Deaf and Blind Medical Device Giant J&J: Harmed Patients Demand REAL Consumer Warranties!

How J&J’s Walmart relationship is inspiring its device business

By ARUNDHATI PARMAR  FiDA highlight

 Oct 31, 2016 at 6:02 PM

The Affordable Care Act has laid the groundwork for a seismic shift in the way the medical device industry operates.

Traditionally, large companies like Johnson & Johnson built up an army of sales reps who would have relationships with the same hospital customer but touting the New Jersey’s companies individual products — be it cardio, ortho or general surgery. As value-based care gains a footing, health systems are focusing on how they can lower costs and improve outcomes through services and solutions as opposed to buying more and more hardware and implants that device firms are known for.

J&J’s medical device business has been ill-equipped to adjust to this shift and its financial performance has been poor. Last year it garnered $25.1 billion, down 8.7% from 2014. The division has also restructured and announced it would be eliminating thousands of jobs earlier this year. In a phone interview, Gary Pruden, J&J’s executive vice president and worldwide chairman for medical devices, explained how the unit is undergoing a wholesale metamorphosis to take advantage of the opportunities afforded by value-based care. One inspiration has been to take a page out of the consumer business book and see how it manages a really large customer:Walmart.

Gary Pruden, worldwide chairman,                                               J&J Medical Devices

“I have more than a dozen companies in the U.S. for example and in the past, they would all go to the hospital system provider separately. They all have separate P&Ls, they all operate independently, they all go separately,” Pruden recalled. “We made a conscious decision and actually this year we integrated all the different business into one single P&L and I have one single strategic account management group in the U.S.”

This model is unlike how other large device firms are fulfilling their go-to-market strategy. For them, the product business and solutions business sit separately, Pruden declared referring to the likes of Zimmer Biomet and Stryker.

“They are trying to bring together a compilation of [offerings] and those solutions providers operate separately from those individual businesses,” Pruden claimed. “And when you talk to [hospital] customers, that’s a little challenging. They want to talk to one person.”

At J&J, that single account management group now has the power to speak on behalf of the product and service offerings of J&J Medical Devices with a single voice as well as to strike deals with hospital customers, partner with them and write contracts. The goal is not only to lower their costs but also share in the risk for clinical outcomes, Pruden said. If J&J  is able to achieve both, it wins with greater volume of products sold.

Pruden wouldn’t provide specifics about the value-based care offerings but said that there are certain demonstration projects with certain hospital customers, both U.S and globally. Through them, J&J’s medical device business can offer its expertise in providing end-to-end supply chain solutions for hospitals, perioperative efficiency, clinical standardization programs as well as in help in figuring out bundled payment programs.

In trying to create a model by which the devices team at J&J would be able to provide savings by managing a customer’s supply chain end-to-end, the inspiration came from the conglomerate’s consumer business.

“With Walmart, we have a very unique partnership where we have a large number of people working in Bentonville, on behalf of Walmart that help manage the end-to-end supply chain,” Pruden said.

This model is already being put to use in the U.S., but Pruden declined to identify the customer or customers with whom this program has rolled out. [In May, Pruden’s presentation to analysts showed the Medical Devices business had at least had eight such customers – or strategic partners. They include New England Baptist Hospital, OSF Healthcare, Saint Luke’s Health System, Grupo Angeles Servicios De Salud and Schulthess Klinic among others]

He was similarly elusive when asked about the types of products for which the corporation has taken on some risk. This is in direct contrast to other device companies that are not only providing full-throated support for alternative payment models that mean bearing more risk with hospitals but actually identifying the product at the heart of the matter.

Take Stryker for instance.

Earlier this year, the Kalamazoo, Michigan orthopedic company announced that it is providing no less than a “money-back guarantee” for customers who use its SurgiCount system to keep track of the surgical sponges that in some cases may inadvertently get misplaced, ending up inside surgical patients. Stryke said that it would offer up to $5 million in product liability indemnification to hospitals and an additional guarantee to refund the incremental cost hospitals bear to invest in its SurgiCount program compared with the hospital’s previous sponge spending for up to three years.

Medtronic, the largest pure-play device company, has also gone at-risk with its Tyrx absorbable antibacterial envelope. The mesh device is meant to encapsulate a pacemaker and ICD  and release antimicrobial agents over a period of seven days to prevent surgical site infections of such cardiac devices.

While Pruden didn’t provide any specific example of products that J&J Medical Devices, he was very emphatic about the need for device makers to assume some risk with their products as they become more of a strategic partner to hospitals than a supplier. And that can mean the difference between a supplier relationship always on the verge of being cut and a long-term strategic partner.

“That’s the essence of what I am doing – aggregating our businesses at scale, offering some willingness to take some risk and leveraging the enterprise and some of the things we can do to create some value,” he said. “Partnerships that only go one way don’t last very long.”

http://medcitynews.com/2016/10/jjs-medical-device-chief-taking-inspiration-consumer-business/

Consumers Union communicates to AAOS: 50,000 patients want hip/knee warranty

 Activists Take Fight to Obtain Hip,Knee Product Warranties to AAOS. Will They Succeed?

Posted in Orthopedics by Arundhati Parmar on March 12, 2014

FiDA highlight

At AAOS, Consumers Union, through its Safe Patient Project, is asking surgeons to support their demand to obtain hip, knee warranties from device makers when implants fail early. 

