industry
Over the past four or five years, the industry has begun to change in ways that could have profound impact on hospitals’ opportunity to reduce per-procedure costs through reprocessing. Consider the following:

The large medical distribution companies have joined the industry: Medline acquired MEDISSISS, a small reprocessing company, in January 2012; Cardinal acquired the reprocessing arm of another technology company and in 2015 formed its Sustainable Technologies division. With deep reach into purchasing groups and hospital buyers through their massive distribution presence in the U.S. healthcare market, both companies have rapidly grown to become major players in reprocessing.

The reprocessing industry has become more fragmented: In the past, a reprocessor obtained FDA clearances to reprocess a portfolio of devices, collected those used devices, reprocessed the devices at its plant, sold them back to the customer and sent the reprocessed devices to the facilities. As is often the case in adolescent industries, this concentration of all activities in one firm is being replaced by more specialized reprocessing activities.

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