Marpac, Inc.: Jeff Alcalde, General Manager

by HCE Exchange on May 11, 2012

Located in Albuquerque, N.M., Marpac, Inc., manufactures medical-tube-securement devices, such as tracheostomy collars and adjustable endotracheal tube holders, for respiratory therapists, critical-care nurses, and home healthcare.

Although five percent of its business is international, Marpac is predominantly a U.S. company. Unlike its competitors, who outsource most manufacturing to China, Mexico, or the Dominican Republic, Marpac manufactures its products 100 percent within the U.S.

“That’s not the kind of owner we have,” Jeff Alcalde, general manager, said. “He wants to have all the jobs here in the states, remaining competitive while manufacturing here.”

Caretakers and patients come first

Recently, Marpac released its new endotracheal tube holder, debuting it at the 2011 American Association for Respiratory Care (AARC) trade show. This product exemplifies the philosophy behind Marpac’s approach to business.

“We do a really good job of blending the needs of the respiratory therapist–the caregiver–with the needs of the patient in coming out with new products,” Alcalde said.

This consideration extends to the service side, where every order ships the same day. Marpac has no backlog and has had 100 percent on-time delivery for five years.

“Our quality system is world-class,” he stated. ““People throw that around, but what it really means to us is last year we made 1.7 million units of products and we only had quality concerns on six.”

Facing the corporate giants

As with everything, there is a downside to this attentiveness.

“It’s a Catch 22 in that once we’re your supplier, you never hear about us again, because things don’t go wrong,” Alcalde explained. “But it’s also tough for us to get people’s attention, because we’re a $2.5 to $3-million revenue company, so in the medical world, we’re peanuts.”

Many larger organizations will look at Marpac and see a company so small, it’s difficult to view it as a needle-mover. Alcalde would like to grow the company into a $10 or $50-million brand that will force people to pay attention.

To sell its products, Marpac uses in-house salespeople and independent commission-only sales representatives around the country who sell Marpac’s products alongside ventilators and other higher-end equipment. Print advertising hasn’t really worked for the company, since Marpac occupies a specific, fragmented share of the marketplace. Marpac also sells directly through distributors, including Cardinal Health, Owens & Minor, and Tri-Anim.

In 2012, the company will be establishing a larger Internet presence that will be focused less on sales and more on information.

“We believe there’s a place out there that we want to create for people who want to learn more who aren’t clinically trained,” Alcalde said. “So if you’re going to have a tracheostomy performed on your child or on your parent, that’s pretty scary, and there’s really not a place to go and search that out and talk to people who have already been through that. We’re trying to create that space for people to do that in a little more congruent way than they do today.”

Trending homeward

With all of these marketing efforts, Alcalde has noticed several trends. First is how centralized decision-making has become at hospitals. He said it used to be that a respiratory therapist or director of respiratory could determine what products they needed and simply purchase them. Now, it becomes a recommendation that is passed onto a product-evaluation committee, followed by a product-standardization committee, and on to purchasing.

“We’ve seen our sales cycle lengthen just because of that process,” he said. “Also being a small guy, in all honesty, that whole system is really set up for the big guys.”

It’s very common that a hospital’s value-added committee will have a representative from a large distributor onboard. Naturally, this lessens the chances that a smaller manufacturer’s products will be approved for purchase.

Furthermore, Alcalde has observed the increased strength of group-purchasing organizations (GPOs). Here, size is also a factor, especially when a GPO is negotiating a multi-billion dollar contract and an organization like Marpac is a few hundred thousand dollars on that contract. GPOs tend to naturally overlook Marpac’s presence.

Then, there’s the issue of dollars-per-unit and the ongoing battle for healthcare organizations to contain costs.

“In the reimbursement world, it’s not always the product that lasts the longest that gets chosen, because if you get reimbursed by each unit, you can have a product that doesn’t last as long and people don’t care as much,” Alcalde said.

Finally, Alcalde has noticed that Marpac’s products are becoming more useful in the home-health setting, since people are being released from the hospital sooner.

“We’re seeing our product line, the tracheostomy care, is becoming more and more of a home-care item also, as opposed to a strictly hospital-type product and distribution,” he observed.

What Marpac offers

These products, Alcalde said, offer quality of design and comfort. For example, its newest product, the ET tube holder, doesn’t require adhesive tape on the patient’s face to keep the tube in place, thus preventing pressure sores and skin breakdown. Like the track on a Ziploc bag, a caregiver only needs to slide the holder back and forth in order to adjust the tube.

In addition to sensible products, Marpac also offers a quick turnaround on production. Because its competitors are manufacturing overseas, what you see on the shelf is what you get. With Marpac, though, it’s not unusual to receive a request to customize one of its products for an unconventional patient. Because of Marpac’s size and domestic manufacturing, that product can be customized immediately and shipped the next day.

“It’s not uncommon for me at all to be talking to a parent of a six-year-old child who has a tracheostomy and listening to what they need from us,” Alcalde said. “We really do want to earn the fact that we’re manufacturing in the states. We don’t want people to just throw money at us because we’re creating jobs here. We know we have to earn that right to add value manufacturing here, not just look for a thank-you kind of sale.”

-by Pete Fernbaugh

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