A consumer advocacy group has seized upon the fairly mundane concept of product warranties to turn the heat on medical device makers.

Consumers Union, the lobbying and advocacy arm of Consumer Reports, sent letters to six top hip and knee makers last September asking them to provide product warranties for early implant failures. The letter quoted the American Academy of Orthopaedic Surgeons in saying that 10% of implants fail.

The group has now made a big push in publicizing its message by organizing a campaign outside the annual meeting of the American Academy of Orthopaedic Surgeons, which kicked off Tuesday and ends on Saturday, March 15.

Activists were handing out flyers outside the Morial Convention Center in New Orleans that urged orthopedic surgeons to text their support for manufacturer warranties. Here's what the flyer looked like:

In an interview at AAOS Wednesday, Lisa McGiffert, director of Consumers Union’s Safe Patient Project, said that only Smith & Nephew formally responded to the letter sent to orthopedic manufacturers in September. Two others acknowledged receving the letter via email but never actually responded to the request. The others did not respond. McGiffert couldn't recall which two companies sent the acknowledgment.

What the group is asking for is not unprecedented in the medical device world, she said.

"Biomet provides a warranty for a partial knee and cardiac products have warranties," she said.

After receiving Consumers Union's letter, Smith & Nephew responded that it is a "complicated issue" because hips and knees can fail for a number of reasons, McGiffert said. It could be the caused by the patient, the surgical technique or the device, McGiffert recalled the company as saying in its response.

But McGiffert clarified that the group is focused on "when the products are the problem." In other words, Consumers Union is not looking for a blanket product warranty, but wants device makers to take responsibility and stand behind the products when device-related problems cause the joint replacement to fail.

"You get warranties for flashlights, toasters and cars, for almost everything in the U.S.," she declared. "I know they are less complicated, but this is something that is going inside people's bodies. We think they ought to stand behind their products for a certain number of years. They can decide how long."

The purpose to bring the campaign to AAOS is to win support from surgeons and get feedback from them, McGiffert said.

However, Consumers Union may not win too much sympathy from the top brass at AAOS.

In a phone interview Wednesday, outgoing AAOS president Dr. Joshua Jacobs said that the "vast majority of orthopedic implants for joint replacement perform exceedingly well - 90% of total joint replacements work 10, 15 years and beyond."

Jacobs did acknowledge that "sometimes implants fail early, " but argued that "while warranties seem like a good idea on the face of it, the issue is more complex." 

Echoing McGiffert's portrayal of Smith & Nephew's response, Jacobs said that early failures could be caused by patients, due to the manner the surgeon did the procedure or it could be because of device problems. But sometimes "a complex interaction of the three" can also lead to early implant failure. So it may not be as easy to tease out which of the three factors caused the implant to fail.

And then there is the potential for infection, which is out of everyone's control, that can contribute to a failure.

"That cannot be addressed with a warranty," Jacobs declared. 

Overactive or obese patients can also lead to implant failure, Jacobs noted. 

However, another well-known orthopedic surgeon and healthcare social media maven, Howard Luks, disagreed with that assesment. 

"I don't think it's fair to blame the patient," he contended. "Once the joint replacement is done, it's stable, it's done. They should  be ready to go. If the patient is obese, then why did you put it in? Device makers understand who these implants are going into and the implants should meet those needs. Or there should be a big red sticker on that says 'Do not put in a patient with a BMI over 30.' So I think the patients have a right to ask for a guaranty or a warranty on a product that is going in their body."

Luks said that unless surgeons push the issue, device makers wouldn't move to provide such warranties.

And it certainly appeared that way. In an interview with DePuy Synthes Joint Reconstruction at AAOS, executives punted the question of warranties to the company's spokeswoman Mindy Tinsley, who responded like this:

"We understand the position that Consumers Union has taken. We are interested in continuing to have a dialogue about this. But I think with joint replacements, it's a complex interaction of factors and revisions have sometimes to do with the implant, sometimes with the patients, sometimes with the technique. We acknowledged the letter but we haven't taken a position. This is an issue we are continuing to explore."

Stryker declined comment via email. A Zimmer spokesman at AAOS said that "it's a complex issue and has a lot of factors surrounding it." The spokesman, James Gill, also forwarded a statement from AdvaMed, the device industry association, which argued that warranties for hip and knee implants that involve complex procedures and involving many different players, involving the patient and the hospital, may not be appropriate. However, it left the decision to provide warranties to individual manufacturers.

Meanwhile, McGiffert said that Consumers Union has secured the support of 50,000 patients who have sent emails to the top orthopedics device makers asking for product warranties-- By Arundhati Parmar, Senior Editor, MD+DI
arundhati.parmar@ubm.com

Great Reporting

Submitted by falascoj on March 14, 2014 - 9:32am.

Great graphics and story. I believe you have only hit the surface on this story. Hopefully we will see followup stories on you asking the medical device companies to come clean on why they are fighting the idea of warranty. They are the only major industry or activity that operates that way. The arguments that Mr.Gill has mentioned and the ortho surgeon are lame and I can just see an automotive guy saying --- well be can't do bumper to bumper because an F-150 is different then a Mustang. -Not
I've forwarded this article to numerous groups as an example of a publication actually getting out in front of the biggest deception on the American public since the Warren Commission.