Outsourcing Reprocessing: safety vs. savings
Edition: October 2005 - Vol 13 Number 10
Author: Laura Thill
The safety of reprocessing single-use devices (SUDs) has long been a point of debate for hospitals and manufacturers. Third-party device reprocessors claim that overly stringent Food and Drug Administration (FDA) regulations ensure that OEM specifications are never compromised. If anything, devices are checked even more thoroughly during reprocessing for flaws and failures. But, manufacturers maintain that devices originally intended for one use will not necessarily meet performance demands when re-used.
As third-party reprocessors reach out to surgery centers, these facilities, as well, must contemplate whether or not safety is an issue, especially when offered the opportunity to save as much as $60,000 annually through reprocessing. Indeed, surgery centers particularly orthopedic centers stand to save a good chunk of money by reprocessing SUDs, according to Arthur Goodrich, VP of marketing and business development for Alliance Medical Corp. in Phoenix, Ariz. “Of course, hospitals work with bigger volumes of products and [therefore] see a bigger savings,” he says. “But, an active orthopedic surgery center can save $50,000 or $60,000 annually on arthroscopic shavers (a device used for outpatient knee and shoulder repairs).” Smaller physician practices do not use devices that third-party reprocessors typically handle.
“Up until now, we haven’t done a lot of marketing to surgery centers,” says Goodrich, noting that companies such as Alliance get much exposure through GPOs, with whom surgery centers have purchasing agreements. Alliance has yet to visit trade shows, he adds.
“We have not yet begun working through distributor reps for surgery centers,” Goodrich continues. “But, just as we work with distributor reps in the hospital arena, we expect to eventually [rely more] on distributor reps with surgery centers.” It’s just a matter of time. An impending merger between Alliance and Vanguard Medical Concepts Inc. in Lakeland, Fla., is expected to expedite a working relationship between the newly formed reprocessor and surgery centers. With more products and services available, the new company should be able to market to a broader customer base. Together, Alliance and Vanguard will reportedly represent about 1,700 customers.
In fact, the third-party reprocessing industry has grown substantially for nearly 20 years and offers the promise of substantial cost savings for providers. “Outsourcing the reprocessing of devices has grown into a $100 million business,” says Mark Salomon, senior VP of corporate development at Vanguard. Since Vanguard began reprocessing its first products in 1992, the company has handled about 16 million devices. Similarly, Alliance, which formed when several reprocessing vendors merged in 1988, has reprocessed about 20 million SUDs, according to Goodrich.
Safe and legal?
For the most part, reprocessed devices include less complex, single-use items. Because FDA regulations subject reprocessors of SUDs to the same guidelines as OEMs, hospitals have limited in-house reprocessing to reusable devices. Less complex SUDs are outsourced to such third-party reprocessors as Vanguard, Alliance, SterilMed Inc. in Maple Grove, Minn., and ClearMedical Inc. in Bellevue, Wash. (More highly complex devices tend not to be reprocessed.) Some hospitals that have embraced outsourcing reprocessing of SUDs include Johns Hopkins Hospital in Baltimore, Mayo Clinic in Rochester, Minn., and Stanford Hospital and Clinics in Stanford, Calif., says Salomon. And in a 2003 U.S. News and World Report ranking of top U.S. medical centers, 69 percent said they participate in reprocessing programs, according to SterilMed.
The safety of reprocessed SUDs may be up for debate for some time to come, but there is no question that using these devices is legal. In August 2000, the FDA issued a set of guidelines called “Enforcement Priorities for Single-Use Devices Reprocessed by Third Parties and Hospitals.” The document states that reprocessors and hospitals are considered to be the manufacturers of each device they reprocess, and they are bound to a stricter set of guidelines than even the original equipment manufacturers.
Two years later, in October 2002, Congress passed the Medical Device User Fee and Modernization Act (MDUFMA), which incorporates stricter regulations for reprocessing vendors. MDUFMA guidelines pertaining to reprocessing include the following provisions:
• New and reprocessed devices must prominently display the name of the manufacturer
• As of January 2004, reprocessed devices had to be labeled, “Reprocessed device for single use. Reprocessed by [name of reprocessor].”
• The FDA is required to evaluate non-exempt reprocessed devices to determine which ones must include validation data with their 510(k) submissions. On April 30, 2003, a list of devices requiring validation data was published in the Federal Register. A 510(k) submission is a pre-marketing notification that a reprocessor must make to the FDA to demonstrate that a particular device is as safe and effective as a legally marketed device not subject to pre-market approval. Applicants must compare their 510(k) device to one or more similar devices already on the U.S. market
• The FDA must identify critical and semi-critical 510(k)-exempt devices whose exemptions should be terminated in order to ensure safety and effectiveness
• MDUFMA requires reprocessors to submit pre-market reports for reprocessed CLASS III devices (that is, critical devices subject to the most stringent regulation by the FDA)
• Within the strict nature of these guidelines, less than 2 percent of all SUDs can be safely and legally reprocessed. These devices include certain compression sleeves, GI biopsy instruments, electrophysiology catheters and various orthopedic bits, burrs and blades, according to SterilMed.
