Are medical device companies ready to share risk? 7 key trends

Written by Laura Dyrda | July 08, 2015 | Print  |

Medical device companies, including some of the biggest names in orthopedics and spine, are offering "guarantees" to attract hospital customers.

Reuters covered the phenomena, reporting although companies are offering a few programs, hospital officials "are seeking even more robust performance guarantees." Here are seven key trends:

 

1. Medtronic, Johnson & Johnson and St. Jude Medical lead the pack by providing some newer guarantees, such as sharing the cost of follow-up treatment for heart devices. There are companies looking at similar plans for hip and knee devices.

 

2. Some of the smaller start-up companies are offering guarantees as well; Titan Spine placed a five-year warranty on the Endoskeleton line of spinal interbody fusion devices for a one-time free replacement if revision surgery is required due to implant issues.

 

3. Hospitals are seeking even more extensive plans that would cover the cost of surgery if a device is replaced. This strategy would bring device companies into the risk-sharing model of healthcare. The Consumers Union's Safe Patient Project advocates for giving warranties to patients directly.

 

4. Many "guarantees" are still being negotiated between hospitals and device companies, and its unclear how an insurer or patient would be compensated for spending on the procedure.

 

5. Providing a guarantee on the medical device most likely won't lower the risk of being sued by "unhappy patients," according to the report, as the device company can't limit its liability toward the patient with guarantee contracts.

 

6. Companies struggling with lower demand and falling prices are in general more willing to take the risk, which could give them a marketplace edge. However, in the report, Medtronic CEO Omar Ishrak said the guarantees are used to "remove any doubt [about the product] and to speed up market acceptance."

 

7. HealthTrust Purchasing Group is finalizing risk-sharing agreements for certain procedures, including spinal fusion implants. The spinal fusion contract would guarantee if the patient needed a revision surgery over the 90-day postoperative period, the vendor would cover operation costs.

 

More articles on orthopedic devices:
K2M makes proposed common stock offering of 4.5M shares
Mazor appoints vice president of marketing and product management
OrthoSpace enrolls 1st set of patients in IDE study

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