One Midsize Company's Answer To Compliance PainOne Midsize Company's Answer To Compliance Pain

Compliance with governmentregulations can be a big cost and productivity drain on small and midsize businesses. Care Rehab has found that automated inventory tracking can remove much of the pain.

Care Rehab, a $38 million-a-year manufacturer of products for physical therapy and rehabilitation, comes out with a new medical device every six months and upgrades older devices to newer versions every two months. Its products--which include handheld devices that stimulate painful muscles with electrical charges and systems that use traction to reduce lumbar pain--are sold to rehab centers and provided to patients via a doctor's prescription. Here's the rub: The Food and Drug Administration requires Care Rehab to keep track of every product it makes. "If you don't comply with the FDA, you can't be in the medical business," Care Rehab CEO Christian Hunt says.

Hunt is an entrepreneur in the classic mode. In 1992, after getting a pink slip at his job as a salesman for a medical device company, he sold his 1972 Cutlass Supreme convertible to gain the capital to start Care Rehab. But with a growing business comes data management challenges. Within several years, Care Rehab's simple database became bloated with serial numbers of thousands of medical devices sold. Some tracking information was recorded on paper and in spreadsheets. It was impossible to quickly find the location of a particular device.

Care Rehab saw an opportunity in inventory-tracking software to provide an organized, cost-effective way to stay compliant with the FDA. Last year, it began using Salesforce.com's application for sales force automation and customized it to include inventory-tracking capabilities using Salesforce AppExchange, an appli- cation-sharing service.

Care Rehab keeps a tracking record within the application of every device it ships from the moment it's made in Virginia until it's issued to a patient. The company can quickly locate the device if it's defective or if there are problems with tracking, in which case the device can be recalled, repaired, or replaced, as required by the FDA.

Care Rehab also uses the data generated by the inventory-tracking application to determine the sales performance of its 80 reps, the degree to which medical professionals are prescribing its products to patients, and demand levels for each of the product lines it sells. The company also can forecast demand to avoid running out of a device. All of those functions are components that are critical to keeping costs down and profits up, VP of marketing Ed Barrett says.

Because Salesforce's software is offered as a service over the Web, Care Rehab didn't need to buy more hardware or software to get the apps running. The company began with the service in January 2005, just several months after it started considering inventory tracking as an answer to its compliance challenges.

Innovative Thinkers
CEO Hunt comes from a family of entrepreneurs, he says, which is reflected in how he runs his business. "We like to think of ourselves as innovators," Hunt says. Care Rehab uses computer-aided design software to create virtual prototypes of its products. The company has become good enough at these virtual tools that it skips physical prototypes and goes right into production from the CAD software. "In order to do that, you have to be very confident in the software application and the expertise in the people that work with you," Hunt says.

He's also confident that the software-as-a-service model for inventory tracking can be expanded to include other applications. Care Rehab plans to deploy a tool that will let sales reps order new equipment for clinicians through Salesforce's sales force automation application. The company is considering adding a tool for recording salespeople's travel and entertainment expenses.

Also, Care Rehab is testing a version of Salesforce on BlackBerry and Treo devices. That could improve productivity for sales reps, letting them input data while away from the office.