This month's headlines

The view from Shawn Walker’s seat at the University of Phoenix stadium.

Vendor credentialing concerns mount. IMDA members are growing increasingly anxious about the cost associated with third-party credentialing.

Vendormate Q&A. Third-party credentialing firm Vendormate responds to IMDA Update’s questions.

It takes great sales and marketing to succeed. Small medical-device manufacturers don’t have to resign themselves to selling out to bigger companies, writes IMDA President Shawn Walker to medical editor.

Superbad Super Bowl. The trip to Phoenix for Super Bowl XLII turned out to be a bitter pill to swallow for Shawn Walker and family.

Hospital provides living lab for medical-device makers. Beaumont Hospitals’ “Technology Usability Center” offers manufacturers a living lab in which to talk about, develop and test their devices.
                                                                                                                                                         

When Bob Byers, president and CEO of Sylmar, Calif.-based Tri-anim, thinks about vendor credentialing, he thinks of driver’s licenses. If you had to pay (and pass a test for) a different driver’s license for every city, county and state in which you drove, you probably wouldn’t do much driving. Similarly, if every hospital or multihospital system demands that vendors be credentialed -- either by the hospital itself or by a third-party credentialing company, such as Vendormate, Reptrax, VendorClear or Status Blue -- pretty soon, vendors won’t be able to afford the tab.

Indeed, in December 2007, when the executive vice president of a major customer told Dave Campbell of Vital/Med Systems that his company needed to be credentialed through Vendormate, Campbell responded that Vital/Med Systems had already taken precautions to ensure that its surgical sales reps were well- trained and vaccinated, and hence would not register through Vendormate. Campbell further explained to the executive that if his company were to pay Vendormate $250 to be credentialed in each of the 300 facilities its reps call on, “the tab would be $75,000 per year for our family-owned business. Not affordable in the least!” (See accompanying article for comments by Vendormate regarding fees and other credentialing issues.)

So what’s an IMDA member to do when it receives the e-mail demanding that the company’s reps be credentialed or else lose the right to call on the hospital? That’s a question that IMDA members are wrestling with. Relief may come soon, when the Joint Commission, as expected, issues some suggested guidelines on the vendor credentialing issue. Still, many IMDA members worry that providers are plunging ahead on the credentialing issue without thinking through the ramifications, including the cost to the vendors who call on them.

Some approaches
“We’re in support of credentialing where it makes sense,” such as for reps who call on the OR, says Byers. “If the rep is going into surgery, there are certain things he or she needs to understand. It’s a matter of protecting the patient from infection. . .We ought to understand what the line on the floor [in the surgical suite, indicating a sterile area] is. Certainly, I would expect all of our people to know that.”

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But Byers questions the need to credential reps who do not call on the OR. “If every hospital demands that every salesperson [be credentialed], the cost of healthcare will go up, and the bad news is, it didn’t need to,” he says. He compares universal credentialing with setting up a stoplight in the middle of the desert: Perhaps two vehicles crossed paths on a sandy dune once, but to set up a permanent stoplight in the middle of the Sahara would be overkill. What’s more, Byers wonders why providers insist that sales reps be credentialed, but ignore visitors who walk the halls and patient-care areas, including the ICU and NICU.

Tri-anim is attempting to head off expensive and time-consuming “per-customer” credentialing by ensuring that its reps are credentialed internally “following the guidelines of what we think are the right things to do,” says Byers. In those cases where the company has been credentialed through a third-party company, it has presented those credentials to other facilities in the hope that they will accept that credentialing as well, rather than make Tri-anim go through a separate credentialing process -- at an additional cost -- for each hospital. The latter approach would inappropriate increase the cost of healthcare, he says..

Byers would welcome some kind of universal credential, recognized by all hospitals. He compares a universal credential to a driver’s license, which ensures that the driver meet certain requirements, and in turn gives him or her the right to operate a car anywhere in the United States.

