Procurement Teams Apply Cost Scrutiny to Medical Device Consulting Spend

There has been a rise in the procurement scrutiny applied to medical device consulting budget expenditures due to changing views on the relationship between external advisory assistance and overall development cost. While device companies continue using consultancy services extensively when preparing for regulatory clearance, quality review and remediation, the procurement teams apply much more rigorous scrutiny towards the nature of work, staffing models and billing structures.

Such developments arise against the backdrop of cautious expenditure control in healthcare manufacturing, given the ongoing challenges with high development costs and unpredictable revenue generation due to changes in reimbursement rates and purchase patterns. Consulting costs that were usually paid under the assumption of providing indirect development assistance now face stricter deliverable requirements and shorter review time.

In particular, some buyers ask consultancies to clarify the scope of their work with reference to the actual number of submission cycles or review and document preparation iterations prior to further billing of the work performed. This practice can lead to friction because the development process associated with medical devices always involves multiple unforeseen modifications and adjustments.

Firms providing regulatory assistance in such cases have to offer much more narrow and technically-focused consulting engagements. For example, manufacturers of devices can hire several independent specialists working separately on design controls, risk assessment and quality review instead of one advisory team performing all these tasks. Such a business model is more costly at the initial stage but allows controlling overall budget expenditure.

In addition, negotiations on consulting costs become more complicated for companies with significant reliance on senior specialists because their expertise remains very expensive. On the other hand, buyers try to reduce their expenditure on external labor while avoiding any risks related to delayed submissions or failed audits. The aforementioned situation creates an interesting dynamic for procurement teams in many ways.

Firstly, the tendency leads to a gradual reduction in the involvement of consultants in early development process stages because manufacturers do not need help at this point. Secondly, buyers are likely to delegate documentation-related work to internal staff while relying on external advisors to perform only assessment and preparation work. This way, the time frame for consultancy interventions becomes significantly shorter.

The above-mentioned trend has a different impact on startup device manufacturers because they cannot operate without external advisory assistance due to limited staff expertise. However, cost constraints can make these companies compress consultation period and decrease overall project scale even if technical documentation has not yet achieved stability.

To address this challenge, firms providing consulting services offer combined packages where senior reviewers will be supplemented by less experienced personnel in terms of document formatting, review and tracing of technical specifications and other documentation. This solution is acceptable for most buyers as long as quality control is ensured. However, issues related to consistency and coherence may occur if team members change too frequently.

Some manufacturers also evaluate benefits and risks of dealing with large consulting firms in comparison with specialist agencies. Currently, buyers prefer turnaround speed, technical knowledge and reviewer continuity over mere corporate reputation in terms of selecting consulting agencies. Long-term advisory relations do not seem as stable as several years ago.

Overall, the discussed developments should not be considered as evidence of changing attitude among buyers to medical device consulting expenditure. Buyers still require outside expertise and assistance with complicated tasks of regulatory and quality preparation and remediation work. However, manufacturers try to use consultancy budgets much more efficiently.