Reprocessors say 100 percent of reprocessed devices are inspected and tested before being shipped to hospitals. Manufacturers, in comparison, often test a sample of their devices, according to Goodrich. “We can’t make a device better than the original equipment manufacturer intended, but we test more devices and may catch a defect that the manufacturer missed,” he says.
“We look at the packaging, sterility and interaction of the device material with the human body,” adds Salomon. “We want to ensure that the reprocessed device will not fall apart under pressure or interact differently within the patient’s body.”
While reprocessors cannot prevent all failures, most appear to be confident that if the manufacturer has not had a device failure, they shouldn’t either. And, if a reprocessed device does fail, hospitals are instructed to report it to the FDA, just as they would if a new device failed, according to Goodrich.
When devices do not qualify for reprocessing, reprocessing vendors sometimes recycle the materials for other purposes. “We recycle 88.3 percent of the devices we can’t reprocess,” says Salomon. Devices that cannot be broken down for other uses may be evaluated in the reprocessor’s research and development department to determine how they may qualify for reprocessing in the future. In some cases, devices must be sent to a landfill.
Manufacturers speak out regardless of the strict guidelines established by MDUFMA, device manufacturers remain skeptical about the safety and effectiveness of many reprocessed SUDs. “There are significant challenges in assuring that single-use devices are effectively sterilized and will still meet performance demands after their initial use and subsequent handling and sterilization,” states Ethicon Endo-Surgery Inc. in its “Position Statement on Used Single-Use Devices.” In fact, single-use devices manufactured by Ethicon are not designed for safe and effective reprocessing and reuse, according to the company. And, depending on the device, some reprocessors may reprocess them up to five times.
Single-use devices are not designed to be disassembled, cleaned or reprocessed in the same way as reusable products, Ethicon adds. “Many are, by their very nature, physically incapable of undergoing the decontamination process,” he says. “Reprocessing can have a negative impact on device materials and construction, jeopardizing instrument performance and, ultimately, patient outcomes.”
The FDA has not reviewed validation data for many critical, semi-critical and non-critical devices currently on the market, note sources at AdvaMed, the Washington-based trade association for medical products manufacturers. Of the 1,803 reprocessed critical single-use devices for which validation data was reviewed in accordance with MDUFMA, over 50 percent were either withdrawn or discovered by the FDA to be insufficiently supported by validation data. By definition, these devices did not comply with Subpart G of the Quality System Regulation (QSR) and could no longer be legally marketed, AdvaMed continues.
“Based on the 50 percent failure rate for those reprocessed, critical single-use devices reviewed by FDA, it is only reasonable to conclude that the failure rate for the many other critical, semi-critical and non-critical single-use devices whose validation data has not been reviewed by FDA will be at least as high,” states AdvaMed in a Feb. 25, 2005, letter to the director of the Center for Devices and Radiological Health at the FDA. “The presence of these potentially violative products in the marketplace represents a significant public health risk and FDA should exercise its authority and call for the immediate submission and review of the validation data for all reprocessed single-use devices to assure that all reprocessed single-use devices which are inadequately supported by validation data are removed from the market as quickly as possible.”
Advances in technology
As the demand for third-party reprocessing grows, reprocessors find themselves forced to become increasingly more efficient. “Today, Vanguard has better packaging and has found better methodologies for disassembling and reassembling devices,” says Salomon.
“Alliance has developed the customized cleaning of equipment and has adopted a hyperflow vacuum technology [designed] to clean microchips more [efficiently],” adds Goodrich. “The technology for rebuilding certain devices has also changed. Some products can be taken apart for cleaning and reprocessing, while others can’t. This technology ensures that devices are thoroughly reprocessed.”
In addition, Alliance relies on LEAN healthcare, a methodology that emphasizes the elimination of non-value-added processes. Based on the Toyota Production System, LEAN was designed in the 1980s for manufacturing applications. It examines a hospital’s whole workflow rather than looking at individual departments. LEAN evaluates hospital work processes and administrative standardization to reduce paperwork, errors and processing times.
The system has proven effective in reducing patient wait times, increasing paperwork accuracy, improving operating room turnover and maximizing inventory control, according to sources at Alliance.
Some GPOs and hospitals acknowledge manufacturers’ concerns about the safety and effectiveness of reprocessed SUDs. But, at the same time, they note that reprocessors have done a good job of responding. They have no choice, given the strict FDA guidelines.
Reprocessors, such as Vanguard, believe device manufacturers will begin to recognize the merits of reprocessing SUDs and will elect to work more closely with reprocessors in the future. Presently, Vanguard has a contract with New Jersey-based Compression Therapy Concepts. “Working with CTC enables us to see the original specs [of devices],” says Salomon. Knowing the device components, including its residuals and materials, enables the reprocessor to better compare it to similar devices on the market and ensure that its makeup is not altered during reprocessing.
The challenge continues to be delivering better quality at the lowest cost. “As we’ve become more efficient and have kept costs down, manufacturers have been forced to respond by lowering the price of new devices,” Salomon says. “Vanguard has a good track record and has driven much cost out of the process.” As an example, hot forceps, which cost as much as $80 or $90 10 years ago, cost $30 today. Similarly, cold forceps have dropped in price from more than $50 to $15.
The reprocessing industry is expected to grow despite continued resistance from some manufacturers. As far as some experts are concerned, it’s an avenue that should be explored as a means of cost containment.