Lars Thording, Innovative Health

Planned Obsolescence and Single-Use Reprocessing in Healthcare

By Lars Thording, Ph.D.
Lars Thording, Innovative Health

As medical device costs continue to be a growing area of hospital expenditures, many hospitals control the savings through device reprocessing programs. The shift toward planned obsolescence is especially troubling given the financial challenges many hospitals face.

The designation of “single-use devices” is often complicated within healthcare. It is certainly true that some devices cannot be used more than once due to material degradation, technical limitations and patient safety. This is the true purpose of the “single-use” label, to ensure patient safety and efficacy of devices. Yet, this definition is not straightforward. A number of single-use devices can, in fact, be re-used, after going through stringent, highly-controlled procedures referred to as single-use medical device reprocessing. Single-use device reprocessing is the practice of applying stringent procedures and processes to clean and test devices to ensure that they are substantially equivalent to the original devices. This provides the healthcare provider the advantage of re-using the devices and thereby significantly lowering costs. Due to the high cost of devices, this is especially effective within certain clinical areas such as catheters and other devices used in electrophysiology labs.

So why is it that these devices are still labeled as “single use” if they can safely and effectively be re-used after these processes? The challenge with this designation begins with the original device manufacturer, who may be relying on planned obsolescence.

Planned Obsolescence as a Barrier to Device Reprocessing

Planned obsolescence refers to a policy of producing goods that rapidly become obsolete and therefore require replacing. It can be achieved through frequent changes in design (“upgrades”) and the use of non-durable materials. Its prevalence in the consumer world has recently made headlines and the EU is actually taking steps to prevent these manufacturing tactics, especially in electronics. However, it is especially prevalent with medical device manufacturing. Certain original equipment manufacturers may design devices with this goal in mind—configuring the device with “locks” to ensure that they cannot be reprocessed. Many of these locks have little clinical or technical value, but make reprocessing especially difficult or even impossible. While this drives great manufacturer revenue, it has a detrimental impact on hospital profitability.

Hospitals and Healthcare Organizations Ultimately Pay the Price

Medical device costs are a growing area of hospital expenditures, one that many hospitals cannot control without the savings generated through device reprocessing programs. As a result, the shift toward planned obsolescence is especially troubling given the financial challenges many hospitals are facing today.

Thanks to recent demographic changes, the payer mix for many hospitals has shifted away from a situation where the lesser reimbursement for a Medicare or Medicaid patient could be offset by better reimbursement from private payers. Instead, the current reality is that CMS reimbursement rates have become the benchmark for whether cases are profitable or not. If the economics of a Medicare case don’t work, they likely won’t work in general. CMS has tried to address this issue by increasing reimbursement rates, but the simple fact that remains for hospital administrators is that cost of procedures is going up and reimbursement is going down. Hospitals increasingly have to make a deliberate decision about whether services can be offered or not.

Reprocessing “single-use” labeled devices has been one of the few strategies on the device cost side that have actually enabled hospitals to keep some procedures in the electrophysiology labs profitable. Instead of discarding “single-use” labeled devices after use, the hospital saves the devices and works with professional reprocessing companies to re-use the devices. Cost per catheter use, in some cases, can go down by $1,000 or more, which matters a lot in an A-Fib procedure, where device costs are more than $10,000 and CMS reimbursement less than $18,000. It is not an exaggeration that some labs have case profitability singularily due to reprocessing, which saves some labs more than $500,000 per year in the cardiology area alone.

A Brief History of Reprocessing

Yet reprocessing itself has also been misconstrued by many in the healthcare industry—and for some very good reasons. That’s because, for many years, it was a largely unregulated and often unsafe practice. Originally, reprocessing often took place in the hospital itself and these practices were not subject to FDA approval until the early 2000s, when legislators demanded that reprocessing become a highly regulated activity. Today, U.S. hospitals no longer reprocess single-use devices; they are instead reprocessed by reprocessing companies that are arguably under stricter FDA scrutiny than any other suppliers in healthcare. For a reprocessor to be able to reprocess single-use devices and send them back to the hospitals, they have to go through a lengthy, resource-intensive FDA clearance process that resembles the one a manufacturer has to go through to sell a device—except it’s even more difficult to get the clearance, as guidance criteria are even stricter.

