These are boom times for medical device reprocessing, and the industry has Evelyn Bowles, an 80-year-old Democratic state senator from Edwardsville, Ill., to thank for the bounty.
Legitimizing an industry dedicated to reconditioning medical devices originally intended for single use only was not Bowles' intent. Far from it. Bowles said she nearly jumped out of her skin while reading an Associated Press story in the St. Louis PostDispatch on a cold Sunday afternoon in 1997, detailing how dialysis filters were being re-used-and how some patients were dying from it.
"I said, `What! What are they talking about?' This really just got to me," Bowles recalled. "The next day I called the (Food and Drug Administration) and inquired about it."
As a direct result of Bowles' intervention, the once-denigrated industry is exploding-to the chagrin of such manufacturing giants as Johnson & Johnson, Tyco International, Becton Dickinson, and Boston Scientific. Growing by leaps and bounds, one national reprocessor, Alliance Medical Corp., Phoenix, is poised to raise $60 million through an initial public offering that, at deadline, was expected to price on Jan. 24. The fortunes of yet another, Vanguard Medical Concepts, Lakeland, Fla., were recently boosted by a "substantial" but unspecified investment from RoundTable Healthcare Partners, Lake Forest, Ill. Several notables in the healthcare supply industry formed the limited partnership last year with the sole purpose of making private-equity investments in healthcare companies (April 23, 2001, p. 20).
What's more, group purchasing organizations-those politically sensitive hospital alliances that marshal the collective buying power of their members to broker discounted deals with manufacturers and service companies-are for the first time boasting about newly minted contracts with third-party reprocessors. Last May, Premier, based in San Diego, signed separate three-year contracts with Vanguard and SterilMed, Minneapolis, on behalf of its 1,600 hospital and health system members. In August, Irving, Texas-based VHA inked three-year agreements with Alliance and Vanguard Medical that will be made available to the cooperative's 1,400 hospital members.
That's a far cry from just two years ago when reprocessing was quietly-some say secretly-conducted in countless hospitals while the industry struggled to bring itself out of the closet. In 2000, an oft-quoted General Accounting Office report on the subject described it as a $20 million-a-year industry. At the time the three contractors that form the Washington-based trade association called the Association of Medical Device Reprocessors-Alliance, Vanguard and SterilMed-accounted for 80% of that volume (July 24, 2000, p. 34). This year, Vanguard is hoping it will do $30 million in business by itself.
"What the government has done in regulating the industry has really opened up an opportunity for the whole industry to be legitimized," said Joseph Damico, a founding partner of RoundTable who now sits as Vanguard's board chairman. "The reality is about 50% of all hospitals were doing some sort of reprocessing themselves, so it's not new. But the manufacturers made such a big stink out of third-party reprocessing that the government got involved and realized that hospitals were doing it and the third parties were doing a good job, so they said, `Let's regulate it.' "
Bowles, who served as county clerk in Mason County, Ill., for 20 years before becoming a state legislator in 1994, said the FDA had no information when she inquired, so she investigated the subject on her own. She eventually introduced a bill in the Illinois Senate in 1997 requiring strict oversight of hospital reprocessing by the state health department. The bill flew through the Senate, but when it finally worked its way to a House committee, "it hit the radar screen, and hospital people came flying in from all over, and recycling people were coming in to try to dissuade me," Bowles said.
Bowles made one concession to the reprocessors: a "safe harbor" provision that allowed reprocessing if it was done by hospitals licensed with the state health department or third-party reprocessors registered with the FDA. The bill took effect in 1998.
Bowles became a heroine to the manufacturers, who invited her to address a national conference in Washington. "Some people in the reprocessing field climbed all over my case, but I had accomplished what I wanted to do," Bowles said. After the conference, she had a little free time to spend in Washington outside the watchful eye of the manufacturers, so she decided to visit her friend and colleague, Sen. Richard Durbin (D-Ill.), "to see if we could get something on the national level," Bowles said.
They did. Durbin's interest eventually led to the GAO report that concluded while there was little evidence of harm from the re-use of single-use medical devices, oversight was warranted. In August 2000, the FDA began enforcing a new policy that required hospitals and third-party reprocessors to go through the same rigorous application guidelines for devices they recondition as the original manufacturers had to go through. The FDA has been implementing the guidance in stages, and except for applications for the simplest devices, it will be in full effect by Feb. 14.
Interestingly, however, the FDA policy had the effect of discouraging hospitals from engaging in the practice while encouraging third-party reprocessors to grow their businesses. In short, the extensive lobbying efforts by original equipment manufacturers to contain the arch-rival reprocessing industry backfired.
"Is this a guerrilla lesson in lobbying?" joked Mark Salomon, Vanguard Medical's senior vice president of corporate development. Vanguard's business has grown by as much as 60% a year over the past several years, Salomon said. More than 650 hospitals are actively reprocessing through Vanguard.
Hospitals are throwing in the towel because of cost concerns. "It was very arduous to go through all the regulations, and we really didn't want to get in that business," said Timothy Grode, manager of cardiac services at 344-bed Hamot Medical Center, Erie, Pa. Hamot spends $2,500 a month and saves an equal amount to farm out its ablation catheters for reprocessing. Before, the hospital spent nothing to do the reprocessing itself, Grode said.
Similarly, 1,001-bed Cleveland Clinic Foundation has ceased reprocessing all devices "due to the prohibitive nature of meeting FDA requirements," a spokeswoman said. During congressional testimony on the issue in 2000, clinic officials argued that reprocessing was the norm in medical practice, and it allowed hospitals to treat more patients at a lower cost.
That's the anecdotal evidence that hospitals have stopped the common but closeted practice. More generally, no hospital has stepped forward to declare itself a reprocessor, said Lily Ng, policy analyst in the FDA's office of surveillance and biometrics in the Center for Devices and Radiologic Health. Any hospital interested in reprocessing any kind of device- whether it be as simple as orthopedic drill bits or as complicated as ablation catheters-should have been listed and registered with the FDA by August 2001, she said.
Josephine Torrente, president of the Association of Disposal Device Manufacturers, a Washington-based trade group of six manufacturing giants, including Johnson & Johnson and BD, said the manufacturers' aim was never "to bankrupt reprocessors; it was to get safer devices to the public." That hasn't happened yet, in large part because of the FDA's slowness in implementing its regulations, she argued.
"Until the FDA goes in and makes an example of somebody, hospitals will understand that the FDA is not serious about regulating," Torrente said.
Regardless, Bowles said she is pleased with the direction her initial efforts have taken.
"No control was being done when I first started this thing, so I feel like a pioneer," she said.
Bowles, who plans to retire this year when her term ends, said she has moved on to work on legislation that would allow the University of Illinois to study industrial hemp as a value-added crop for Illinois farmers. The bill passed twice, and the governor has vetoed it twice.
"I pick up these things that seem to be difficult," she said.