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We have spent quite a bit of time talking about what it means to have a disposable or a single-use device. We've talked about some advantages and disadvantages, but it's a different question to ask, when does it make sense or going through the process of determining if it makes sense. I've really been able to boil this down into three primary categories.
The first and foremost is when it's a health benefit to the patient. Secondarily, it can also be a method for introducing either new technologies or new procedures, or otherwise elevating the standard of care that maybe wouldn't be available otherwise, that has to do with some of the cost structure. Finally, there are certainly some economical factors for both hospitals as well as manufacturers when we look at using medical devices. It's a relatively complex arrangement, but it's something that we will touch upon at a high level and try to introduce some of the topics.
One of the primary driving factors for single-use devices, or at least primary consideration, is the economics and the business model for such devices. Ultimately, what it usually comes down to is unit cost. One of the primary ways that manufactures are able to bring unit cost down is through higher volumes on more of the material you purchase generally, the price breaks you get through the economies of scale. Additionally, the more units that you're building, you're able to generally employ better and more sophisticated levels of automation which reduces touch time or labor time.
Those really are highly-scalable applications, especially once you get to extremely high volumes, the automation side of things if you can be hands-off, you basically pay for a system once and it can produce material for you. Really, one of the things that we're looking at is are the economics viable and there are just certainly cases where it's not.
Folks do consider another class of devices that's halfway in between reusable and single-use and they're called repose-able. There are devices that may be reused, let's say 5 or 10 times, rather than hundreds or thousands, but they're certainly used more than once. Looking at it from a cost per use scenario, if you're able to use something 5 or 10 times that greatly reduces the cost per case scenario which can be advantageous. It still allows you to design something relatively simply that doesn't have to be robust enough to last hundreds of your reprocessing cycles, but still gives you some of the advantages of a single-use device.
At Lighthouse, we try to use our core values when we approach devices and I think this applies to the waste element of disposable devices as well as the unintended re-use of single-use devices that we don't want to be involved in chasing the short dollar if you will, we want to be good stewards of our world and we want to make sure that what we're doing is viable economically in the short term but also the long term.
Generations from now, if we have to spend billions of dollars cleaning up the waste that was created, there may have been a short gain for us but ultimately a loss when it's all summed together. When we consider all of these elements, we do use our core value systems and our morals to make sure we're making the right decisions for our future as well as for the patients that are being operated on these devices.
Benjamin Gray, CTO of Lighthouse Imaging, and Justin Starbird, dig deeper into disposable devices and what the benefits are. They discuss a little bit of a more clear visual for listeners on why disposable devices are becoming a major trend in the medical device space. They also answer why it is so important for manufacturers or companies developing devices to take this into consideration.
Benjamin explains, that there are really two major categories. One is more cost-related and the other is more use related. The simpler one to address is the cost equation, the cost side of things. If a disposable or a single-use device economically doesn't make sense, it likely won't get developed, at least not as a single-use device. One of the challenges obviously is using material once and then discarding it. Cost of the device itself becomes very important, which maybe is less so important in a device that gets reused over and over.
Justin Starbird and Lighthouse Imaging Chief Technology Officer, Benjamin Gray talk about the different medical device options available.
Every product development process in the medical device industry is unique due to factors such as function, use, performance, and cost objectives. In some cases devices function stand-alone, while others are complementary to the primary device, impacting the way the development process unfolds. Broadly speaking, Benjamin said, "...devices may be generally categorized as reusable or single-use. When it comes to the process and economics of development, there are pros and cons to each type."
Obviously, one of the primary challenges to developing single-use devices is meeting pricing targets, as material and labor costs must be minimized in the final product. Costs and margins need to be continuously evaluated and remain at the forefront of the developer’s mind.
Listen as Justin and Benjamin discuss how the needs of clients ultimately determine which direction folks should lean.
The use of and need to leverage traditional and emerging technologies in designing a visualization system. Medical optics device design, custom design options, design approach. Justin Starbird and CTO of Lighthouse Imaging, Benjamin Gray discuss the topic of Hybrid Design in length.
Chief Technology Officer of Lighthouse Imaging, Benjamin Gray joins Justin Starbird to talk about a systems approach to digital imaging. They dive into how various function components are thought of as a holistic system rather than individual pieces in the medical device imagery space.
The topic of manufacturability and targeted costs focuses on the importance of identifying and the economics of the device under consideration at inception. It is critical that the targeted sales price is determined as a function of the business plan and the balance of the economic equation is completed prior to initiating development. The equation should consist of annual volumes, desired profit margin and targeted cost of good sold or in the case of a contract manufacturer, the acquisition price. Without defining these targets, the product will undergo development without consideration of the economics and may lead to the product never reaching commercialization. It is very possible that a great product is development but the economics, the sales price does not allow the product to be successful in the marketplace.
Every for-profit organizations primary objective is revenue generation. Revenue generation of a new medical devices always facing steep challenges, development issues, regulatory hurdles, market acceptance and so on. The more expeditiously you launch the new product the sooner you begin recognizing revenue. Lighthouse Imaging practices a development path that expedites the process to commercialization. By focusing on the product requirements, which includes not only includes product specifications but the regulatory strategy and manufacturability requirements, we initiate the device to be commercialized at the outset, rather than addressing these concerns later in the development cycle.