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Devicemaker sales reps being replaced in the OR

By Jaimy Lee 

Posted: August 16, 2014 – 12:01 am ET
To cut the price of orthopedic implants and curb the influence of manufacturers, some hospitals are training their own employees to provide technical assistance to operating room staff, displacing company sales representatives who have offered this service to surgeons for decades.

Few patients being rolled into surgery for a hip or knee replacement are aware that a sales rep is often in the operating room during their procedure, aiding the surgeon and nurses with decisions about instruments and sometimes influencing the kinds of products that will be used.

Now, a small number of hospitals around the country are collaborating with manufacturers to replace this model. One is Loma Linda (Calif.) University Medical Center, which trains hospital staff to set up the OR and assist surgeons during joint replacement procedures. The payoff for Loma Linda is a 50% markdown on the prices of implants, which cost on average about $4,320 for a total knee implant and $4,820 for a total hip. Overall cost savings data were not available.

“Sales reps have created this necessity for themselves with the surgeon, and we’re saying it’s not as necessary as everyone thinks it is,” said Justin Freed, Loma Linda’s executive director of supply chain.

Over the past two years, a few small and midmarket orthopedic manufacturers including Smith & Nephew and Wright Medical, along with distributors such as Cardinal Health in partnership with Emerge Medical, have launched “rep-less” sales models, selling certain implants at a significant markdown. In turn, participating hospitals are training employees to take over the sales reps’ former technical assistance role. The service function of the sales rep is significantly reduced and sometimes entirely eliminated.

The rep-less model is part of a broader effort by hospitals to cut medical-device costs and improve clinical quality through greater standardization in the devices used. As part of that, hospitals have worked with physicians to limit purchasing of physician preference items.

“A lot of the (healthcare providers) today are beginning to recognize that the rep is not a ‘free’ service,” said Donald Casey, CEO of Cardinal Health’s medical segments business. “It’s actually part of a bundle that results in prices that they may or may not want to evaluate.”

Costs of medical supplies

But it’s unclear how many manufacturers are willing to give up their sales reps’ coveted one-on-one relationships with surgeons. That access can allow manufacturers to influence surgeons to use more costly products. Still, hospital initiatives in recent years to reduce the costs of medical supplies—which make up a hospital’s second-largest expense after labor—and a push for more transparency about doctors’ financial relationships with manufacturers have started to limit surgeons’ choices about the products they use.
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Josh Sandberg

Josh Sandberg is the President of Ortho Sales Partners and Partner for The De Angelis Group. He also serves as Co-Founder and Editor of OrthoSpineNews.

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