Timely detection of potential medical device recalls helps prevent overreacting: study

CHICAGO, Jan. 29 (Xinhua) -- Timely detection of potential medical device recalls could both reduce the cost of and improve the effectiveness of health care delivery, a study shows.

U.S. researchers found that the "situated context" of the decision-maker, such as firm size or the depth and breadth of their product portfolio, is significantly associated with judgment bias in favor of either overreacting or underreacting.

"The danger is twofold," said Ujjal Kumar Mukherjee, a professor of business administration at the University of Illinois.

"We find that a high signal-to-noise ratio in user feedback is associated with a greater likelihood of underreaction, meaning that firms will take a more hands-off approach to a product recall."

Mukherjee and co-author Kingshuk K. Sinha, at the University of Minnesota, also found "user feedback related to high-severity adverse events is associated with a greater likelihood of high overreaction, meaning that firms will take an ultracautious and conservative approach to recalling the product and repairing, redesigning or remanufacturing the product."

Firms that underreact often fail to heed the signals and often delay their recall decision.

"We call this an 'underreaction to signal,' and the outcome or consequences of delaying such a decision for a product that has a design flaw or a manufacturing flaw is very severe in the medical device industry because you are dealing with life-or-death situations," Mukherjee said. "It's also led to many millions of dollars in claims and lawsuits in the past."

The study also found firms that tend to underreact to failure signals are larger firms with a diverse product portfolio.

"Larger firms tend to react much more slowly and delay their recall decision than specific or specialized firms that have clear divisional boundaries," Mukherjee said.

The solution would be for bigger firms to "divisionalize" their organizational structure around a product or a type of product or service to create greater focus on emerging new products and technologies.

Failures of medical devices now account for approximately 15 percent of the total cost of health care delivery. "And even the best technology may fail, with serious economic and social consequences," said Mukherjee. "So being able to predict and proactively act upon signals of failures of medical devices is very important."

The study has been published in the journal Production and Operations Management. Enditem