Why Does Obsolescence Impact Healthcare Manufacturers More than Most?

The healthcare industry is somewhat unique in the fact technology, for all of the responsibility it bears for moving society forward, is still not the primary force behind a patient’s decision to seek care. Does access to the latest specialized CT scanning technology sway a patient to seek an accurate cancer diagnosis at one medical provider over another? Perhaps, but there’s another factor that takes far more importance: the opinion of the doctor.

The importance of that single factor cannot be understated, and it is a primary cause of the healthcare industry’s penchant for obsolescence issues.

“The practice of medicine today relies on trust between two humans: a patient and a doctor,” writes University of Kent lecturer Srivas Chennu. “The doctor judges the best course of treatment for a patient based on their individual clinical history, weighing up the relative pros and cons of the different options available. The patient implicitly trusts the doctor’s expertise.”

If we think of a healthcare provider as a business, as we should, then this makes sense. Technology is what convinces a consumer to choose the latest iPhone or HDTV over the previous model, but in healthcare, technology will always remain dependent on the human element that wields it.

If we have an illness or condition that requires highly-specialized care, is our first step going to be the institution that has the latest equipment, or the institution that houses the doctor we trust our wellbeing to? That’s the variable that makes the “sale.” If technology does have the final say, it’s often because the doctor refers the patient toward it, not because the patient actively seeks it on their own.

Because of the unshakable bond between doctor and patient, product manufacturers who choose to operate in the healthcare sector are posed with a unique problem: how to market their devices to a consumer pool that’s largely not dependent on the latest technology to attract additional business. New technology often comes with a learning curve, and doctors who have spent many years studying and honing their craft a certain way may prefer to stick to more traditional equipment they understand and trust.

Of course, there are other obstacles that must be taken into consideration, as well. In addition to the high costs and long development times associated with introducing a new healthcare product, any change related to a medical device must undergo a strict evaluation and FDA certification process related to risk and performance. This includes notifying the FDA of the intention to modify the product design, investing in third-party testing, and potentially even implementing new packaging procedures. While expensive and occasionally complex to navigate, with lives on the line most agree that these processes that need to exist despite the hurdles they pose to manufacturers.

Knowing these obstacles, healthcare manufacturers instead have opted to not introduce new products on an annual or even biannual basis, but to instead support their current products through updates and repairs years — even decades — past their initial sale date.

This business model obviously relies on the assumption that the electronic components required to maintain the product’s functionality are available for that extended length of time. Today, component manufacturers are continually pushed by customers (and competitors) to producer smaller, faster, more energy-efficient components for other, larger markets with more short-term profitability potential.

Such an environment is ripe for obsolescence issues — and as a result, many equipment manufacturers who rely on extended product lifecycles are forced to either exit the healthcare market entirely, or find a solution that allows them to navigate around end-of-life components.

Contract manufacturer Jabil succinctly describes the issue as follows: “Technology does not drive the medical device industry, proven therapy does. Therapy, paired with the requirements of a regulated industry, create a pace of change that is inconsistent with the technology that exists in their products.”

Can such an issue be overcome? Of course it can, but the first step is, as always, education and understanding of the market you choose to operate in. Obsolescence is not a healthcare-specific issue, but if your company is considering operating in this industry it’s critical that you understand just how significant an issue obsolescence will be for you. Obsolescence in many ways defines the healthcare industry, and all signs point to this trend remaining for the foreseeable future.

We hope you’re ready – and if not, we’re here to help.

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