Can you afford to aim for average? The cost of change in the med-tech industry

By Riccardo Consonni

John F. Kennedy once said, “There are risks and costs to action. But they are far less than the long-range risks of comfortable inaction.” It is an appropriate concept for the state of the medical device manufacturing industry, where the risks of poor change management of any particular manufacturer are great from a business perspective, but even greater for the healthcare industry they serve.

In a recent survey conducted by analyst firm Axendia, a group of medical device manufacturers were asked about the characteristics of their change management processes and systems. The group was divided into two categories – one group who reported that their change and configuration process was “closed-loop,” meaning their system depends on input and feedback elements that start with R&D/Ideation, support manufacturing operations and include post-market surveillance/obsolescence. The other group reported they had “open-loop systems,” without connections across the different functions of the product lifecycle.

Let’s consider the financial impact of change and configuration management decisions. Surprisingly, most companies are not able to clearly quantify the financial impact of potential product changes.
When medical devices manufacturers were split into the closed-loop and open-loop groups, a dramatic difference surfaced. Most of the closed-loop manufacturers said their ability to assess the financial impact of change was above average. Only a few of the open-loop group reported their financial assessment ability was above average.

So why should you worry if you are among the average majority? Because understanding what the costs of change are for your organization will become increasingly critical as healthcare models shift from fee-for-service to outcome-based models. If the economics of change has not yet pushed you to create efficiencies with closed-loop systems, they will soon. The new healthcare model will reward providers for keeping patients healthy, reducing hospital admissions and length of stay.

So, can you really afford the risk associated with continuing to operate using open-loop systems, that comfortable inaction that puts you in the average majority? Probably not. And definitely not if your peers are seeing what’s coming, and taking action now.

See what your peers are doing, what the benchmarks are, and what the costs of your decisions could become. Download the white paper, “Successfully managing change through integrated MOM,” to understand more about the cost of change, and how closed-loop systems are necessary for the future.

Leave a Reply

This article first appeared on the Siemens Digital Industries Software blog at