How the medical supply industry blocks device startups from selling to hospitals

I don't know if anybody has read Thomas Kuhn, but this has a parallel in how science works. Science gets "stuck" in one way of thinking. During this time, people work on small details and innovate in tiny ways around the edges. After enough pressure builds up for a change, there's a paradigm shift (he was the guy who coined the phrase) and people start working in the new world.

Complex, rule-based systems of people are mostly quantum by nature. Progress is never a straight line. Instead, it stays frustratingly far away, then it jumps. The stuff you read about in school where everything happened in a linear, step-by-step fashion was just a bowdlerized version of things they tell kids.

Hopefully the system does not require an extreme amount of pressure and our next jump is not too far away. (Apologies to students of Kuhn if I butchered his thesis badly. This is what I got from his work)

Mind you there's a fair number of entrepreneurs out there solving difficult problems. But they're not as many and they don't get as much press.

The regulations are another hurdle, but I think they are easier to get through since everyone is on the same playing field in that regard. But getting your product into hospitals and labs? There's a battle I don't even know where to start fighting.

Maybe it's time to start looking exclusively at foreign markets.

The worst monopolies always seem to me to be underwritten by government policies. The worst part is that, for the most part, the policies were created to try and do the right thing, but end up doing the opposite.

Today's progressives are just sheeple. They will believe blindly any politician that says "for the children's future" or "for teachers and fire fighters," so let's raise taxes or strangle pharmaceutical companies.

A "progressive" used to mean "believe in individual" or "believe in freedom." Today it means "believe in gov't" or "believe in regulation" or "believe in politically correct speech", etc etc (the list is long).

Progressives, in other words, are just statists.

Currently they rely on the rest of the world to find the best designs and practices, then cherry pick the good parts and make the whole thing efficient with centralised control. For them to pull -ahead- permanently they need to start fostering their own innovation. Capitalism and transparency have been shown as the best way so far to achieve this

Hospitals will be thinking

1. "will insurance claims be rejected for non-standard treatment?"

2. "If something goes wrong with my malpractice insurance cover it?"

Even if everything goes correctly, and procedures are better/faster/cheaper the insurance companies will just lower the amount they pay. The hospital doesn't have a lot to gain here.

Conversely if an insurance company hears about a new better/faster/cheaper treatment suddenly that's they only thing they will pay for and the company selling that treament makes a mint, with hospitals knocking down their door.

Also, $180/month is not really what people mean by "high healthcare costs". They mean something like a $50,000/day hospital stay. $180 is a lot if you don't have a lot of money, but it's hardly backbreaking.

dr_, are you in the health tech field?

Btw. It's not only in the us. Regulation today is the most secure form of monopoly

Very well put in general. We're avoiding the device angle as well, due to the same things you've mentioned.

http://www.stltoday.com/news/national/article_44747e48-649e-...

Government solutions to real-world problems are the EXACT opposite of this

I could talk about how any organization tends to become less tolerant of risk over time. Failures happen and when they do the tendency is to make sure that they are prevented from happening again. And when they happen again (they will) the tendency to add more laws which, since the resources devoted to enforcing laws won't be increased, causes all laws to be enforced less well.

I remember a while ago The Economist had a feature one issue on the Dodd-Frank Financial bill that was pretty critical. Dodd and Frank then wrote in the next issue with letters that I though were, frankly, rather illuminating.

One gave the "Something had to be done, this was something, we did it" syllogism nearly perfectly. The other talked about all the hard work that went into the bill, how he'd talked with all sorts of professionals working in the financial industry and added all sorts of special cases so that the currently existing set of businesses weren't unduly inconvenienced.

No, it does with a great deal of certainty. HIPAA protects patient privacy, but often prohibits healthcare research, certainly increases the cost of health IT by orders of magnitude, and certainly destroys the opportunity to make good decisions about how to run a hospital or treat a patient.

The original plan was for the "P" in HIPAA to mean "Portability" but those parts of the bill were delayed and eventually dropped.

A lot of the time the rules are not made by bureaucrats but by politicians in receipt of lobbying money and an industry-supplied amendment which the politicians has neither read nor understood; also, when private actors dislike bureaucratic decisions, they frequently sue the bureaucratic agency in question to prevent its implementation. Blaming the problem on timid bureaucrats without acknowledging these frequently encountered situations is a hollow argument.

FTA: As it turns out, Shaw’s retractable syringe hit just as these trends were converging. In fact, the year his product came onto the market, three of the nation’s largest GPOs merged to form a company called Premier, which managed buying for 1,700 hospitals, or about a third of all hospitals in the United States. Shortly thereafter, Premier signed a $1.8 billion, seven-and-a-half-year deal with Becton Dickinson. Under the agreement, member hospitals—among them Dallas-based Presbyterian, where Shaw would hit a brick wall—had to buy 90 percent of their syringes and blood collection tubes from the company. Over the next two years, BD landed similar deals with all but one major GPO. As a result, almost everywhere Shaw turned, he found hospital doors were closed to him.

Here, for example, no government bureaucrats were involved at all.

This is how I see it:

1. Government makes an anti-kickback rule.

2. It relaxes the rule.

3. Corporations take advantage of the opportunity using kickbacks to entrench themselves in the market, costing us money, freedom and choice.

4. Your conclusion: government rule making is bad.

I think that that is one of the reasons we're seeing such a huge shift to the virtual world. Problems that used to be physical are gradually becoming software problems. A great example is how media is starting to largely be distributed through online channels, ie iTunes, or what Amazon is doing to retail. I recently started http://www.AudioNotch.com, a site that provides tinnitus therapy through online music. Before the proliferation of mp3 players, this problem would have had physical elements, I would have to mail CDs with the audio therapy for example, and users wouldn't be able to change their music easily. But now, due to pre-existing technology, I can do everything virtually. Unfortunately, it looks like the medical devices industry will be one of the last to make this change.

