Medical Device Link.

Originally Published MX May/June 2006

CONTRIBUTORS

To keep their companies on track, medtech executives must continually be watching over changing market conditions, finance trends, investor relations, and public policy issues that could affect their business planning. In light of their numerous obligations, company leaders can lose sight of the foundations on which their companies are built: the devices themselves. Continual evaluation of a company's product portfolio and future pipeline is key to sustaining growth.

In this issue, MX explores multiple dimensions of medtech product development, from forecasting customers' future technology needs to handling postmarket safety issues in a changing regulatory climate.

Market Analysis

Prodger

In light of continually escalating healthcare expenditures, hospital administrators and other industry stakeholders are forever exploring new ways to manage costs. One emerging business model that is increasingly being explored—much to the chagrin of some medical device manufacturers—is gainsharing. These arrangements, in which hospitals standardize their use of various devices in order to negotiate lower prices with manufacturers, could dramatically change how medtech companies do business in the future. In "Getting a Grip on Gainsharing", Mark Prodger shares the findings of a study in which researchers conducted in-depth interviews with cardiovascular physicians and senior hospital administrators, some of whom currently participate in gainsharing arrangements. Prodger is a vice president for the medical devices and technology division of Market Strategies Inc. (Livonia, MI), a healthcare-focused market research and consulting firm. He has more than 23 years' experience in medical device and equipment leadership, spanning across the hospital products, ophthalmic, orthopedic, and cardiovascular product and equipment segments. He can be reached at 317/417-2520 or via e-mail at mark_prodger@marketstrategies.com.

Business Planning & Technology Development

Ginsburg

The pace of acquisition activity in the medical device space continues to accelerate, and the impact of these transactions on the corporate executives involved is substantial. In "Acquiring Executive Talent", Ted Ginsburg and Aubrey Bout examine the executive compensation component of medtech acquisitions from the vantage points of both the acquirers and the targets. While an acquiring company often has a strong interest in retaining at least some of the target's executive talent, its task is often complicated by lucrative change-of-control packages that encourage executives of acquired companies to resign their posts. Careful negotiation of these agreements during an acquisition can ensure all involved come out on top. Ginsburg and Bout are consulting principals with Top Five Data Services Inc. (Fremont, CA). Ginsburg can be reached at tginsburg@top5.com, and Bout can be reached at about@top5.com.

It's no secret among medical device executives that the incorporation of new technology into a product line is not a defined event, but rather an ongoing, never-ending process. As part of this issue's special focus on technology development, MX contributors examine this process through three lenses: the long term, mid term, and short term.

Evans

In "Riding the Long Wave", Bill Evans applies the principles of long-wave economic theory to medical technology forecasting. Long-wave theory, which focuses on the technological revolutions that have characterized the significant surges of economic growth in past centuries, suggests that medical device companies should prepare themselves—and their product pipelines—for the culmination of society's latest revolution: the microprocessor. By looking toward distant horizons and developing an appreciation for where the medtech industry is in relation to society as a whole, medtech executives can make better-informed management decisions. Evans, president of Bridge Design Inc. (San Francisco), can be reached at bill@bridgedesign.com.

Andrews

Companies must also be able to meet market demands in the near future. In "Technology Forecasting", Robert R. Andrews offers guidelines to help medtech leaders identify customer needs, search for technologies to help meet those needs, and shape their company's strategy to develop products accordingly. Andrews is medical division manager for the commercial group at Foster-Miller Inc. (Waltham, MA), a product development and process engineering firm with a specialty in the medical device and pharmaceutical industries. He has more than 25 years' experience managing medical device development and operations and has 11 issued U.S. medical device patents. He can be contacted at 781/684-4639 or via e-mail at randrews@foster-miller.com.

Diston

Rounding out the MX technology development package, Andrew Diston examines how medtech companies can revitalize their existing product portfolios in the short term by incorporating advanced technologies. In "Adopting New Technology", Diston examines key considerations for selecting mature technologies and leveraging them as a cost-effective means of upgrading a product line. Diston is managing director of the U.S. office of UK-based Cambridge Consultants (Boston) and a senior vice president in the firm. He has nearly 20 years' experience in developing medical products. Diston can be reached at 617/532-4700 or via e-mail at info@cambridgeconsultants.com.

Information Technologies

Gee

In this issue's annual installment of the IT Showcase, Tim Gee reviews IT innovations recently introduced by medtech manufacturers and explores larger trends in healthcare IT that may shape the device industry's ultimate quest for interoperability. Gee is the principal of Medical Connectivity Consulting (Beaverton, OR), a firm that specializes in the application of technology and process reengineering for hospitals and medical product manufacturers. For more than two decades, he has focused on hospital connectivity, creating products to automate work flow for cardiology, the emergency department, radiology, and most patient-care areas. Gee is a member of the Healthcare Information and Management Systems Society (Chicago) work group on medical device security. He can be reached via e-mail at tim@medicalconnectivity.com or through his Web site at www.medicalconnectivity.com.

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