The FDA’s criteria for allowing reprocessing of a device is that the reprocessor has to demonstrate it is substantially equivalent to a new device. Further, the reprocessor has to conform with even stricter operational rules to be able to send the devices back to the hospital. There cannot be any increased patient safety risk, and no functional difference between the new and reprocessed device. Device accuracy is not altered between the first use and the use of the reprocessed device. If it was, the FDA would not have allowed reprocessing to take place.

When Planned Obsolescence Goes Too Far

Device manufacturers are well aware of the savings hospitals can achieve through reprocessing. And they are well aware that every time a device is re-used, the direct result is that they don’t make another sale. What is lacking is the device manufacturer’s participation in enabling hospital economics to make sense. When the device manufacturer deliberately makes a design decision only to prevent re-use, planned obsolescence has gone too far. Especially since the hospital’s decision to make procedures available depends on those economics to make sense.

What is even more concerning is that to prevent hospitals from using reprocessed devices, some manufacturers remove their techs from the labs and operating rooms when a reprocessed device is opened. This obviously creates a dangerous situation. Planned obsolescence has gone too far when patient safety becomes a negotiation tool—even though the devices are reprocessed under FDA oversight.

Maintaining a Balance between Safety and Affordability

The reality is that most manufacturers cannot design a product to be the best it could possibly be—and this is true across a variety of industries. Products would be prohibitively expensive and therefore not available to buy. That’s easy to accept with just a little bit of economic understanding. It gets more difficult when it is about the medical devices that critically impact life or death, but the logic is the same. Medical device manufacturers must design devices so that they are not so good that they can be used again and again. The problem is, designing for limited re-use is not separate from designing for device integrity (which impacts patients outcome). While you succeed in limiting re-use, you may, inadvertently, put patients at risk.

Device manufacturers are caught in a dilemma: Do they produce and market devices that are top quality (which impacts sales) or do they produce low-quality devices (sales will increase—as long as anybody wants to buy our low-quality products)? The answer has been somewhere in between. Manufacturers must design, manufacture and market devices that are good, but not so good that they can be used repeatedly and face wear and tear. This is not an insignificant challenge because there is a varying level of wear and damage to devices, which depends on the physician, the case, etc. Manufacturers must, in effect, design the device to land within a certain range of obsolescence. However, designing devices that can in fact be re-used without any detrimental impacts to safety and quality should be a priority within the healthcare space.

Real-world Examples of Planned Obsolescence in Device Design

Many healthcare organizations have experienced the negative effects of under-designing products for planned obsolescence. For example, sensor-enabled catheters in an electrophysiology lab typically cost more than $1,000 per device. The lab cannot complete procedures without these devices. Yet over the past few years, leading manufacturers in the space have taken built-in obsolescence to an entirely new level. This includes:

  • Placing chips in the device that serve no purpose other than to prevent re-use (aka digital locks). It’s a bit like placing a timed bomb in a car, so it blows up, just in case it doesn’t break down after a certain number of miles.
  • Downgrading materials to ensure that after very little use, the device falls apart—hospitals have seen manufacturers downgrading material to the point where device obsolescence may actually happen during the first use rather than after the case. (These are referred to as “material locks”).
  • Installing features like valves that can only be used once, although this is not necessary from a design standpoint. (These are referred to as “mechanical locks”).

In healthcare, we have “reusable devices” and “single-use devices”, and the difference is not as firm as it sounds. All devices are designed with a certain level of utilization in mind, and when a
device manufacturer launches a “single-use” device, it doesn’t mean it couldn’t be reused, just like when a device manufacturer launches a “reusable device”, it doesn’t mean re-use couldn’t be problematic. The label is the device manufacturer’s choice (not the FDA), and in either case, it would be prudent for the hospital to look carefully at how they get the best utilization out of their device purchase.

Discovering the right balance between design quality and the need to replace products to ensure manufacturer profitability is a legitimate business. But medical device manufacturers need to become part of the solution when it comes to healthcare economics and find the right balance between profitability and utilization impact.

About The Author

Lars Thording, Innovative Health