Hard Times at Physio-Control

Medtronic said it would reduce its workforce by 1,100 positions on March 3rd, 2008. A company spokeswoman said,
"Yesterday’s announcement does not impact Physio-Control employees." Medtronic took the reigns when it merged with Physio-Control
in 1998. The Physio-Control
brand name is one of the best-recognized names in the EMS product Industry.
Founded in 1955, it is also one of Redmond Washington’s largest employers. Most
of the very first portable defibrillators widely used in EMS were developed and
manufactured by Physio-Control. But today times must be tough at
Physio-Control.

Physio-Control’s parent company Medtronic, Inc. and their
two top executives signed a consent decree of permanent injunction related to
Automatic External Defibrillators (AEDs) manufactured by Physio-Control, Inc.
on April 30th, 2008. The consent decree prohibits the manufacture,
distribution, and export of specified AEDs at or from Physio-Control’s facility
in Redmond, Wash., until the devices and facilities have been shown to be in
compliance with the Food and Drug Administration’s (FDA) current Good
Manufacturing Practice (cGMP) requirements, as set forth in the Quality System
regulation for devices.

My first defibrillator as a new Paramedic was the reliable
but heavy Lifepak 4. Once it flew out of the unlatched door of my moving
ambulance. When we pulled over to pick it up and checked it out, it still
worked fine. Physio-Control durability became the standard by which other EMS
products were judged. They also produced the first truly portable EMS
defibrillator/cardiac monitor, the Lifepak 5. Tens of thousands of these rugged
little devices were sold. In some cases, they gave decades of reliable
life-saving performance. Physio-Control then set another new standard with the first
integrated 12-lead capable portable cardiac monitor/defibrillator, the Lifepak
12. With each new accomplishment, Physio-Control successfully partnered with
EMS clinicians to meet our rapidly evolving product needs.

When Physio-Control
Inc. suspended shipments
of its LIFEPAK defibrillators in January 2007; the
company cited vague issues with its quality-control systems (read that story here). A
few weeks later, it eliminated 300 jobs, or about 30 percent of its work force. The FDA’s recent injunction against Medtronic and
Physio-Control cites 11 violations, reported by FDA inspectors during a 2006
visit. Previous FDA inspections in 2000, 2003 and 2005 showed similar
violations. FDA issued warning letters after the 2000 and 2005 inspections,
citing the cGMP violations (Read the injunction here).

Medtronic said a year ago that it would spin off
Physio-Control into an independent public company by October 2007. However,
those plans were put on hold when manufacturing process problems were reported
in January. In recent filings with the Securities and Exchange Commission,
Medtronic reported that it still plans to pursue the spin-off. Over the six-month period that ended Oct. 26, Physio-Control
operated at a $30 million loss before interest and income taxes. They will
report financial results for the fourth quarter and fiscal year, which ended
April 25, 2008, on Tuesday, May 20, 2008. It is unclear exactly how long it will take Physio-Control
to comply with the injunction agreement, at which point it will again be able
to sell its defibrillators. However, if Physio-Control does not comply with the
agreement it will have to pay a fine of $15,000 per day, in addition to $15,000
per day for each violation.

The company continues to support EMS customers
without interruption. Physio-Control has been paying the sales, service,
customer care, and all mission-critical staff salaries required to maintain a
strong supporting presence in the EMS market. The brand was built on service,
and this commitment has been maintained despite recent challenges. Many in our industry are closely watching this
evolving situation with growing concern. Only this last weekend, I saw a law
firm advertising on television for clients in a class action suit against
Medtronic for alleged faulty internal defibrillators. Medtronic Physio-Control
has been a vital partner to EMS for over 30 years, and recent news highlights
the growing risk to this longstanding relationship.
 

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About Dan White

I'm a retired Paramedic and EMS Instructor with 35 years EMS and emergency medical product experience. I love canoes, cars and EMS. I write about EMS Technology on the Paramedic Blog, the Insights on Innovation column for EMS1.com, on AmbulanceWorld.com and Multibriefs.com. I work for Intersurgical, Inc. managing EMS sales and distribution. I can be reached directly at 573-240-0002. Follow me @Paradan on Twitter
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2 Responses to Hard Times at Physio-Control

  1. Ken says:

    It appears the Physio may be finally getting out from under the cloud that has held it back for the back two years. How are people in the EMS community feeling about getting back on board with Physio?

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