Medical Device Makers Beefing Up Product Guarantees to Shoulder Device Failure Risks with Hospitals

Medical device manufacturers are gearing to put a lot more at stake by offering additional guarantees to hospitals in the United States in the event a device fails to perform to expectations. The move comes as a means to overcome recent sluggishness in sales that has plagued medical device companies. Key players such as St. Jude Medical, Medtronic Plc, and Johnson & Johnson have already taken a lead and the second-rung participants are expected to jump into the fray soon. Makers of cardiovascular devices are offering to take responsibility for follow-up costs whereas makers of orthopedic implants are toying with the idea of a similar guarantee for hip and knee implants. 

However, hospitals in the United States have a lot more to expect of medical device companies. They want the performance guarantees to cover a lot more than they currently do. For instance, hospitals are now asking medical device manufacturers to compensate for the cost of the entire surgery if a key device fails to function as required. 

Though it is just taking root, this trend could mark the beginning of a major change in the medical devices industry. Device manufacturers shouldering the financial risk of medical procedures is unprecedented.

According to a recent Reuters report, which quoted Premier Inc’s chief executive, Susan DeVore, this trend is a “big shift”. She also goes on to say that device manufacturers who are responding to this expectation set forth by hospitals are the ‘most progressive’ because they are able to identify the changing landscape. Market watchers say that though novel, this change is not entirely surprising.
Hitherto, patients and health insurers were the ones who had to bear the cost of replacing a medical device. The healthcare industry has, over the past few years, seen several lawsuits against medical device makers for faulty products – companies have shelled out billions to settle these patient lawsuits. Against the backdrop of a complex insurance environment, it now remains to be seen how hospitals try to rope in medical device makers and how much ground the latter are willing to concede.


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