Updated 3 yearss ago
A new industry that recycles medical devices is rankling the manufacturers of those devices.
By Stacie Kress Booker
Cost-cutting measures born of managed health care have created a new industry in reprocessing medical devices -- and a controversy that has as much to do with market share as patient health.
Looking to save on purchases of medical supplies, hospitals now seek to reuse many items they once threw away after a single use. One company, Vanguard Medical Concepts, now makes about $16 million a year recycling devices that manufacturers call "disposable" -- forceps, for example -- and selling them back to hospitals at a fraction of their original cost.
The reprocessing industry is still tiny. Vanguard, based in Lakeland, accounts for about half the $30-million total for reprocessors nationwide, while medical manufacturers in the region's 13-county High-Tech Corridor, including 190 companies in Pinellas County alone, account for some $900 million in sales.
But every sale of a reprocessed device is one fewer for manufacturers, who are not about to sit idly by. Claiming the devices are unsafe, manufacturers have persuaded the Food and Drug Administration to begin regulating the reprocessors. "Don't allow products to go to market that compromise a patient's good fortune," says Dick Isel, president of Sterile Recoveries in Clearwater.
The reprocessors respond that the manufacturers' labeling of devices as disposable is self-serving -- intended to boost sales rather than protect patients. They point to numerous hospital studies as well as findings from the Centers for Disease Control that show many "disposable" devices can be safely reused. "Manufacturers are unhappy with us because we're taking money out of their pockets," says Charles A. Masek, CEO of Vanguard. For example, Vanguard sells reprocessed biopsy forceps for $15 apiece and angioplasty balloon catheters for $175. Manufacturers sell those products for $30 and $350, respectively.
Bowing to political pressure from manufacturers, the FDA has developed new regulations covering the reprocessing industry. As of August, companies that recycle disposable medical devices must register with the FDA and apply for what's called a 510(k) certification on each product they reprocess.
The requirement is expected to cost Vanguard $1 million. Masek has already had to hire consultants specializing in 510(k) certification, computer software and equipment sterilization. As the largest reprocessor nationwide, and the only one in the Tampa Bay region, Vanguard can foot the bill. Many smaller companies can't afford to.
Lakeland Regional, which pays Vanguard to reprocess most of its disposable devices, estimates it saves about $100,000 a year recycling. Medical Director Edwin Sammer sees one potential benefit from the FDA scrutiny: "We hope the new regulations will increase public acceptance of reprocessing."
Masek says the FDA regulations add legitimacy to the industry and is claiming victory: "The manufacturers thought it would hurt us. Instead it's going to make the market." His company recently inked a deal with U.S. Endoscopy Group to offer its services to U.S. Endoscopy customers. Masek predicts this is only the beginning of partnerships between reprocessors and manufacturers.
In the News
Clearwater -- IMRglobal Corp. announced a $75-million deal to provide online contract management and payment services for the Columbus Metropolitan Housing Authority in Ohio. The five-year contract is the largest to date for the high-tech consulting firm.
Cryo-Cell International (Nasdaq-CCEL), a cryogenic storage facility for umbilical cord blood, signed several Internet marketing deals, signaling a switch from its clinically based marketing strategy to a more consumer-oriented one. iVillage.com, babygear.com, HomePharmacy.com and babyfirst.com, currently under construction, will carry Cryo-Cell advertisements as well as educational pieces on cord blood banking. The company reported revenues of $1.4 million as of July and employs 30.
Naples -- The Twin Eagles Golf and Country Club development has emerged from bankruptcy with a new owner, Bonita Bay Properties, which purchased the majority of the upscale master planned community, 1,373 acres, for $51.4 million this summer. Bonita Bay will start marketing 47 of the original 67 home sites remaining for between $300,000 to $499,000. The company said it doesn't expect further delays from environmentalists' legal actions, which prompted the bankruptcy filing. Signature Communities purchased the Twin Eagles beach club for $4.8 million and will incorporate it into its own residential development nearby.
Palmetto -- Illinois Tool Works purchased Trilectron Industries from Hollywood-based Heico Corp. for $52.5 million. Trilectron, a manufacturer of aircraft ground-support equipment for commercial and military use, employs 285 at its Palmetto facility. Illinois Tool is a $10-billion company based in Glenview, Ill., that makes products for the automotive, construction and food and beverage
St. Petersburg -- The Occupational Safety and Health Administration and the Florida Department of Environmental Protection are looking into a possible environmental contamination at the Equifax facilities. This spring about a dozen employees reported sudden, unexplained hair loss. Some have gone bald. The Atlanta-based company, one of the largest credit reporting and check verification companies worldwide, has hired independent consultants to test for contaminants in and around the building.
Looks like the four-star hotel planned for the Carillon business park will be a Hilton. Developer Echelon International is keeping mum about the negotiations, but the city's Environmental Development Commission recently approved a site plan for the $47-million project. The 11-story, 300-room hotel would be across from the Raymond James Financial Center. A 91-suite Radisson Hotel is already under construction near Carillon.
ZOM Development plans to build a 290-unit luxury apartment complex spanning two city blocks in the downtown bayfront area. The Orlando developer is purchasing some of the land from Los Angeles Dodgers player Gary Sheffield, who has given up plans to build a spa and retail complex there. This is the first major luxury apartment development for downtown.
Tampa -- Florida Lift Systems, a materials handling and equipment consulting company, spun off Florida Clarklift this summer. The new company, which employs 10, will serve customers using the Clark and German Linde line of forklift equipment from Citrus to Collier counties. First-year sales projections are $6 million to $8 million. Parent company, Florida Lift Systems, posted annual sales of more than $40 million and lists Publix, Office Depot, US Cold Storage and Disney as clients.
Walter Industries plans to trim 5% of its workforce, mostly in field offices. The homebuilder, coal mining and metals manufacturing company is cutting as many as 375 jobs. Still reeling from a $130.3-million loss and a $139-million restructuring fee posted in the fourth quarter, the company also is searching for a new CEO following the resignation of its top executive after just 14 weeks on the job. Robert Burton had been hand-picked by New York buyout firm Kohlberg Kravis Roberts, which owns 27% of the company.
Pennsylvania developers Toll Bros. agreed to build a school and a mass transit station and spend more than $1.5 million to widen Bruce B. Downs Boulevard, a major thoroughfare in a hot development area known as New Tampa. Tampa's City Council asked for the concessions in exchange for approving the proposed 1,600-home golf community Grand Hampton, which will be built on an endangered upland habitat. This is the first time City Council has requested such amenities in exchange for approving a development.