Advancing the Circular Economy in Healthcare Delivery
The Association of Medical Device Reprocessors (AMDR) seeks to advance policy initiatives in the U.S. and globally that:
Incentivize hospital purchasing of value and environmental benefits, not volume and wastefulness, in the healthcare supply chain.
Current reward systems incentivize hospitals to buy more products, prioritizing volume in order to drive down prices. Fundamental changes are needed to move away from volume-based incentive structures, to value-based that will drive a circular economy. Strong federal oversight is needed to develop value-based payment incentives for the use of environmentally preferrable products. AMDR would like to see federal regulatory authorities incentivize through payment or reward systems, greater hospital adoption of medical device reprocessing programs to reduce emissions, waste and cost.
Reprocessed “single-use” devices (SUDs) are reimbursable as part of a larger Diagnosis Related Group (DRG). Stand-alone payments to hospitals that participate and meet certain reprocessing benchmarks would rapidly incentivize hospitals to make immediate carbon reduction, waste, and cost reductions. In future years, the rewards could be amended to adopt increasingly ambitious targets for reprocessing program compliance. Because the infrastructure, including strong federal oversight, is already in place, reprocessing is low-hanging fruit. AMDR believes other subsets of the healthcare supply chain will seek participation and will begin to offer more circular product offerings.
Incentivize or require hospital reporting on emission reductions, goals, and focus specifically on the healthcare supply chain.
Given that researchers have found that 60 to 80% of the emissions coming from the health sector are Scope 3 related and result from the supply chain, AMDR urges federal regulatory authorities to focus hospital GHG reduction efforts on the supply chain itself. Setting benchmarks, goals and reporting requirements that can be amended over time will make dramatic impacts on GHG reductions and, we believe, in cost and waste reduction efforts as well, as evidenced by the reprocessing industry’s commitment to healthcare over the last two decades.
Fund and disseminate Life Cycle Assessment (LCA) studies and research on cost savings.
LCAs of healthcare products will better inform healthcare purchasers of the cradle-to-grave carbon emissions associated with disposable versus reusable or commercially reprocessable products. AMDR encourages funding for and use of these independent evaluations to assess supply chain vulnerabilities that may be associated with disposable medical equipment as compared to an alternative remanufactured/reprocessed product.
AMDR also encourages funding for research to evaluate cost comparisons, such as:
• Head-to-head prices for comparable disposable versus reusable or reprocessable products;
• Lifetime costs (or full life cycle or “cost per use”) of products;
• Disposal costs, incurred by health institutions, for the proper disposal of disposable equipment versus reusable or reprocessable version; and
• Assessments of how the lowering of supply chain costs associated with longer life cycle products may find savings that can be used to provide equitable, quality, and affordable care to underserved patient populations. We urge inquiry to investigate greater surgical intervention potential associated with cardiac ablation procedures, for example, if prices were lowered for the diagnostic medical devices. Further analysis could advise hospitals how savings from reprocessing could be used to offset the cost of additional environmental remediation efforts.
Collaborate to create federal guidance on “best practices.”
Identifying and sharing best practices will improve supply chain reliability, promoting products with preferential environmental outcomes, and lowering long-term cost. Suggestions include:
• Coordinate with group purchasing organizations (GPOs) or health plans to identify impediments for using more environmentally sustainable medical device options and advise on policies to help overcome roadblocks. Our members can also help to explain these barriers;
• Identify and highlight existing circular economy business models, including medical device reprocessing, to help address Scope 3 emissions in healthcare;
• Focus first on “wins” or easy-to-adopt supply chain “best practices” that will provide guidance to hospitals and health systems on reducing Scope 3 emissions; and
• For federally run or reimbursed health institutions, require participation in federally regulated reprocessing programs or other existing circular economy solutions, as a means of seizing “low hanging fruit,” and to begin to move institutions into greater adoption of circular business models.
Incentivize development of apps and other handheld tools to help hospitals calculate real-time emissions reductions.
AMDR is aware of numerous efforts to develop tools for hospitals to calculate supply chain waste reduction and/or greenhouse gas (GHG)-emission reduction. A perfect tool would calculate both. Involving federal authorities onto these projects will increase the likelihood of accurate and valuable tools. In the United States, HHS-OCCHE could incentivize use of these programs for hospitals.
Address “repair restriction” issues related to healthcare products.
Federal regulators and authorities could catalyze change that would reduce emissions significantly by taking the following measures:
• Investigate “forced obsolescence” practices used by some healthcare manufacturers to intentionally limit device use and require greater healthcare acquisitions and source consumption; and
• Prepare a report to healthcare purchasers so they may make more informed purchasing decisions and to allow healthcare delivery organizations to exert counterpressure to linear sales models placed upon them by the current industry.
Educate Hospital Supply Chain Purchasers on the Need to Use Reprocessed SUDs.
AMDR requests that regulatory authorities provide a resource webpage identifying which devices have been cleared for reprocessing, particularly focusing on devices for which there are threatened supply chain disruptions. Some manufacturers are reporting to customers that supply disruptions are likely to occur for devices with chips used in laparoscopic surgery and in the electrophysiology lab. We urge federal authorities to take specific action to alert hospitals to the additional supply option that exists by reprocessing.