By Al Brander, CSO
We speak to large healthcare systems all the time about their policy for managing medical device warranty credits after an explant procedure has taken place.
Managing these credits is a laborious process. The end-to-end procedure requires precise coordination between up to seven different departments and as a result, it often fails. Through our work over the past decade, we have observed that mismanaging a warranty credit costs your healthcare facility over $50,000 – per each mismanaged warranty credit. The costs scale up very quickly, creating a material impact to your bottom line.
One of the major breakdowns we see in the process is when the hospital allows the sales rep to take possession of the medical device and return it. We hear from clients all the time that this is a common procedure.
The Office of Inspector General – in their 2016 and 2020 audits of this process at over 1000+ hospitals –reported in their findings, that “critical gaps resulted” whenever hospitals relied on Manufacture Device Reps to manage the explant return and/or the warranty credit process.
It is important to keep in mind that the explanting hospital will be fined and penalized for noncompliance, and not the manufacturer reps.
As part of our ongoing research, we spoke with a TOP 3 Medical Device supplier and asked them for a little clarity on their role in managing warranty credits and physical product returns. Take a look at the following, in their own words:
…as far as the rep not assisting in the return, while a rep may assist with portions of completing the warranty form or the return paperwork and help box the product up, it is ultimately the responsibility of the hospital to complete these warranty requirements. A rep also may never take possession of the product or mail it for them.