Processing low-cost, high-volume medical devices for reuse reduces the amount of medical equipment waste going to landfills. But that’s just a side effect of the work of Birmingham, Ala.-based Hygia Health Services. The primary benefit is the cost savings to hospitals and other health-care institutions that contract with Hygia for recovery and redelivery of eligible devices, such as pulse oximeter probes, blood pressure cuffs, anesthesia and respiratory devices, and other equipment formerly considered disposable. Some of Hygia’s clients can save $500,000 a year or more by recycling such noninvasive medical devices, according to Hygia CEO Scott Comas, who founded the company with his wife, Tracy.
Tracy, who worked for a medical sales firm, saw the potential for healthcare institutions to save money by outsourcing equipment reprocessing. Although hospitals saw the value of reprocessing costly major equipment, they had been throwing away smaller items labeled as disposable. In 1999, the Comases conducted research at a University of Alabama at Birmingham (UAB) medical laboratory, identified a need for reprocessing former throwaway equipment, put together a team and found a group of investors. Then, they became clients at the Office for the Advancement of Developing Industries (OADI) Technology Center at UAB. Incubator staff focused on connecting the company with investors and with potential clients and helped the company gain media attention.
By the time Hygia graduated from the incubator in 2003, the company’s sales reached $1.7 million, up from just $30,000 in 1999. This growth was especially impressive considering the unexpected challenges the company faced during that time. About 18 months after the company started, the U.S. Food and Drug Administration (FDA) determined that reprocessing medical equipment was similar to manufacturing it and began regulating the industry.
The increase in operating expenses resulting from FDA regulation placed a significant burden on Hygia, requiring the company to pursue additional funding. "We were fortunate to secure a couple of accounts that helped offset [the costs], and we went outside and privately raised some additional capital," Comas says. With the additional funds, Hygia hired an FDA compliance director and related staff to comply with the new regulations. Their efforts paid off when Hygia became one of the first companies in the field to win FDA approval.
Comas says FDA industry regulation has benefited Hygia in two ways. First, it winnowed the field of about 20 providers in half; second, it helped convince hospitals that reprocessing was an acceptable practice. "It gives our industry a sense of credibility that did not exist prior," he says. This newfound credibility gave Hygia — named for the Greek goddess of health — the impetus to go after national contracts. However, group-purchasing organizations, which make purchases for large hospital chains, were hesitant to hire a small regional company for their national clients. "We had to convince those groups that our service plans allowed us to do business with them regardless of geography," Comas says.
Hygia hires an employee in each city where its customers operate. These on-site employees perform customer service and recover used medical devices. They then ship the devices to Hygia’s Birmingham facility to be cleaned and disinfected using a new application of an old process — pasteurization. Once a hospital’s recovery system is well established, the Hygia staff person can serve and solicit additional accounts in his or her area. Hygia currently has clients across the United States, and recently reached an agreement with a buying group that represents 90 research hospitals.
Hygia staff face an ongoing challenge of convincing hospital employees to use their collection containers — rather than trash cans — for used medical devices. But with the help of Computer Technology Solutions (CTS), an OADI Technology Center client, Hygia is encouraging more participation. Hygia’s proprietary customer management software system, developed by CTS, helps the company monitor participation at each site. Hygia then provides awards — such as catered lunches — to hospital units that increase participation by the highest margin.
Thanks to the support of OADI Technology Center staff and clients, the dedication of Hygia employees, and a relatively untapped market niche, Hygia eventually outgrew the incubator. At its new location in Birmingham’s Oxmoor Technology Park, the company occupies about 15,000 square feet of space, up from 3,500 square feet in the incubator. "We were impressed with how they’ve grown the company," says Susan Matlock, OADI Technology Center executive director. "They have a strong reputation among their client base, great employees and a great team."
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