Chances are, your home’s value has been rising in recent years, but nowhere is real estate at more of a premium than in our nation’s operating rooms. As a result, hospitals increasingly are searching for equipment that can perform more functions while occupying less space. Advances in electronic manufacturing services (EMS) are providing a solution to those challenges.
|As medical device end users look to improve care, manufacturers and their outsourced EMS partners are developing smaller and more functional devices to better monitor and care for patients. Above, an engineer with the Aubrey Group works on a circuit board design. Photo courtesy of the Aubrey Group.|
“Today’s medical devices are offering more horsepower in a smaller footprint,” noted Robert Kundinger, director of medical business development for Sparton Corp., headquartered in Jackson, MI. “By adding multi-chip modules, smarter integrated circuits and multiple microprocessors, medical devices are able to give healthcare providers more information about a patient’s condition, allowing hospitals to drive down capital expenses by procuring equipment that provides more functionality than in the past.”
For example, he added, historically, a device might monitor a patient’s blood pressure. An improved version, however, might also measure how much oxygen is in the blood and track brain waves to indicate pain levels.
The miniaturization of devices is expected to fuel growth in EMS over the next decade. Echoing other experts, Hani Malek, vice president and general manager of Preco Electronics in Morton, IL, estimated that the EMS industry has penetrated only 15-20% of the overall market and even less of the medical segment. “EMS is a booming industry,” he said.
|Return to top|
Driving the Boom
Electronic systems in medical devices are destined to drive the technology of the future for several reasons. First, further miniaturization of medical devices—particularly those implanted in the body or carried by patients—continues to be a pervasive trend. Each new generation of products is designed to be smaller and more lightweight than its predecessor. By building boards with multiple layers and greater capabilities, EMS suppliers can help OEMs miniaturize their innovations.
“We’re seeing a lot of older products being redesigned into smaller packages and micro-BGAs (ball-grid arrays),” said Jim Lanigan, director of operations and engineering for Preco Electronics. “In the old days, components had leads that extended beyond the component. Now, instead of legs, balls are placed under the components so they don’t take up any extra real estate, allowing for a smaller package. The spacing of the balls underneath the components is now just 0.8 mm, typically.”
Second, communications and wireless connectivity is a huge driver, said Josh Rose, director of marketing for TriVirix in Durham, NC. “A wireless environment is ultimately where everything is going,” he said. “Technologies increasingly must be able to communicate with other devices and provide the healthcare team with information in a seamless manner. We’re seeing more need for products to be wirelessly connected with another source to simplify the hospital environment and enhance mobility. Before, patients were moved from area to area to be treated. Today, the patient is kept stationary, and the devices are being moved.”
Further, this connectivity allows a rural patient who wears a glucose monitor to receive top-of-the-line care. The healthcare provider can simply log into a data center to check the device’s past and current readings and call the patient with recommendations. Some devices can also be reset or fixed remotely.
Rose added that in many cases, devices transmit patient data to a central hub to be incorporated into the original patient record and made available to nurses and physician, for use perhaps even on a Palm Pilot. As a result, patients are monitored in real time, fewer transcription errors occur in the medical record and treatment is thus improved.
Third, building more capabilities into new generations of products allows healthcare workers to gather more data that will assist them in diagnosing, monitoring and treating patients to achieve better healthcare. Rose noted that lab-on-chip technology, which essentially allows many assays to be embedded onto one chip, lets medical professionals conduct many more diagnostic tests at a fraction of the costs of several years ago.
|Return to top|
|Lab-on-chip, wireless connectivity and miniaturization of components are driving EMS services. Above, circuit boards are manufactured at Sparton’s plant. Photo courtesy of Sparton.|
Lab-on-chips are one method by which EMS companies are helping OEMs manufacture products that will most appeal to their markets. Other enabling applications also bring a new level of sophistication to implantable, mobile and wireless devices.
“The flip chip, which directly attaches an integrated circuit to a substrate, offers the highest density interconnect available today, and it allows for more functionality per area,” explained Bill Barthel, manager of manufacturing technology development for Plexus Corp. in Appleton, WI.
He said the next step is to add more function per volume, which can be achieved with die stacking. Integrated circuits that use both flip chip technology and die stacking can be used in smaller areas. This results in devices having more functionality as well as the potential for redundancies and increased reliability.
