GE Sees ‘Quality Dividend’ From FDA Consent Decree

GE Healthcare’s efforts to remediate production issues under a consent decree for its surgical imaging business have resulted in more efficient manufacturing operations and improved product quality, a company executive says.

Aside from bringing its operations into compliance with the FDA, Pete McCabe, CEO of GE Healthcare Surgery OEC, said operating under the decree has reduced failure and reject rates, translating into increased production yields while maintaining the same manufacturing line rates. He called it part of the “quality dividend.”

A good quality management system helps improve the design of products, making them more competitive and of higher quality, McCabe said.

OEC entered into the decree because of production issues early last year, agreeing to halt some manufacturing until the affected facilities were brought into compliance. The decree cost the firm more than $100 million in lost revenue during the first quarter of 2007. The division will be operating under the agreement for at least the next four years.

The FDA cleared the firm this spring to start shipping its OEC 9900 Elite C-arm, a fluoroscopy surgical imaging device that transmits real-time imagery of patients’ internal structure. However, there were delays in getting the agency’s clearance, which cost GE $50 million in lost revenue during the first quarter of 2008.

Before it entered into the consent decree, the firm was the market leader in surgical imaging systems, McCabe said. But because the company was unable to ship product, its competitors — Philips, Siemens and Ziehm — marketed their systems without competition from OEC for more than a year. McCabe said he is looking forward to having products from his division back on the market.