More and more, reprocessing companies specialize in either distribution, regulatory and R&D, or sales. This means that the reprocessing industry has become an intricate web of business relations among reprocessors: For example, Medline (distributor) sells Innovative Health devices under private label; Northeast Scientific (sales) has leveraged Innovative Health as an R&D partner; Stryker (sales) gets some of its products from Medline, etc. This development is as logical as it is confusing. It’s tough to be the best at everything from R&D to sales and distribution, so companies concentrate and “outsource” other activities. What drives the integration among reprocessors is that most hospitals have traditionally wanted to work with only one reprocessor, meaning the sales/distribution firm would have to be able to offer the full portfolio of reprocessed devices.

A strategic split between volume reprocessors and niche reprocessors has emerged: During the last half of the 2000s, the major reprocessors all achieved FDA clearances for the devices that were technologically accessible (i.e., relatively easy to reprocess) in the EP lab, in the OR, and on the floor. Since the early 2010s, most reprocessors have not looked to more FDA clearances for growth in hospital savings. Rather, they have looked to add markets or increase same-store sales (getting more savings for the hospital through program management and education).

Unlike the volume reprocessors, niche reprocessors have focused on growing savings on only a few product lines. Niche reprocessors include Innovative Health (cardiology) and Northeast Scientific (intravascular).

The specialty reprocessor has emerged: From this strategic evolution, the specialty reprocessor has emerged. Today, a reprocessor can grow in one of two ways: either through volume (market growth or market expansion) or by getting more FDA clearances so that more devices can be reprocessed. The challenge for non-volume reprocessors has been that all the low-hanging fruit (in terms of easy-to-reprocess device types) has already been picked. This means that without the market reach of the volume reprocessors, a reprocessor must develop a deep and narrow clinical, regulatory and technological focus on specific devices. This enables them to obtain FDA clearances for devices that in the past have been seen as not reprocessable.

These emerging trends are not surprising. In fact, almost every new industry goes through consolidation, fragmentation, and specialization. In my view, these trends are positive for the industry, as well as for hospitals, as reprocessors play to their strengths and increase the savings value to hospitals through refined strategies.

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