“As systems become more complex, OEMs are requiring new and deeper approaches to reliability, certainly for Class III devices but also for Class II devices. Refining these technologies lets us meet that need,” Barthel said.
Greater integration of microprocessors is a key trend, as is increased self-testing, said Rich Nazarian, president and CEO of Minnetronix, Inc. in St. Paul, MN.
“Fifteen years ago, a product may have had no microprocessors,” he said. “Ten years ago, some of the first microprocessors were integrated, and perhaps you had up to six microprocessors in a device. Today, that device might contain 60 microprocessors, and the board is denser as a result. Therefore, manufacturers have ramped up their testing capabilities to save OEMs time and money.”
Manufacturers are building test points into the boards, and computers are automatically testing the boards at these set points (before all the components are integrated) to catch problems early, when they are the easiest and least expensive to correct.
Another way in which technology is saving money is by eliminating the number of components used in devices. In general, the number of components used is declining due to increased integration and incorporation of microprocessors, Nazarian said. “If you can replace 10 parts with one microprocessor, even if the microprocessor costs more initially, the whole lifecycle cost will be less expensive since you no longer have 10 parts and 10 suppliers to track,” he explained.
As the number of components declines, so are the vias, or traces, being used on the boards, according to Steve Maylish, director of business development for the Aubrey Group, Inc. in Irvine, CA. Via sizes are now one-third of what they were five to 10 years ago. Printed circuit boards are increasingly electromagnetically compatible.
While boards are becoming smaller, they are also becoming denser. Maylish noted that the number of layers on boards and reliability are increasing. Today, 32-layer boards can be made very reliably. In addition, BGA-mounting technology allows denser integrated circuit packages to be assembled in ever-smaller areas.
“These newer technologies are allowing us to put more on boards—more electronics, smaller chips, more compression, more layers,” he said. “Everything is getting denser and denser, and as everything gets smaller, the tolerances become tighter.”
He added that two-dimensional chips will be replaced by 3D versions, and microelectronic machining (MEMs), nanotechnology and optical electronics continue to make headway as well, likely fueling even smaller, more powerful devices in the years to come.
For years OEMs resisted outsourcing their products’ electronic systems, largely due to concerns about maintaining control of their intellectual property. Recently, that mindset has changed.
“The challenge for OEMs is that they are medical device companies, not connectivity, networking, telecommunications companies,” explained Brad Goskowicz, medical sector vice president of Plexus Corp. in Neenah, WI. “With the increasing focus on connectivity and remote diagnostic and monitoring capabilities, OEMs across all medical areas are considering how to incorporate that technology into their products. This technology changes monthly, and it isn’t a technical expertise for them. So now they are looking for outside partners who can bring those solutions and technologies to them but still understand the challenges of medical manufacturing.”
“The trend is to outsource more and more,” said Perry Eimers, sales manager of EI Microcircuits, Inc. in Mankato, MN. “Even those companies that had held on to parts of assembly are letting that go. They are focusing their resources on what they are best at—engineering and marketing their products—and letting other companies do what they do best.”
Outsourcing partners are eager to help OEMs determine if such a move would be right for them. TriVirix has developed a financial-based modeling tool that can simulate an OEM’s processes to determine if outsourcing makes sense over a specified period.
OEMs also have become more comfortable with these companies’ grasp of regulatory issues—so much so that many U.S. outsourcing partners are being asked to complete and file 510(k)s and other documents on behalf of their OEM customers.
|Return to top|
Where the Work Is Going
Much of this outsourcing is remaining in the U.S., said Tamim Hamid, vice president of Sanmina-SCI Corp.’s worldwide medical division in San Jose, CA. “Most OEMs have high-mix, low-volume assemblies, which tend to be a better fit for domestic companies,” he noted. “Offshore production favors smaller handheld devices like glucometers, spirometers and blood pressure cuffs because they are low-mix, high-volume devices.”
Hamid warned that OEMs considering going overseas first must justify the decision. “Are you going to distribute the end product in that country? Will outsourcing overseas really save you money, even considering the cost of the materials, assembly, shipping and transit time? If you can answer a resounding ‘yes’ to either of these questions, then going overseas could be the right choice,” he said.
