Medtech Startups: Four Approaches to a QMS

Early stage startups in the medical device/Medtech/in vitro diagnostic (IVD) world often struggle with when and how to implement a quality management system (QMS) into their operations.

Part of the equation is, of course, spend and burn rate. Each organization will have their own set of circumstances around funding and budget constraints. When it comes to implementing a QMS, there are four fundamentally different paths an organization can take, each with different impact on cash flow: do-it-yourself (DIY), retain an individual consultant, engage a QMS specialist agency, or hire someone with QMS experience.

1. DIY

In the (DIY) approach, the company acquires a set of standard operating procedure (SOP) templates, and fills in the necessary information to customize the template to meet the circumstances and requirements. Template sets typically range from $1,000–$4,000 and there are also templates available on the U.S. Food and Drug Administration (FDA) website. This approach is feasible for those entrepreneurs who have:

• Been closely involved with QMS setup at previous organizations.
• A strong background in regulatory compliance.
• The bandwidth to plan and execute everything required for a QMS.

There will still be situations where the team involved in the DIY approach might need to bring in external support. For example, internal auditing or supplier auditing.

2. Individual Contractor (Lone Ranger)

Entrepreneurs are accustomed to tapping into contractors for a variety of needs, and individual contractors are available for the quality management process. These individuals typically have previous experience with quality at major medical device firms, and are available on either a full-time or a fractional basis. Some will work on a “use it or lose it” monthly retainer, which doesn’t always line up with the peaks and valleys of activity on the path to first-in-human (FIH) medical device trials and submission.

When deciding to go with an individual contractor, management should seek an individual for whom no task is too menial, lest you be surprised later when you need document control support, for example. Also look for a career lone ranger, not someone just filling their time between jobs. You want someone who will be available for as long as you need them.

3. QMS Specialist Agency

There are a number of QMS specialist organizations in the medical device ecosystem that replicate a full-service quality department in a major medical device company. In this model, the entrepreneur can tap into various functions on an as-needed basis, and only pay for hours worked. These service providers can plug in individual specialists for everything from document control to strategic management. They can also scale up and scale down quickly to match the activity required to meet the client’s milestones.

Often times, startups and emerging Medtech companies have a small staff, and they prefer to have a specialist agency execute the initial QMS set-up. This typically includes a full system and support in all functional roles. The latter can include document control, design quality engineering, and management support up to and through an initial audit.

Depending on the size of the organization and their experience with a QMS, the process is usually completed between 3–6 months, and costs about $25,000–$40,000.

4. Hire

Hiring is often the least flexible path for the entrepreneur. An entrepreneur might contemplate this path if they have a specific person in mind with whom they’ve worked successfully in the past. If not, it takes time to recruit, interview, and onboard a new staff member, which can threaten milestone achievement. It also requires a decision as to what level resource to hire for quality management. Depending on various factors, it might make more sense to hire an experienced quality manager instead of a Director or Vice President (VP).

Typical yearly salaries are $142,00 for Quality Manager, $164,000 for Quality Director and $258,600 for a VP of Quality Assurance/Regulatory Affairs (QA/RA). Many startups decide to push off adding this headcount if more flexible options are available.

Electronic Quality Management Systems

Not included in the salary expenses/cost estimates are the costs that can be associated with installing a digital QMS (often referred to as “eQMS”), operating on a software as a service (SaaS) model. Adopting a digital QMS platform for your company is not like putting the work on autopilot; it still requires subject matter experts to develop and fit the digital QMS platform to the business needs. There might also be a need for additional external resources at some point.

Early stage startups in the medical device/Medtech/IVD world may start by using common tools like Dropbox and PDF documents, which can help them avoid quality issues that are common with paper. As a startup grows, however, that approach is no longer practical, and a digital QMS becomes an essential tool to maintain quality and regulatory compliance.

Conclusion

Any of the four paths described above can be an effective approach, depending on the circumstances. Each option will have a different impact on cash flow, and financial resources and speed of development will play a large role in determining the appropriate path.