Byers hopes to make his views known to the Joint Commission, which reportedly is preparing to issue suggested standards and guidelines soon. “My goal and objective is to try to get JCAHO, ultimately, to understand what is important and what’s not, and then to pick a direction on what makes sense. We have to do what’s in the best interest of healthcare, but we have to balance the cost vs. the potential outcome.”

Slow the train down
But IMDA members wonder if the hospital industry can settle on a universal credentialing system. Some fear the train will soon leave the station, if it hasn’t already. Indeed, with Amerinet (with 2,200 acute-care members) and Child Health Corporation of America (with 43 children’s hospitals) designating Vendormate as “the preferred vendor information management solution” for their members, their fears may be well-founded.

“What concerns me is that everyone is running forward too quickly,” says Campbell. “There’s a tendency to say, ‘Everybody is already doing it this way, so let’s just go on.’” Vital/Med has been credentialing its reps for years, he says. It’s a good, cost-effective solution that ensures patient safety, he says.

In the case of the multihospital system that instructed Vital/Med Systems to be credentialed through Vendormate, Campbell followed up his initial correspondence with the executive vice president by sending him a copy of a trade journal article discussing the questions and controversy surrounding the vendor-credentialing issue. It was, says Campbell, his way of telling the executive that the jury is still out on vendor credentialing.

Shawn Walker, partner in North Andover, Mass.-based Bay State Anesthesia, shares Campbell’s concerns about vendor credentialing, particularly the third-party credentialing movement. “We had one account say, ‘Don’t worry, it will cost you between $50 and $250, depending on the volume of business you do with us,’” says Walker. “We figured, we’re not Johnson & Johnson or Owens & Minor, so we’ll be at the low end.” To Walker’s dismay, her company was not.

The experience led Bay State to “try to get our customers to back down out of the tree they’re in,” says Walker. “We’re talking to them, telling them that this is on JCAHO’s radar screen, and that they will be coming out with a field report this year. Once we all know what it says, we can react to it.”

The IMCA Annual Conference committee is exploring a panel on the vendor-credentialing issue for the upcoming Management Conference in suburban Chicago in June.

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Founded in February 2005, Atlanta, Ga.-based Vendormate isn’t the only third-party vendor credentialing firm, but it is creating a buzz among hospitals, given its designated status as “preferred vendor information management solution” by Amerinet and Child Health Corporation of America. Recently, IMDA Update submitted a list of questions to Vendormate. Here is an edited version of its responses.

IMDA Update: How many hospitals use your services?

Vendormate: More than 200 hospitals are currently under contract for our services.

IMDA Update: My understanding is that the vendor’s fee per rep can range anywhere from $25 to $250. Is that correct? If so, can you explain the reason for the wide range?

That’s not correct. It’s important to understand that Vendormate is a vendor information management solution that provides vendor credentialing and monitoring service. The fee isn’t driven by the individual representative, rather, it is driven by the risk that the vendor poses for the hospital. Different vendors pose different levels of risk. The low end of the range is for vendors who are not currently under contract, but want to proactively show their commitment and acknowledgement of the hospital's policies and data requirements, and for the vendors who provide limited services and do not come into contact with patients or patient data. The higher end is for the vendors who have a greater impact on the hospital -- the vendors who represent the higher end of the hospital contract spend and the vendors who come into contact with patients and patient data. Each hospital creates its own risk profile for its vendor base.

IMDA Update: I understand, then, that Vendormate charges one fee per vendor per hospital customer, not one fee per rep. Given that, does your fee range from $25 to $250 per vendor per hospital, as I have heard?

Vendormate: That range is accurate. Also, the fee is not necessarily per hospital. Many health systems have multiple hospitals, which would be covered under one registration fee.

IMDA Update: Your website indicates that Vendormate checks the vendor company and its management team, not just the sales reps who call on the hospital. Is there an additional fee for conducting checks on vendors’ management teams?

Vendormate: Vendormate uniquely reviews the individual representative, the vendor entity, and the vendor management, all within the first registration fee. Payment is linked to the business entity. Once a business entity has registered at a hospital through Vendormate, all subsequent representatives from that vendor can register at that hospital for no additional charge.