In general, high-volume (typically more than 100,000 units a year), labor-intensive devices tend to favor overseas manufacturing. Eimers added that if an OEM can’t save a minimum of 30% on costs, it can’t justify going overseas due to brokerage fees, communication challenges, shipping and timing concerns. Further, advances in equipment automation make U.S. companies even more competitive.
That said, products distributed in Asia or Europe are being manufactured there, and more engineering work is being performed in India and the Philippines because of lower wages.
“Almost everyone is outsourcing something,” said Ralph Bright, marketing manager for Interpower Corp. in Oskaloosa, IA. “The shift we see is high-volume, low-mix production moving offshore. Lower volume, high-mix has stayed in the U.S. Some of the low-volume, high-mix that had moved offshore has already come back. Our U.S. customers increasingly need smaller orders for immediate delivery. They aren’t ordering until they have an immediate need for product.
“The trends toward lean manufacturing, fast delivery, immediate response and holding zero raw material inventory tend to favor domestic companies,” Bright added.
Just as in other areas of medical manufacturing, devices that incorporate electronics are more sophisticated than ever before, but time-to-market pressures are requiring a shorter production cycle. Fortunately, off-the-shelf, computerized solutions are making that possible, said Sparton’s Kundinger. In the past, he pointed out, outsourcing partners usually designed custom microprocessors with custom circuitry; they basically designed computers. Today, more of these components are available in off-the-shelf versions, which reduces design time. Computer integration is the focus today.
Outsourcing partners also have streamlined their processes, and with advances in technology, they’ve dramatically reduced production cycles. Indeed, by embracing lean manufacturing and continuous flow techniques, one company is now able to build the same number of products in four days compared with 15 days five years ago.
Minnetronix’s Nazarian cited another example of today’s compressed schedules: “It used to be that getting an EMS product developed and into the marketplace within a year involved a Herculean effort. Now a year is a lot of time—six months is more common. A project we worked on in 1990 took $1 million and 16 months to develop.”
Another expectation today is that EMS partners will provide more services than they have in the past. “OEMs expect more services to be part of the overall offering so that they can streamline their supply chain,” explained Malek. “NPI (new product introduction) services, rapid prototyping, engineering and completing 510(k)s now need to be considered almost core offerings for an EMS company.”
Eimers added that design work is the final frontier in medical device outsourcing. Just five years ago, OEMs were reluctant to turn to outside firms for design and validation of some processes, but today those same companies realize that their partners can offer comparable services at a lower cost while freeing up internal resources, he pointed out.
Outsourcing partners say they want to be involved in the design process, especially at the beginning to minimize manufacturing challenges later on.
“Three things need to be addressed in the design phase,” explains Lanigan. “How buildable is the design? Is it testable? And is the supply chain workable, or will there be problems later?”
In addition to assistance with design work and rapid prototyping, OEMs want outsourcing partners to help with reimbursement concerns, regulatory paperwork, testing and process validation, distribution, marketing and manufacturing. By incorporating lean manufacturing, six sigma and other quality improvement principles throughout their companies, outsourcing partners have become more prepared to help their OEM partners succeed in each area.
Sanmina-SCI’s Hamid noted that OEM-outsourcing partner relationships may take on a new look in the future. “I call the trend ‘collaborative design and manufacturing models,’ or CDMs,” he explained. “In the CDM model, the outsourcing partner and the OEM work jointly on platform development and developing technologies that will get the product to market faster. The OEM concentrates on its core competency—the enabling technology—and the outsourcing partner concentrates on its—building the computer system around that technology. Both parties share the risks and the rewards. We’ll see more of these collaborations in the future.”
Communication between partners is critical, too, which is why enterprise networking and web-based information sharing also will become more common, added Nazarian. “We want our customers to be able to leverage our system,” he said. “Within another year, customers will be able to log into our system and monitor their products online. Ultimately, that’s where the industry is headed—providing real-time access to all types of data so that everyone can make well-informed, timely decisions.”
With many EMS companies expecting growth of 15-35% in 2005, prospects look bright. Increasing sophistication and innovation will only fuel further advances. Changes in the types of components and equipment placed and the types of designs OEMs are creating will undoubtedly evolve. Better ideas always seem to be on the horizon, and many EMS providers are well positioned to help OEMs bring them forward with myriad of new technologies and tools.
Stacey L. Bell is a Tampa, FL-based freelance writer who specializes in business and marketing issues.