Wii Balance Board Gives $18,000 Medical Device a Run For Its Money

Gizmodo highlights a very cool repurposing effort for the Wii's Balance Board accessory. Rather than the specialized force platforms used to quantify patients' ability to balance after a trauma like stroke, doctors at the University of Melbourne thought that a Balance Board might serve as well. Says the article: "When doctors disassembled the board, they found the accelerometers and strain gauges to be of 'excellent' quality. 'I was shocked given the price: it was an extremely impressive strain gauge set-up.'" Games controllers you'd expect to be durable and at least fairly accurate; what's surprising is just how much comparable, purpose-built devices cost. In this case, the Balance Board (just under $100) was compared favorably with a test platform that costs just a shade less than $18,000.

Comments

"Not for ________ use"

[LostCluster]

What determines the price of a scale is not just its equipment or accuracy.. but also the insurance the manufacturer has to carry in case something goes wrong. That's why medical devices are more expensive... you're also paying for the liability of somebody being misdiagnosed by a technical malfunction. Highly unlikely, but the money that has to be paid when that happens and gets proven is huge.

Re:"Not for ________ use"

[Anonymous Coward]

What determinds the price is production, and demand. The wiimote is mass produced, which makes the price even less. And its in high demand.
Medical equipment? There is a certain number of hospitals involved ordering X amount of copies, and the demand is static. They will also pay for it. Basically its overpriced, but the question is how much its overpriced.

Re:"Not for ________ use"

[DJRumpy]

There is no justification for an $18,000 price difference for what amounts to the same fundamental technology. I don't need a formula, or theories as to why this is. The medical industry is full of a bunch of crooked greedy bastards. They use the same basic technology to accomplish the same result, probably with the very same components, all of which can obviously be had for very cheap. Costs are applied at the component level. If you can buy the same components for a Wii as in this other piece of equipment, their prices should be a bit closer. Our medical system has been gamed so badly for so many years, that a hospital doesn't even blink when they see $18,000 for a piece of equipment. They will happily pass the costs on to the patient, and the patients health insurance.

If this isn't a case of price fixing then I don't know what is.

What we really need is transparency is pricing for all medical costs. Force manufacturer's to provide their component costs for everything like eqiupment, drugs, and consumables, so that the consumer can see exactly what kind of markup their paying for.

Re:"Not for ________ use"

[Anonymous Coward]

Not really. I think what's happening with consumer gear becoming more and more complex and "agile" is that the whole concept of expensive custom hardware is becoming obsolete.

While some devices (MRIs, x-rays machines, ultrasound imagers) are legitimately expensive, other gear, such as the one in the article, are being revealed to be extremely simple devices that are simple marked up due to the OEM knowing that their target market has deep pockets.

In some ways, it's analogous to the software movement in the late 80s where software engineers and their tools were in such shortage that they were only found in high budget corporate and government settings. The commodification of computers led to computer programmers becoming commonplace, allowing the development of cheap software development on consumer grade computers and paving the way for the open source movement where programmers' time is in such supply that they can afford to give it away for free(tm).

The mass production and wide availability of advanced components such as accelerometers, GPS chips, DSPs and other previously prohibitively expensive items are bringing highly sophisticated applications into the realms of the consumer where novel ideas are being explored and old expensive ideas are being redone with a Made In China label on them.

Finally, I could maybe buy the insurance line if we were talking perhaps even a few multiples, but a $100 device to $18k? That's one hell of an insurance policy.

Re:"Not for ________ use"

[Anonymous Coward]

You have obviously never worked in an industry with high quality control standards. The price of some product isn't the sum of its individual components. You have to pay people to design it, and people to test it, and then pay insurance on it. For small markets, this means that the price is very steep for even simple things. What would you price this device if the parts cost $100 per unit, but the R&D cost (2 doctors and 2 engineers for 1 year) was $1 million, the insurance cost was $500,000/yr, the customer support cost was $100,000/yr, and the market size was 100/yr?

Re:"Not for ________ use"

[RobVB]

Nice post with a nice result, although you used some mystery maths to get there.

Sales proceeds need to be: $93.5 million. That means, the price for each unit needs to be: $93.50 per unit. What if they want a healthier profit margin? Their sole purpose in life is to manufacture medical devices, they don't sell software -- they need a good profit margin from selling their product. A fair profit margin is 100% or more. To achieve that, the minimum price is $930.50 per unit.