IMDA Update: When you say “first registration fee,” are you referring to the first annual fee that the vendor pays for credentialing, or is there an additional registration fee on top of the first annual fee?

Vendormate: There is only a single, annual registration fee per vendor entity/company per health system. Vendor management team checks are included.

IMDA Update: You have pointed out that Vendormate regularly reviews the vendor’s legal status, financial health and general business information. Two questions about this: First, if the hospital does not require regular review of these things, is the fee to the vendor lower?

Vendormate: If a health system requires fewer checks, then the vendor is categorized as a lower risk profile, and the registration cost is lower.

IMDA Update: Second, Vendormate says that the vendor’s financial status is verified by third party data aggregators. What kinds of companies are these?

Vendormate: [Companies] such as Dun & Bradstreet, Lexis/Nexis, Equifax, etc., for both public and private companies.

IMDA Update: Referring back to the question about the registration fee for credentialing the vendor’s management team, is this a one-time fee, or is it part of the annual fee?

Vendormate: Throughout the year, Vendormate re-checks the representative, entity, and management for changes in status. For example, as the government releases updated watch lists, Vendormate rechecks all of its customer hospitals’ registered vendors to ensure no change in exposure. In addition, Vendormate regularly reviews the legal status, financial health, and general business information of registered vendors, as well as monitoring the expirations of representative certifications.

Vendormate customizes the exact checks performed and policies presented at each hospital's request. Vendormate updates all vendor representatives registered with a customer hospital when that hospital changes a policy or requirement.

Because of this regular monitoring, review, and notification, the fees are annual.

IMDA Update: Your website mentions that Vendormate charges a one-time consulting fee to the hospital. What is that fee?

Vendormate: Customers engage Vendormate consulting services for a wide variety of projects. Projects range from [Office of Inspector General] screening for immediate compliance, to process design and engineering. The fee varies by hospital based on how unique the hospital requirements are. Hospitals do not receive any portion of the vendor registration fees.

IMDA Update: In a press released dated Dec. 18, 2007, Vendormate says the following: “[F]or every vendor company a hospital uses, more than 30 records must be checked or documented for compliance with a variety of government regulations and medical guidelines.” Can you explain some of the 30 records that must be checked or documented for each vendor, and the degree to which Vendormate independently verifies the information.

Vendormate: Hospitals are concerned about their vendor partners on many fronts. At the basic level, hospitals need to be assured that the vendor will be able to provide the service or products contracted. So, hospitals want to verify the vendors’ financial viability and legal status. In addition, hospitals are mandated not to work with sanctioned businesses. Finally, hospitals create their unique policies and requirements based on their own ethics, patient care guidelines (e.g., CDC, AORN), or other business guidelines. The result is that some of the records checked include:

• Business data: Type of business, founding year, number of employees, headquarter country. Verified by Secretary of State filings, third-party data aggregators.
• Financial status: Revenues, credit score. Verified by third-party data aggregators
• Legal alerts: Bankruptcies, derogatory UCCs, number and value of loans. Verified by third-party data aggregators.
• Watchlists: U.S. Treasury Office of Foreign Assets Control (OFAC), Office of the Inspector General (OIG), Drug Enforcement Administration (DEA), Food and Drug Administration (FDA), Federal Register, etc. Checked by Vendormate.
• Diversity ownership: Various.
• Hospital-specific policies and certifications: Immunizations, HIPAA training, etc.

Vendormate independently verifies selected records, particularly those unique to a hospital. For example, Vendormate visually reviews document images uploaded in order to meet immunization or other certification requirements.

IMDA Update: Can you explain your agreements with Amerinet and Child Health Corporation of America? Your press release of Jan 15, 2008, describes them as “distribution partners.”

Vendormate: Vendormate has been identified by Amerinet and CHCA as the preferred vendor information management solution for their member hospitals. Member hospitals still make the decision that is right for them.

