This month's headlines

The Hyatt Lodge, site of the 2008 IMDA Annual Conference

Vendor credentialing panel set for Annual Conference. At press time, REPtrax and the University of Chicago Hospitals had agreed to participate.

Members look at options. Faced with requests from customers that their reps be credentialed by third-party firms, IMDA members respond in different ways.

MicroMed LLC is IMDA's newest member. When Rick Dodson worked for a medical service company, he had a feeling he could do things better.

Manufacturers Partnership Award nominations sought. Do you have a manufacturer whom you really like to work with? A company that works with you to get things done? A company that acts as a partner rather than an adversary? A company you'd like to see recognized at the upcoming Annual Conference in June?

Manufacturer's lawsuit has lessons for IMDA members. The story of two manufacturers of cardiovascular devices fighting over sales reps and non-disclosure agreements in the Twin Cities has some lessons for IMDA members.
                                                                                                                                                         

Vendor credentialing panel set for Annual Conference.

IMDA Announcement 2008 Annual Conference & Manufacturers Forum June 8-10, 2008 The Hyatt Lodge Oak Brook, Ill. (Just 20 miles west of The Bean in Millennium Park.) Book it!

A panel during IMDA's upcoming Annual Conference will address vendor credentialing. At press time, REPtrax (a third-party vendor credentialing company) and the University of Chicago Hospitals had agreed to sit on the panel. IMDA Executive Director Katie Swartz was attempting to secure a speaker from the Joint Commission, which was expected to issue suggested guidelines for hospitals. The panel will be on Monday afternoon, June 9.

“Our members are extremely concerned about this issue,” says Shawn Walker, IMDA president. “This panel is a chance to hear multiple perspectives, and to try to move the industry closer to a resolution that can meet hospitals' needs as well as those of vendors -- at an affordable cost.”

The Annual Conference will kick off on Sunday afternoon, June 8, with a welcome session, followed by the Manufacturers Forum. Dinner is on your own Sunday night. On Monday morning, Scott Fanning, the dynamic founder of 95% Share Marketing -- and former vice president of marketing for Midmark Corp. -- will lend his enthusiasm, and sales and marketing expertise to the proceedings. (To get a taste of 95% Share's offerings, visit the Website at www.95share.com.) 

A panel on the future of medical device marketing will be held Tuesday. Interspersed throughout the formal sessions will be breakout sessions, giving IMDA members valuable opportunities to share ideas and opportunities with each other.

The Manufacturers Forum will be open Sunday evening, and throughout the day on Monday (as well as Monday evening). It is the industry's only venue in which specialty sales and marketing companies meet with manufacturers of innovative products. The Annual Awards dinner will be held Monday evening. The Manufacturer's Partnership Award will be presented at that time.

This year's Annual Conference will be held at the Hyatt Lodge at McDonald's Campus (www.thelodge.hyatt.com) in Oak Brook, Ill., a western Chicago suburb. The lodge is located about 20 miles from Downtown and 15 miles from O'Hare International Airport. Midway Airport is easily accessible as well. Exact times for the sessions were still being hammered out at press time. Watch your e-mail and the IMDA Website for more details.

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As the industry waits…and waits for the Joint Commission to issue suggested guidelines for vendor credentialing, hospitals are making decisions about which third-party vendor credentialing firm to subscribe to. (Some, such as Henry Ford Hospital in Detroit, have constructed their own programs. See January 2007 IMDA Update.) But the decisions they're making are upsetting some IMDA members, who are considering their own options.

At least one third-party credentialing company -- Vendormate -- charges vendors calling on the OR and other critical patient-care areas as much as $250 per hospital or hospital system. (See February 2008 IMDA Update.) As reported last month, Dave Campbell of Vital/Med Systems, Centennial, Colo. resisted one customer's mandate that Vital/Med reps be credentialed through Vendormate. In a letter to the customer's executive vice president, Campbell explained that were he to pay the company $250 for each of the roughly 300 facilities his reps call on, his annual tab would be $75,000. “Not affordable in the least!” Campbell wrote.

Faced with a similar request, another IMDA member -- who wished to remain anonymous -- is contemplating a strategy of his own. “One avenue we will pursue is to inform the hospital that since they are making this registration mandatory in order to do business at their facility, they leave us no choice but to implement a processing fee for each invoice to pay for this added cost,” he said.

Meanwhile, IMDA's task force on the vendor credentialing issue met via teleconference on Tuesday, March 18, to discuss potential strategies. The task force endorsed a panel on the subject at the upcoming Annual Conference. In addition, its members agreed to craft a letter to the Joint Commission, voicing potential solutions to the issue.

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When Rick Dodson worked for a medical service company, he had a feeling he could do things better. So he and three others -- two of whom had been with him in the business -- decided to give it a try. In March 2006 they started MicroMed LLC, an Indianapolis, Ind.-based company that markets endoscopy equipment and service. MicroMed is IMDA's newest member.

Dodson was born and raised just west of Indianapolis. He graduated from Purdue University with a degree in industrial engineering, and for seven years was a plant manager for a plastic injection molding company. (“After dealing with executives from companies like Sherwin Williams and ICI Paints, dealing with doctors is no big deal for me,” he says.) Looking for a change, he and his wife moved from South Bend, Ind., to Indianapolis, where he began working for the medical service company. He spent two years with the firm.

