Charging for Product Recalls

 Recalls cost hospitals time and money. Shouldn’t we be compensated?

 By Jack Anderson

 Recalls by manufacturers of medical equipment, supplies and drugs are time-consuming interruptions in a healthcare provider’s routine, may expose patients and staff to undesired dangers, and cost hospitals thousands of dollars each year. The time that hospital staff spends responding to recalls is uncompensated, and I believe that we should be paid for our time.

The number of recalls seems to be increasing each year. The web and 24-hour news channels often report product problems in advance of hospitals being notified of them. Often, these reports are for products that your hospital may not use, but prudent practices require our attention in any case.

Many recalls are avoidable. Product problems, both advisories and recalls, result from poor manufacturing processes, questionable clinical trials by physicians receiving payment from the manufacturer, or a lack of scrutiny over third-party suppliers, concealing a device’s known adverse effects and more.

Why should our hospitals respond to these errors with labor and, very often, additional costs, without being compensated for our efforts? Processing recalled products is time-consuming and needs to be accomplished immediately; the recall warning can’t wait until we have time. Multiple levels of staff are often involved, from supply and biomedical technicians to managers, directors, administrators and physicians. I maintain that we should be paid for this time. If some of you are doing this, I would like to learn of your experiences.

Processing recalls includes:

  1. Logging the recall notice.
  2. Determining whether the product is used by your hospital, either currently, or in the case of implanted products, in the past. This might be accomplished by researching your information system’s database, but would be a much longer process if manual means were necessary.
  3. Documenting whether your hospital uses the product and where.
  4. Determining where the recalled product is in your hospital, gathering the suspect goods and quarantining them in a secure location so they can’t be used. The storeroom location is easiest, but then each department that uses the item needs to be inspected. In some cases, products are stored in unofficial storage areas, such as surgical rooms, procedure carts and other convenience locations, making this job more difficult and time consuming. In cases where portable equipment is recalled, finding all of the targeted items is challenging and time-consuming.
  5. Documenting the actions in step 4.
  6. When an implant is involved, physicians are primarily responsible for contacting their patients and deciding on the course of action.  However, in our hospital, we search our implant database and notify the physician, in writing, of our findings.
  7. Disposal or return of the recalled product(s).
  8. Document all and report our actions to our Recall Committee. Often, this committee will identify further complications or suggest other places where these products might be.

 

At this point, we may not have a product to take the place of the recalled item, so buyers and other staff must research possible alternatives. The replacement product could cost more, could result in priority shipping charges and may require your staff to be trained on the use of the replacement product. More time, more money.

Compensation

How should the supplier be charged? One method I have considered would involve tracking my time and other out-of-pocket costs and invoicing that amount. While this might be fair, it is also additional record-keeping during a time when we are busy with other related activities.

Instead, I propose a matrix approach based on the complexity of the recall and size of the institution. Class 1 recalls would involve a single product used by a single department. Class 2 recalls would apply to products used by multiple departments and could include multiple products. Class 3 recalls would include any items that were implanted in patients, such as prostheses, stents, pacemakers and ICDs. The proposed amounts are not meant to be punitive (we’ll leave that to the government and malpractice attorneys), but should, in most cases, offset the expenses incurred by the healthcare provider.

Here is an example for discussion:

Recall Service Fees

1 to 100 beds

101 to 300 beds

301 to 700 beds

701+ beds

Class 1

$500

$750

$1000

$1500

Class 2

$1000

$1500

$2000

$3000

Class 3

$2000

$3000

$4000

$6000

 

Suppliers usually charge customers to restock products or refuse to take back products when their new technology makes them obsolete. This is a cost that we all pay. It is only fair that our time, inconvenience and additional expenses are also paid for by the responsible party.

 

Jack Anderson is president of Material Resources Inc., a supply chain consulting firm, and is on assignment at The William W. Backus Hospital in Norwich, Conn. Jack welcomes your comments regarding charging for recalls. His e-mail address is jranderson@wwbh.org.

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