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Small medical-device manufacturers don’t have to resign themselves to selling out to bigger companies. They can compete and succeed, and one way to do so is to outsource sales and marketing to specialty distributors. That’s the message that IMDA President Shawn Walker of Bay State Anesthesia conveyed to the editors of Medical Device & Diagnostic Industry (www.devicelink.com) in response to a recent editorial, “It Takes More Than a Great Product to Succeed. (To see the editorial, go to (http://www.devicelink.com/mddi/archive/08/01/001.html).

MDDI Editor Erik Swain reported on a healthcare conference sponsored in December by RBC Capital Markets. At the conference, speakers representing mid-sized medical device companies said that their strategy is to position themselves somewhere between the giants and the small companies. This way, they avoid encroaching onto the turf of the big guys (and getting stomped on) while avoiding the pitfalls that face the smallest companies, including the hassle and expense of hiring a direct sales force.

What interested Walker was a comment attributed to Howard Root, CEO of Vascular Solutions Inc., Minneapolis, who was quoted as saying “[S]mall companies have a harder time getting a direct sales force. Just getting onto the vendor list of a hospital can be a year-long process. So we’ve seen small companies that sell smaller products fall away, and that has left a big open space for us.”

Walker’s letter
 

FDA news View a list of all medical devices receiving FDA marketing clearance in January by visiting the FDA website at: http://www.fda.gov/cdrh/510k/sumjan08.html. You might find a company in need of your expertise.

Hoping to reach not only the ears of MDDI editors, but also those of small-medical-company executives around the country, Walker penned the following Letter to the Editor. (At press time, it was unknown whether the magazine would publish it.) This is what Walker wrote:

I couldn’t agree more with the headline of your January 2008 editorial, “It Takes More Than a Great Product to Succeed.” In my mind, success depends not only great technology, but on great sales and marketing. That’s because most truly innovative technology demands plenty of “missionary work” in the field in order to build customer recognition and acceptance. I agree with Mr. Root of Vascular Solutions, who, in your editorial, points out the difficulty that small companies face in putting a direct sales force on the street. However, it’s not an impossible task -- if small companies are willing to outsource their sales and marketing. That’s where specialty sales and marketing companies like mine fit in. We’re the outsourced sales arm of new-technology companies.

I am president of IMDA, which is the association for specialty sales and marketing companies. (We prefer the term “specialty sales and marketing companies” rather than “specialty distributors” because we feel that it more accurately and fully describes what we do.) Our members are in the business of creating markets for new-technology companies. We like to say that we are building markets for technologies that will become tomorrow’s standard of care. Well-established companies such as Arrow International, Augustine Medical, Ballard Medical, Howmedica, Nellcor, Pall Corp. and St. Jude Medical got started using specialty sales and marketing companies.

They did it for a number of reasons. First, they couldn’t afford a full-time sales force. Second, they couldn’t attract the attention of big, general-line distributors, many of which offer superb logistical support, but which are short on strong selling skills. Third, and most important, they knew that our members have technically sophisticated salespeople who have longstanding relationships with clinicians and other decision-makers in hospitals in the United States and Canada. It’s that combination of technical knowledge and credibility in the hospital that allows us to introduce new technology rapidly into the healthcare community.

Forgive me for sounding like an advertisement. It’s just that there is a whole world out there -- specialty sales and marketing companies -- that many in the healthcare community don’t know much about. We’ll never be able to compete with multibillion-dollar general-line distributors. That’s why we stay away from commodities. But we can compete -- and excel -- in the business of bringing new technologies to market. It’s our niche.

Thanks.

Shawn Walker
Partner
Bay State Anesthesia
North Andover, Mass.

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IMDA members from such cities as Cleveland, Cincinnati and Kansas City -- whose teams haven’t brought home a Super Bowl trophy for years, or decades, or ever -- may shed few tears for Shawn Walker. That said, Walker’s account of her family’s trip to Arizona earlier this month for Super Bowl XLII should elicit sympathy from even the hardest-hearted specialty sales and marketing professionals, if not for Walker herself (who has witnessed first-hand the New England Patriots win three Super Bowls since 2002), then at least for Calvin, her seven-and-a-half-year-old son.

