Management at Memphis, Tenn.-based Grace Medical—a maker of ear implants and other instruments used by otolaryngologists—first started paying attention to the novel coronavirus in January. At that time, the effects of the virus were little more than a question mark. Maybe, they thought, it would be nothing.
Explore This IssueJune 2020
In February, as concerns grew that the virus would have an effect on the United States, managers started work on a business continuity plan—a way to keep the business going even if a global pandemic began to shut down the economy, said Michael Crook, Grace’s chief operating officer. But at that point, it was more of a “just in case we need it” plan.
“We began setting up ways to access our server and for employees to be able to work remotely in any kind of disaster,” said Crook.
It soon became clear that the “just in case we need it” plan would indeed have to be put into action for the COVID-19 pandemic—and quickly. In March, the company transitioned many administrative employees, such as those in customer service, to working from home. The company also started daily sanitizing in its manufacturing facilities, stopped frequent executive business travel, and dramatically altered a previously rosy financial outlook.
Since the economic shutdown took hold in mid-March, device companies big and small that work closely with health professionals in the otolaryngology field have had to make sweeping changes to the way they conduct business, test products, interact with patients, and develop new technologies. The pandemic has tested their wherewithal and adaptability as never before, and, try as they might to craft an outlook that could help them plan for the next several months, no one is quite sure what to expect. Still, most companies expect a sharp, but only temporary, slowdown and say they’re continuing with manufacturing and innovation.
At Grace Medical, the plan has worked so far. “What we’ve found is that we can function as a business with the administrative parts in a remote location, and I think that’s something that was a big question mark,” Crook said. “That being said, some functions at the business, like manufacturing and distribution, have to be on site to continue operating.”
The way the manufacturing process is set up at Grace Medical’s facilities has been an advantage, with machines and molding equipment naturally spacing employees at least six feet apart, or with barriers already up between workspaces. “It’s just by luck that we were already set up that way,” Crook said.
About four to six times a day, Grace Medical’s facilities are wiped down and cleaned up—a routine effort at keeping everything sanitized, he said. Also, break and lunch times have been put onto a staggered schedule to avoid crowding in common areas.
Still, the effects of the virus have been severe. Every year for about 13 years, Grace Medical had seen growth in the double digits. According to Crook, due to effects from COVID-19, Grace’s sales for April are down about 80%. “It’s had a significant effect on our business.”
Some offerings really aren’t realized until there’s context provided to them. COVID-19 was the context that restricted in-person healthcare, required stay-at-home orders, and increased demand and expectation for digital solutions and connections. This helped our industry realize the necessity of these remote services. —Tony Manna, president, Cochlear Corporation
Helped by the federal Paycheck Protection Program, Grace Medical has been able to keep all 85 of its employees on the payroll. Not only does this preserve a culture of caring for employees, it’s also practical: With specialty items like titanium and platinum ossicular and stapes prostheses and ergonomically minded specialty drills, losing employees would mean losing expertise that would be tough to replace. “The skill set needed to make these products is pretty unique,” Crook explained. “We don’t have the luxury of just replacing a manufacturing employee with someone off the street,”
As of this writing, manufacturing is continuing at 100% capacity in anticipation of a demand surge once elective procedures are allowed again. Work on new products has been whittled from a list of about 20 to the top three or four. The company has also spent part of this period manufacturing face shields and other products that the medical community needs to treat coronavirus patients, Crook said.
A reasonable timeline for re-opening would keep the business preserved, but, as with everything about the pandemic, a reasonable timeline is no certainty.
“Our revised business plan has surgeries starting back in June and ramping up to almost full speed by July or August,” he said. “From what I’m told by surgeons across the country, that timeline seems pretty viable right now. But should something happen and we’re not up and fully running by the end of the summer, even with the government assistance, it’s going to be really hard for us to maintain the business as it currently exists.”
Finding Remote Solutions
Tony Manna, president of the North American region of the Cochlear Corporation in Lone Tree, Colo., said the company is taking the expected steps of remote working when possible, along with social distancing and ramped-up cleaning. Its customer service team has remained fully available for those with hearing devices and those who are candidates. He said there has been no impact on product availability.
The pandemic has led to a greater use of digital and remote services, including virtual counseling for potential implant recipients experiencing hearing loss but preferring to stay distant. They’ve also seen increased use of Cochlear Link, in which Cochlear Nucleus users’ individualized hearing data is cloud-stored, which speeds receipt of a replacement device that processes sound. Manna said that the service recently helped a 93-year-old woman, socially isolated in a nursing home, replace her lost device, a mishap that had left her in a totally silent environment. With the service, the processor was replaced and delivered in under 24 hours, and the woman’s daughter said her mother’s face “lit right up” when she was able to hear again, Manna said.
Other remote features continue to show progress despite the pandemic, such as Remote Check, a service that allows remote checking of a cochlear implant patient’s hearing with a smartphone that received expedited FDA approval in April and is expected to be rolled out by the end of the year. Results can be reviewed by a clinician, who then assesses the patient’s progress and determines whether further intervention is required. Cochlear has even been able to use remote programming to activate a hearing device from afar for an 18-month-old, who was able to hear for the first time despite the pandemic.