“We saw we could do things better, and we knew the customers would appreciate somebody doing it the right way,” he says. “And we've been a success story since Day 1.”

Operating out of a 5,000-square-foot facility, MicroMed is a regional OEM repair center for Fujinon, and a third-party-service provider for Olympus and Pentax. The company also services printers, monitors, surgical equipment, instruments, pneumatic and electric handpieces, endoscopy cameras, rigid endoscopes and other equipment. In addition, MicroMed markets scopes, electrosurgical and smoke-evacuation equipment, and other devices, primarily as a manufacturer's rep.

When asked about the good, bad and ugly aspects of being a service provider, Dodson responds that on the upside, hospitals are always breaking equipment and will always need service. But on the downside, service is a very competitive business. Still, he is optimistic about his company's future. And he hopes IMDA will be part of it. Introduced to the association by IMDA board member Mack Johnson of Axium Medical Group, Dodson looks forward to taking advantage of its offerings. For example, he's hopeful that IMDA can finalize an affordable product-liability insurance package.

Welcome Rick Dodson to IMDA by calling him at (317) 872-8709 or e-mailing him. MicroMed's Website is www.micromedllc.com.

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Do you have a manufacturer whom you really like to work with? A company that works with you to get things done? A company that acts as a partner rather than an adversary? A company you'd like to see recognized at the upcoming Annual Conference in June?

FDA news View a list of all medical devices receiving FDA marketing clearance in February by visiting the FDA Website at. http://www.fda.gov/cdrh/510k/sumfeb08.html. You might find a company in need of your expertise.

Then take a moment right now to nominate a manufacturer for the IMDA Manufacturers Partnership Award. The Award, which was introduced last year (Vidacare was the recipient), recognizes a manufacturer that:

• Offers exceptional clinical and sales support.

• Communicates frequently and openly with its specialty distributor or rep partners.
• Responds promptly to questions, suggestions or problems.
• Aggressively and creatively markets its products through such vehicles as advertising, trade shows, promotions or direct mail.
• Actively contributes to helping the IMDA member increase revenues on the product line.

Do you work with such a manufacturer? Would you like to see that company publicly recognized at the upcoming Annual Conference and Manufacturers Forum in June in Oak Brook, Ill.? Then take the time to submit a nomination. Go to the IMDA Website (www.imda.org), then click on “Nominations due May 2nd for the 2008 Manufacturers Partnership Award” under “What's New” on the home page. (Limit one nomination per IMDA member company.)

Take the time to recognize outstanding performance.

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The story of two manufacturers of cardiovascular devices fighting over sales reps and non-disclosure agreements in the Twin Cities has some lessons for IMDA members.

ev3 of Plymouth, Minn., sued a rival, Cardiovascular Systems Inc., of St. Paul, Minn., alleging that CSI had raided its sales force and was benefiting from confidential information that the reps acquired from their work for ev3, according to a report in the Pioneer Press. CSI argues that the former workers had no non-compete provisions in their contracts and so are free to work for the company.

According to the newspaper report, a Ramsey County judge in January issued a temporary restraining order preventing former ev3 employees (who were subject to nondisclosure requirements in the employment agreements) from using confidential information from their previous employer while on the job for CSI. But the order stopped short of barring the workers from working at CSI, as ev3 had requested.

Lessons for IMDA members

There are several lessons for IMDA members in the ev3/CSI story, says Mitchell Kramer, of Kramer and Kramer, Rydal, Penn., and IMDA legal counsel. First, IMDA members should not be surprised when major market players file suit against new entrants. In some cases, major players file lawsuits to impede the new company's entrance into the market or to harm its ability to compete due to the expense of defending a lawsuit, he says. In extreme cases, the incumbent may use lawsuits to try to drive the new entrant out of the market entirely. In this case, ev3 used the confidentiality portion of its former reps' employment agreements as the basis for its suit.

The second lesson is this: While IMDA members seldom get raided by other specialty distributors, they may -- and do -- get raided by manufacturers that are about to terminate them and go direct. There's only one way to prevent that, says Kramer: Have your salespeople sign carefully drafted non-compete agreements. Such agreements must specify that for a given period of time, the rep cannot go to work for a company that the IMDA member has represented. That's superior to an agreement that forbids the rep from working for a manufacturer that the IMDA member represents at the time the employee leaves. (Under such an agreement, a manufacturer that cuts off an IMDA member would be free to hire the distributor's reps the day after it cuts off the distributor.) All bets are off in California, whose statutes make it all but impossible to make non-compete agreements stick.

Lesson 3 is this: Be careful when you hire new sales reps. Establish whether they are bound by a non-compete or confidentiality agreement. If they are, study its provisions carefully. Depending on how it reads, you may be able to place the new rep in a different territory than the one he or she worked prior to switching companies.

“Non-competes are very, very tricky,” warns Kramer. Each state is different. And each judge hearing a case is different too. That said, non-competes generally stand up if they 1) do not bind the rep for an unreasonable length of time, 2) allow him or her to operate in a reasonable geography, and 3) in general, allow the rep to earn a living. Still, IMDA members hiring a rep with a non-compete should think long and hard whether he or she is worth the cost of the potential litigation that might ensue. “Unless the person is really outstanding and can really bring in business, is it worth fighting that battle?” asks Kramer.

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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.