IMDA President Walker is a partner in Bay State Anesthesia in North Andover, Mass., located about 53 miles from the Patriots’ Gillette Stadium in Foxborough. Her father has been a season ticketholder for years. When current owner Bob Kraft purchased the team in 1994 -- promising to bring New England a Super Bowl championship -- he replaced bare-bones Foxboro Stadium with Gillette. Ticketholders were given the option to pay a bit extra per year for seats in the club section. With that came a parking place next to the stadium, cupholders with the ticketholders’ names on it, access to good restaurants, and an opportunity get Super Bowl tickets. Hence, Walker’s periodic forays to the Super Bowl.

This year, Walker, her husband, Scott, and their son, Calvin, traveled to Arizona with her dad and other family members (her mom would have been there had it not been for the knee replacement she had undergone some time earlier). Their expectations were high. After all, the Patriots had gone undefeated 16-0 in regular season play, and had won two playoff games. And with the New York Giants 12-to-14-point underdogs, there was every reason to believe the trip would be celebratory and history-making. Indeed, the celebrations began on the trip down on Wednesday. “There were two Giants’ fans on the plane,” recalls Walker. “The rest were Patriots’ fans. They ran out of beer two hours into the flight, if that tells you anything.”

The weather in Arizona wasn’t the greatest in the days leading up to Sunday night’s game -- a bit chilly. But the Walkers made the best of it, hanging out at the “NFL Experience” exhibit and interactive theme park outside the University of Phoenix stadium. Despite the traditional New York-Boston sports rivalry, fans from the two teams got along rather well all week, she notes.

Game day was about 60 and overcast. Because of the threat of rain, NFL officials ordered the dome closed. The Walkers were seated 33 rows back in Section 115, which is one of the slices of pie between the end zone and the sidelines. Nearby were various celebrities, including the actor David Arquette and one of the members of hip-hop duo Outkast.

Before the storm. The Walker entourage picks up tickets at the Westin a couple of days before the game.

Game time
All was well and spirits high during pregame festivities. The Walkers had refrained from buying any “New England Patriots: 2008 AFC Champions,” opting instead to wait until after the game, when they could purchase “New England Patriots: Super Bowl LXII Champions.” As they listened to Alicia Keys perform before the game, there was no reason to believe there wouldn’t be a happy outcome to the story…until the game started.

“One thing I observed about the Patriots this year, was that they either come out strong and score on the first drive, or they struggle,” she says. “And that’s what happened. You’re like, ‘Oh my God, it’s going to be one of those games.’” End of first quarter: Giants 3, Patriots 0.

By the end of the first half, the Patriots were leading, though barely, by a score of 7-3. “We’re watching Brady get hit. He doesn’t even see it coming. We’re missing all kinds of opportunities to score. Around half time, we’re all just kind of coming to the realization that we could have a big problem here.”

But the New England faithful were not about to give up hope. Coach Bill Belichick is known for giving his players a heaping of kickass during half time, after which they come out blazing, says Walker. But the Giants weren’t responding to anyone’s kickass but their own on Super Bowl Sunday. End of the third quarter: Still 7-3.

Walker remained optimistic. “In every Super Bowl I’ve seen them in -- except the Packers in New Orleans [in 1997] -- it always comes down to the last three minutes. It’s never ever, ‘We’re set.’” With 11:05 left in the game, Giants’ quarterback Eli Manning threw a five-yard touchdown pass to David Tyree, making the score 10-7 Giants. But eight minutes later, Brady connected with Randy Moss for a touchdown. 14-10 New England with 2:42 left. Would the three-minute rule apply to this game?

No. With 59 seconds left, Manning evaded a sack and threw a 33-yard pass to Tyree, who pinned the ball on his helmet with one hand. Then, with 35 seconds left, Manning connected with Plaxico Burress -- who had, outrageously, predicted a Giants’ victory earlier in the week -- for a 25-yard touchdown pass. Game over. If there was one consolation for Walker, it was that the deadly pass was completed in the far end zone.