The most memorable phrase I've heard all week.

"In the United States, the Centers for Disease Control and Prevention estimate that roughly 1.7 million hospital-associated infections, from all types of microorganisms, including bacteria, combined, cause or contribute to 99,000 deaths each year"

Medical errors officialy account for between 100,000 and 200,00 deaths per year, and between 20-35% of people who die in hospital are discovered at autopsy to have been misdiagnosed. BUT consider you are treating an 80year old man for pneumonia and when he dies the autopsy discovers he had undiagnosed prostate cancer - is that 'really' a medical error death?

Then there are around 100,000 deaths due to hospital infections. 30,000 of them from MRSA alone = twice the number of people who die of AIDS. The rates in nursing homes and other 'medical' facilities are probably much higher but aren't as well monitored or reported.

http://www.iom.edu/Reports/1999/To-Err-is-Human-Building-A-S...

Then overnight pure capitalism would create an efficient market to import and distribute them. When it's cheaper to buy heroin on the street than an aspirin in a hospital you know that the market is screwed up somewhere

Why?

That's probably a valid point. Media loves a little guy against huge industry story.

> in several cases, needles detached and were left “stuck in the arms of patients.”

More data needed to make any assessment. We need to compare failure rates of the retractable device with existing devices. We also need to adjust for the skill level of the people using the devices. There's probably an adjustment needed for the patients too.

<anecdotal evidence> I have a doctor and a nurse in my extended family that deal with Kaiser on a daily basis and I've heard horror stories that would make a battle hardened marine cringe. One that immediately comes to mind was a patient that literally died while waiting for some kind of approval (it's been a while since I've visited) from Kaiser for a kidney transplant. </anecdotal evidence>

"Without a GPO contract, it doesn’t matter how good your product is. Even if I could wave this wand over your body and cure you from cancer, chances are I couldn’t sell it to hospitals"

The core problem is, big manufacturers offer discounts (or bigger kickbacks) for bundling. A niche product is unlikely to succeed, even if it's obviously better. A product that has pros and cons is not going to have a chance.

Also, I'd imagine that a detached needle could be a greater legal liability than an infection. It's easy to prove that a needle detached in a patients arm. It's a lot harder to prove that an infection was caused by a needle without safeguards. "First, do absolutely no harm for which you can be sued for" is not a great creed, but it's one some hospitals will follow.

If you're a supplier, perhaps you're best shot is to license to a big manufacturer, to break in, even if you're capable of producing and marketing your product; because you'll be locked out of the supply stream if you go it alone. That's a pretty sad state of affairs.

As someone who is trying to finish his Master's thesis relating to prostate cancer, claims like this make me cringe. It's like paying a marketing group to conduct a survey for you. Of course the results will be positive.

I didn't read the whole article since it's pretty long, but I bookmarked it for later. But this guy managed to burn through $42 million dollars and still hasn't achieved wide adoption?

If this was really about getting his superior technology to market, he would attempt to strike a licensing deal with these companies instead of trying to supplant them.

Fact is, many people in medical device and healthcare industry claim to be conducting research and ground-breaking work in the name of making people's lives better. But in reality, they're looking to get rich off of it. I respect that, but at a certain point, you need to decide what's more important: your personal profits, or the lives of the people you claim to be dying from this issue.

The guy who invented/discovered/extracted insulin didn't patent it/the process, even though he could've made tons of money. Again, if you want to make money, I respect that. But in that case, don't go whining about lives being lost.

I wish this guy luck, because it sounds like he has something new and novel. He just needs to realize that he has to pivot, not persevere.

I'd also be surprised if what was said didn't turn out to be technically true, but that's not really the point, which is to spread FUD. Raising vague, out-of-context allegations is a time honoured mudslinging technique and I hate to see it accepted without question.

> “significant supply issues” on Retractable’s end

Out of context this is meaningless. What is a significant supply issue? It could be anything and everything, including this guy not liking the colour of the packaging or any other triviality.

It sounds odd to me that a company with $42MM in funding and desperately trying to move its products for over a decade would have anything other than a gross oversupply.

> prone to malfunction and that, in several cases, needles detached and were left “stuck in the arms of patients.”

This statement would be technically true even if the product in question was less prone to malfunction and needle breakage than the incumbent product! Without any sort of context, however, it is at best ambiguous and at worst quite possibly deceptive.

It's very possible to deceive and mislead without ever actually telling a lie.

First of all healthcare is a very conservative space. Unless your product demonstrate a truly significant progress, nobody will give an eye at you. The decision making progress is very slow and very conservative. So even without the big medical supply corp, Shaw might never had a chance anyway.

"And it seemed to be remarkably effective: a 2007 clinical study funded by Shaw’s company and conducted by the independent SGS Laboratories found the device prevented germs from being transferred to catheters nearly 100 percent of the time"

Cigarette companies have sponsored plenty of "independent" studies that shows that cigarettes are not detrimental and even healthy. So take that with a grain of salt.

"But Shaw still isn’t any closer to breaking into the hospital market, and in the meantime the life on his patents is dwindling."

Really? Patients losing their life over some IV caps?? IV caps are always going to be more prone to infection when compared to needles (since well, those caps are stuck in there for weeks while needles are disposable), but nurses are trained to look at sign of infections ASAP.