First you say 85 bucks is their break-even point, which means they have to sell it at 93.50 for a 10% profit margin (1.1 times 85). Then you somehow (almost) multiplied by 10 to get 930.50 bucks?

If 85 bucks is break-even, then they'll have a 100% profit margin selling at twice that, or 170 bucks. Not 930.50.

Also, 1 million sales is unrealistic for a niche product, it will probably be more like 200,000 sales. To maintain a healthy product with 1/20 of 1 million, the actual price needed will be 20x that, or $18,610.00

200,000 is 1/5 of 1 million. So following your line of thought, the actual price would be 5 times 170, or 850 bucks.

You did, however, say they produced 1 million of them, costing them 75 million in parts and labor. If they're only making 200,000 those costs would only be 15 million. Adding 10 million research costs to that makes a total of 25 million in production costs. To get that 100% profit margin, they'd need to earn 50 million in sales, meaning 50 million bucks/ 200,000 units = 250 bucks per unit.

Holy smokes, that's nowhere near the "$18,000 medical device" price.

Re:"Not for ________ use"

[NewbieProgrammerMan]

You have obviously never worked in an industry with high quality control standards.

I worked at a nuclear power plant that happened to be on a Navy ship. One of our supply guys had to order some simple part (a resistor or something) that was categorized as part of the nuclear plant, and it was maybe $100 through the supply system. He took the part number home, called the supplier from his home phone presenting himself as a hobbyist. It was about $1 for the same part. I guess we were paying $99 for the QC sticker they put on it before they sent it off through the supply system.

Disclaimer (because /. has taught me I need one): I'm not saying all QCed stuff is expensive for no reason. Just that sometimes people really are getting ripped off in the name of QC.

Re:"Not for ________ use"

[Opportunist]

What you fail to see, and what the GP identified successfully, is risk. Now, with average consumer equipment the risk is very close to zero. If it doesn't work, no biggie. Get the customer to return it and 2-4 weeks later he'll get a replacement. If he gets hurt in the process of using it, no biggie either. We just told him we're not responsible for any dumb accident he might run into. If that can't be excluded, the price goes up.

I hate car analogies like anyone, but in this case it's one of the things where liability is part of the price. Faulty cars can result in incredible cost, and that is reflected in the price. You get the same with dangerous work and the compensation you get for it. And illegal drugs are not really expensive due to high manufacturing costs either, or an insane demand compared to the supply (you'd be surprised how high the supply for some drugs really is...). It's the risk involved.

You can actually get medical equipment very cheaply, provided you declare that you will not use it for human use. What else you could use a heart monitor for is beyond me, but when they can strip liability from the price tag, the price goes down. Considerably down. Think 1/10th of the "all warranties included" price tag. It's probably easier to see for the everyday user with consumables. Syringes can be used for more than injecting something into a living body, thus you can get the same syringes with or without "medical" quality. Both kinds are essentially the same syringes. One kind is "certified" and thus with all liability and warranty attached, one isn't. Both are equally sterile, simply because the manufacturing process is the same, they roll off the same presses. Now compare the price.

Re:"Not for ________ use"

[Miamicanes]

> I guess we were paying $99 for the QC sticker they put on it before they sent it off through the supply system.

Actually, there's a very good real-world example of a cheap electronic component that nevertheless can be very expensive when its quality is absolutely certified: electrolytic capacitors. Today, in 2010, brand new devices are STILL being manufactured with electrolytic capacitors that have substandard electrolyte. This is a problem that was supposed to have gone away YEARS ago. Why is it still around? Because the bad electrolyte is a tiny, tiny bit cheaper to make... and the capacitors tend to work just fine for at least a few months. In other words, they fail prematurely... but not immediately.

If you're building something that absolutely, positively, must NEVER use an electrolytic capacitor with bad electrolyte, you have no real option besides buying only capacitors that are certified (and can be audited) all the way from you (the company building the device that uses them) to the chemicals used to make the electrolyte itself. It's not enough to buy "a good brand". To get that level of certification, every party along the way -- distributor, wholesaler, supplier -- has to be certified capable of keeping them secure and properly stored. Otherwise, an employee (or manager, or higher) at the supplier could substitute counterfeit capacitors, then sell the genuine ones elsewhere.

