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Demand to Reduce Consigned Inventory Leading to Instrumental Changes in OR

James-Schultz-ECA-Medical-web Doug-Slomski-Caltorque-web Toby-Buck-web
Jim Schultz Doug Slomski Tobias Buck
ECA Medical 
Instruments 
Caltorque Medical
Products 
Paragon Medical

Device manufacturers increasingly seek to streamline their instrument inventories, a shift that demonstrates an attempt to cool the burn of their working capital spent on this segment of their business, and also a reaction to hospitals’ demands for simpler, more cost-effective solutions.

These requests have funneled down to their supplier partners, who have offered perspective on these industry changes.

One trend is a request to design and develop instrument sets that cover more implant lines.

“Think of all of the pressures on the OEMs. They have to cut cost out of the game,” says Tobias Buck, Chairman, President and CEO of Paragon Medical. “We have to develop different instrument set families that may be attached to a specific set of implants for a given OEM and make those sets common across a broader number of implants in a given segment.”

Another trend is the demand for single- and multiple-use disposable instruments due to cost savings, inventory reduction and the assurance of sterility for surgeries.

“Reusable instrumentation will be displaced, to a certain extent, by single-use instrumentation,” Buck says. “Some of that supports reduction of set configuration in the field. Single-use instrumentation is an approach to get cost out of the game and have the ability to bill for it, in some circumstances, contingent upon the way the billing is configured. Nobody is paying for those reusable instruments. The sets are just in the field in anticipation of a total knee or total hip or some other event.”

Disposable instruments present opportunities for large-scale cost reduction, as well as revenue growth.

ECA-Medical-Instruments-1-web “Adoption of single procedure instruments and procedural kits (for trauma, extremities, fracture repair, spine, CMF and general reconstruction) can save the orthopaedic and spine implant market over $4 billion per year and create another $4.2 billion for the OEMs in recurring annual annuity revenue,” says Jim Schultz, Executive Vice President, ECA Medical Instruments. “That’s an $8 billion swing in a market that is absorbing those costs and leaving money on the table. This did not exist five years ago. Major adoption is taking place in the spine market, as well as trauma and extremities.”

Schultz says the ten largest orthopaedic device manufacturers and about 35 percent of the smaller players are using or in the process of fielding single-use instruments.

Traditional orthopaedic instrumentation such as torque, ratchet, driver/wrench, kerrison style rongeurs, benders, forceps, awls, tamps, retractors, guides and trial plates can be manufactured and disposed of in a cost effective way due to the increase in highly engineered polymers for instrumentation, says Doug Slomski, Vice President, Global Sales and Market Development at Caltorque Medical Products.

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