Reused Devices Attract Entrepreneurs, Scrutiny

But FDA officials say they are not sure whether they know of all the reprocessors operating today. When asked for a list of reprocessors, the FDA first said it did not keep such a list. In response to a Freedom of Information Act request, the FDA later released one, but it did not include some firms identified by The Washington Post. That is in part because smaller reprocessors are difficult to identify if they do not register with the FDA.

'Salvaging' Waste

Around 1987, Goodrich took money out of his retirement savings to create Sterile Reprocessing Services Inc. in a Houston office of about 500 square feet. There, Goodrich began resterilizing opened but unused sutures by hand, an idea he said he got from a friend of a friend, a former salesman for a company that made sutures.

Until then, hospitals had been reprocessing medical devices through in-house sterilization departments. Medical instruments were made mostly of glass, rubber or metal, which were designed to be reused. But in the 1970s and 1980s, manufacturers increasingly turned to plastics, making smaller, more malleable and complex devices and giving rise to the proliferation of the single-use label, which is believed to be at least a $3 billion U.S. market, a small fraction of the $80 billion medical devices market.

Goodrich decided to expand his business in the early 1990s while standing by his Chevy van in the loading dock behind a hospital in town. He was waiting to pick up some sterilization equipment when he noticed hospital orderlies hauling big bags to a garbage bin. When he asked what was in them, they told him it was just a bunch of used disposable medical devices. And Goodrich thought, "There should be some way of salvaging some of it." So he started reprocessing them, too.

Along the way, he approached FDA officials. But, he said, the industry was so new, "they had no idea what we were talking about." By 1997, the FDA had a better idea. It issued Goodrich's company a warning letter for violating several good manufacturing practices, citing, for example, "no documented evidence that the surgical devices can tolerate resterilization without adverse effects" and instances in which reprocessed device "labeling is false and misleading."

Goodrich dismissed the problems, saying his firm did a good job reprocessing devices while saving hospitals money. "We had a few complaints," he said, but "none that we ever considered serious."

None stopped his company's merger in 1998 with two other reprocessors, Orris Inc. and Applied Medical Technologies Inc., to create Phoenix-based Alliance.

An Opportunity

Mark W. Aldana had a little more experience in health care. He was pre-med in college and worked for medical device companies in Minneapolis and Houston before he was approached by an engineer with an idea in the early 1990s: sharpening used surgical saw blades. "I just had an opportunity," he said.

Aldana started a company in 1993 out of his Lubbock, Tex., home called Adven Medical Inc. The business grew to reprocess catheters and biopsy forceps, among other single-use medical devices, but from 1999 to 2002, Aldana's company was hit by dozens of manufacturing violations by the Texas Department of Health and the FDA, which cited his firm for failing to validate its sterilization process, provide employee training or follow procedures for handling complaints.

Aldana said: "It didn't matter what kind of quality program we had. It wasn't going to be acceptable, period."

In August 2003, Aldana signed a Justice Department consent decree of permanent injunction, and by that October, he closed Adven Medical, selling the business to another reprocessor, ClearMedical Inc. of Bellevue, Wash.

Two months later, public records show and Aldana confirmed, he reemerged as a consultant, which was not prohibited by the FDA. He submitted at least two applications to reprocess surgical cutters, staplers and appliers to the FDA on behalf of Vanguard of Lakeland, Fla., one of the big three reprocessors. Vanguard said it had bought Aldana's proprietary information about how his firm cleaned those devices.