“Some offerings really aren’t realized until there’s context provided to them. COVID-19 was the context that restricted in-person healthcare, required stay-at-home orders, and increased demand and expectation for digital solutions and connections,” Manna said. “This helped our industry realize the necessity of these remote services.”
At KCK Group, Inc., a Trabuco Canyon, Calif., venture capital firm that invests in a variety of areas including medical technology companies on the verge or at the start of commercialization, the fate of projects hangs in the balance, although no projects have had to be abandoned so far, said Susan Stimson, executive in residence at KCK, who works in the medical technologies division.
“One of the actions the team has taken is to spend time with those CEOs to really understand how we can help,” she said. “What are their needs? How can we help them scenario-plan to evaluate many of the potential ways in which this pandemic could impact them? The reality is, no one knows exactly what to expect.”
The hold on elective procedures has affected the development of some of the medical devices in projects supported by KCK, Stimson said. In some cases, clinical study enrollment has been halted. But many studies had already been fully enrolled, and those patients need follow-up. Much of that is being done remotely through telephone or video conferencing.
“It’s ethically responsible to find a way to follow up with those patients, particularly when you’re talking about investigational devices, and especially if those devices are pre-FDA approval,” said Stimson. “You need to be able to continue to collect that data.”
If more contact is necessary, decisions have to be made about whether those visits are carried out. Medical device companies have had to call clinical sites to find out what they and their patients are comfortable with, and consider the type of procedure that’s involved, Stimson said. “I’ve heard some physicians talk about if a patient had to wait, say, two months, do they believe that patient’s outcome would change? If not, can we hold off for a while?” she noted.
At some centers, particularly academic medical centers, clinical research staff have been shifted away from existing studies to studies involving COVID-19, she said. For the most part, however, said Stimson, “I think people are looking at this as a pause—one of unknown duration, of course,” and are now thinking about a plan for the right timing and pace to resume activity once hospitals and offices start seeing patients regularly again.
While most companies are experiencing a slowdown, one company associated with KCK, Lungpacer Medical, Inc., has the opposite problem: It has been granted emergency FDA approval for its technology, which had been in Phase 3 trials, that helps wean patients off ventilators more quickly by stimulating the phrenic nerve and keeping the diaphragm active and well-conditioned. Wider deployment of the technology is happening now rather than later, requiring planning for the sudden training of healthcare workers on how to use the system that will have to be done remotely on computer tablets rather than in person.
The Lungpacer situation illustrates the unpredictability that has been wrought by the pandemic, Stimson said. “It isn’t uncommon for start-up medical companies to, at some point, face a curveball and need to come up with plans B and C, because that’s just the nature of the business,” she said. “It is certainly unusual for all of them to face a curveball at the same time and related to the same issue.”
At Acclarent, the Johnson & Johnson subsidiary in Irvine, Calif., known for its balloon dilation systems, critical inventory has been moved to major distribution centers away from high-risk areas, and employees who can work from home are doing so, said Jeff Hopkins, Acclarent’s worldwide president.
Business is down considerably, but the company is continuing to provide essential medical products. “Supporting patients and our customers during tough times is our top priority,” Hopkins said. “About 90% of our procedures are deferrable, but 10% are urgent, and we’re still supplying customers as needed.”
The company is also staying prepared for the return to more normal times. “The majority of our global medical device manufacturing is running at or near normal capacity at this time to make sure that our products will be ready when patients return to their doctors for procedures,” he said.
The research and development side is pretty much the same, he said, thanks to its robust pipeline. “It spans over multiple years of development, so we have products in different phases,” said Hopkins. “Right now, we’ve been able to stay on track and continue the work that we’ve had on hand, and do regulatory filings, get regulatory clearances, and sustain our priorities.”
He added that although the near-term financial situation is challenging, the company expects a leveling off by the end of the year. “The second quarter is going to be tough,” he said. “We expect stabilization in the third quarter and a move toward normalization in the fourth quarter as healthcare systems work through addressing the pent-up demand.”
In its latest quarterly filing with the Securities and Exchange Commission, Johnson & Johnson strikes a fairly optimistic tone: “Considering recent market conditions and the ongoing COVID-19 crisis, the Company has re-evaluated its operating cash flows and liquidity profile and does not foresee any incremental significant risk.”
Johnson & Johnson points to many variables that could have an effect on the pace of the recovery. “You think about the overall economy, unemployment, people who may have lost insurance coverage, and then of course physicians and hospitals’ ability to get back to capacity,” said Kara Ryan, communications director with Johnson & Johnson. “There are a lot of factors that go into that, so it’s hard for us to say exactly what a recovery looks like.”
On a bright note, Hopkins said that the crisis has tightened the relationship among physicians, hospitals, healthcare corporations like his, and their employees.
“This crisis has brought us together with our employees, and we have worked more closely and more collaboratively with customers through this,” he said. “I think the silver lining is that COVID-19 has brought a unity between industry and healthcare providers to come up with safe solutions for all of us.”
Thomas R. Collins is a freelance medical writer based in Florida.