The point is, that degree of auditing and handling is insanely expensive, because it involves SO MANY different parties (all of whom want to be reimbursed for the extra trouble). It's made more expensive by the fact that there are (fortunately) very few things that really NEED that kind of quality control. Life support equipment and nuclear power plant control systems are obvious excamples where it's justified, costs be damned.

That said, this particular device isn't life support equipment, regardless of how hard someone might try to make it sound like the tiniest malfunction would lead to death or injury. I think it's safe to say that this particular device's price is all but guaranteed to come down a few thousand dollars if they want to keep selling it.

Re:"Not for ________ use"

[timonak]

I can honestly tell you that you have no idea of what you are speaking. I work for a small medical device manufacture as a software architect/engineer. There are many reasons why a medical device is expensive. I'll enumerate the two that I have experience with. The first, and biggest is the FDA. We are a class 2 medical device, much like the piece of equipment mentioned in the article. So what does this mean? It means reams and reams of paperwork. Not nearly as much paperwork his required for a class 2 as a class 3 (pace maker and other implantable devices) device, but still reams of paper. We sent almost a WHOLE box of paper to the FDA when we submitted our paperwork. If I had to add up the cost to produce the paperwork, given the cost of lawyers, and staff time, my guess would be >$250k. Thats just the initial cost. We now have to get ready for an FDA compliance audit in the next few months. We have also have to overhaul how we develop the software. We have to be able to trace every line of code back to reams of paperwork, that adds an additional burden to the bottom line. Next are lawyers. We spent a TON of money on lawyers while doing our FDA 510K. Competent lawyers who are also knowledgable about the FDA 510K process are NOT cheap. ONE of the lawyers we used cost $600/hr. You also have to remember that the medical market is quiet limited. How is a small medical device company supposed to survive if they sell the device for a couple of hundred dollars into a very limited market? When you see our product, you might be tempted to think $5000? I'm not paying that much for a metal frame, a hardened PC w/ a touch screen and some software. Its not worth that much. And when you do, I want you to tell that to me personally, to my face. I also want you to tell me that my family doesn't deserve to eat.

Re:"Not for ________ use"

[wvmarle]

We're talking about a diagnostic device. Not a life saving device. Not even for internal use. It is quantifying balance: we know the patient has balance, we just want to know how much of it. It is not even diagnosing whether a patient has a disease or not, or what disease a patient has.

If it is faulty, the doctors will know. Either it doesn't work, or the values do not make sense. A doctor with a little bit of experience will know from looking at the test about where the number should end up, and if out of expectations can take another device to test again. They're cheap, so you can have more than one on hand.

Sterility is not even an issue here (beyond basic cleanliness of course), it is not for use in an OR.

The main reason these things are/were so expensive I think is because of the very small product runs. Really small: hundreds, maybe a few thousand. There was no other use for these sensors, so development cost has to be shared over a few thousand pieces at most. Come the Wii with its gadges using basically the same tech, and both production cost and development cost per unit drop enormously. It matters a lot if you share costs between 1000 or 100,000 units.

Then probably the medical version is much stronger and sturdier, lasting longer, but the price difference is too big to make up for that.

Obligatory

[Naurgrim]

Ah, I see you have the machine that goes ping. This is my favorite. You see we lease it back from the company we sold it to and that way it comes under the monthly current budget and not the capital account.

This is not a shock...

[Anonymous Coward]

I had been prescribed a medical device to assist in night time breathing... after asking the clinic person to show me an itemized list of parts and costs, I was shocked at the bill - over $2,200 (USD). She was annoyed that I wanted this list printed out because my insurance was "going to pay for it anyway..."

A few months later, my insurance no longer wishes to pay the rental costs - so I have to return it or pay $250/month. Found online for $700 new and delivered with three years of support.

Only when you put medical care in a truly competitive market is when you'll actually see competitive prices.

Re:No wonder

[Anonymous Coward]

Oh ,there is much more to it than that...

A friend of mine recently had to wear a device that helps bones knit faster by using electromagnetic fields. The device cost (his insurance) $5000. I am an electrical engineer, so I couldn't resist tearing it apart to see what it was. Maybe, maybe, $20 worth of electronics. More likely $5 when manufactured with coolie labor in China.

And the reason my friend was willing to let me tear it apart? It can only be used once! It is designed to permanently disable itself after one period of treatment.

What a waste of time and resources. What a gouge to the medical consumer. You wanna talk about controlling health cost? Start here.