“We were stunned,” she says. “Kids were sobbing.” She had run into Patriots’ fans who had taken out home equity loans to finance tickets and the trip to Arizona, to catch a glimpse of history and perfection. “We went back to the hotel, watched a little post-game stuff, but we had been watching football all weekend, and we couldn’t bring ourselves to watch any more.”

The mood in New England the following Tuesday was far different from that of the plane going to Phoenix the preceding Wednesday. “Nobody was talking about it,” recalls Walker. “They weren’t talking about it on talk radio. Everybody had gone into mourning. Thankfully. We didn’t want to hear any more about it. It was awful to be there. Awful.

“But you move on. There’s next year. I hope Brady is OK, and that they re-sign Randy Moss. I don’t know what Bill Belichick is going to do.”

She adds wistfully, “It would have been nice to see the team win the Super Bowl.” 

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Struck with a great idea for a new medical device, manufacturers sometimes have difficulty testing it out with clinicians before committing huge amounts of time, money and resources developing it. That’s particularly true for start-up companies, which lack the resources and contacts that a large manufacturer can conjure up. Recognizing this unmet need, one hospital system has set up a “Technology Usability Center” to offer manufacturers a living lab in which to talk about, develop and test their devices. And it is stepping up its efforts in 2008. Assisting Detroit-based Beaumont Hospitals in the endeavor is Vector Resources, the Midvale, Utah-based marketing firm founded by frequent IMDA speakers Rick and Chris Davies.

“From clinical input on early concept evaluations, prototype design and usability engineering to fast tracking IRB/IDE [Institutional Review Board/investigational device exemption] clearances, clinical evaluations and trials or to better understand clinical reaction to competitive products, we are expanding our services in 2008 to be more comprehensive than ever,” said Steve Ebben, Beaumont Technology Usability Center vice president of sales and marketing.

The Technology Usability Center is said to provide device companies with easy access to clinicians and clinical settings in more than 40 medical specialties, including acute-care hospitals, Level I Trauma Center, nursing homes, home care, community clinics and a fully accredited virtual operating room/learning center. For 2008, the Center is expanding its services to include increased prototyping and design services, regulatory approval management, concept development support, and intellectual property development services.

IMDA members who wish to pass on information to their manufacturers about the Usability Center should refer them to its website at www.beaumontusability.com.

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IMDA Update Published by IMDA 5204 Fairmount Ave., Downers Grove, IL 60515 Phone:  (630) 655-9280 (866) IMDA-YES (866-463-2937) Fax: (630) 493-0798 Website:  www.imda.org E-mail:  imda@imda.org   Staff Katie Swartz: Executive Director Judy Keel: Executive Vice President Patti Perillo:  Database & Finance Admin. Mary Moran:  Chief Financial Officer Mark Thill, Editor (847) 255-0716 Laura Thill, Associate Editor (847) 255-4854 Mitchell Kramer, Legal Counsel (800) 451-7466   2007-2008 Directors President Shawn Walker, Bay State Anesthesia (978) 682-6321 President-Elect Kevin Trout, Grandview Medical Resources (412) 914-0950 Secretary/Treasurer Leo Mindick, Med-Tech Consultant Partners, LLC (516) 708-1111 Chairman of the Board Dave Campbell, Vital/Med Systems (303) 660-0888 Directors-at-Large Hal Freehling, O.E. Meyer (419) 609-1633 Tom Birmingham, Bay State Anesthesia (978) 682-6321 Tony Marmo, Martab Medical (201) 512-1100 Past-President Ed Boracchia, Boracchia + Associates (707) 765-3100 Manufacturer Representative to Board Rick Pfahl, Bovie Aaron Medical (727) 384-2323 The ideas presented in this newsletter may or may not be applicable to your particular situation.  Always consult your tax advisor, attorney or CPA before putting them into effect.