“If medical companies want to continue to make money as prices face continued pressure , their only option is to take cost out.’’ This comment is from the head of procurement of a major UK healthcare provider.
Everywhere in the world, there is a serious effort to contain healthcare costs. This has had the effect of rewiring the system. Yes, outcome based or value based reimbursement is increasingly the normal expectation, but so are lower unit costs – and an early appreciation of this at the design stage will help you stay ahead of the curve.
We get excited, and rightly so, when an innovative product looks to provides a step change improvement in, for example, the treatment of acute conditions, patient care and quality of life. But even for these, just as for those within the more mundane ‘me too’ product category, the pressure is on against shrinking reimbursement levels, and to meet those increasingly imposed cost constraints head on. Furthermore, if you are not planning for reimbursement for your medical device you may well experience a very low price for it.
The following is intended to be helpful to entrepreneurs, inventors or ‘ start ups’ by showing which solution philosophies could, and indeed should, be applied at the concept design stage of any product to help ensure initial and lasting commercial viability within the changing economies of the healthcare environment. Design out cost and you will be in a strong position to attain reduced selling prices year on year. Especially poignant if the terms of any supply contract dictate this!
So let’s talk about Design for Manufacture (DFM) and its closely associated sister methodology Concurrent Engineering ( CE).
DFM normally applies to the initial design of a new product where a methodology is followed to ensure that the product (a) is easy to manufacture at an economic cost, (b) is built to the required quality and (c) can achieve the required reliability. In other words, it is the process of proactively designing products to optimise all the manufacturing functions. Don’t reinvent the wheel by insisting on design elements that are off the well-beaten manufacturing path if you don’t really need to. Consideration for DFM requires early stage input from experienced manufacturing experts using principles of standardisation. These experts will have a strong knowledge of existing manufacturing techniques and convention, in order to help you to realise a viable design at the right cost.
If your design is so ground breaking that existing manufacturing techniques and methodologies are simply incapable of producing to a required cost then CE can be employed. Concurrent Engineering is the practise of concurrently developing products and their manufacturing processes.
In one of my earlier roles as a production engineer, the company suffered the infamous ‘silo’ mentality where design engineers worked alone or only in the company of other design engineers. Designs were then thrown ‘over the fence’ leaving manufacturing people with the dilemma of objecting (when it’s too late to change the design!) or struggling to launch a product that was not designed for manufacturability. This, at least on one occasion, delayed the product launch, increased the manufacturing cost and prevented any ability to ramp up to volume manufacture in order to gain cost reduction through economies of scale and automation.
To summarise, please build one of the following in to your design commercialisation aspirations.
- If existing processes are to be utilised, then the product must be designed for these processes.
- If new processes are to be utilised, then the product and the process must be developed concurrently.