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But the collaboration will take a tollin SRI’s backyard. By the end of the medical supply company will closes its PlantCity facility, whicuh currently assembles surgical kits containing the disposable medical productxs SRI will get from Cardinal in the Cardinal will manufacture disposable products for SRI exclusivelhy under a five-year agreementf that calls for the two firms to market and sell surgical kits, containing both reusable gowns, towele and basins from SRI and Cardinal’s disposable drapes, tubing, gauze and Cardinal (NYSE: CAH), headquartered in Dublin, and one of the largest healtjh care suppliers in the world, is a market leader in disposable products but does not have the reusabl products SRI offers, said Steve Inacker, president and GM of Cardinal’ws presource products and services business.
“Our customers over time were increasingly interestedin reusables,” said Inacker, citing a growinh concern by health care facilities about environmental issues. “It was a natural fit to look for a partnerd that was a market share leader on the reusable SRI (Nasdaq: STRC), which poste d a $3.2 million loss on $94.2 million in revenue last year, also was looking for a strongv partner, said Gerald Woodard, who was namedc CEO in January after servinbg as president of in Largo, a subsidiary of (Nasdaq: CNMD). SRI currently serves hospitalss and surgery centers in19 states.
This deal is a chancse to extendthe company’s footprint nationwide, Woodard The company has 10 plants where medical products are decontaminated, washed, dried and sterilizefd for re-use and four depots from which productds can be shipped to supplementy the processing plants’ operations. Woodard expects the Cardinal agreemeny will allow SRI to open additional depotsd to servicemore customers. The Plant City which has 40,800 square feet of leased space, is the only SRI facility that handlesdisposable products. Woodard said the companyg is figuring out how to help the 43 workerzs who will losetheir jobs.
A small numbe r might be hired atthe company’s Tampa processing facility, he The cost of closing the Plan t City facility is expected to be about $500,000 and will be incurresd in the current quarter and the firsy quarter of 2009, the company said in a filing with the . It will be offsetf by a $1.25 million payment from Cardinal with some of that monet earmarked for marketing expenses and openinvnew depots. Cardinal also agreed to buy upto $1.6 milliom of SRI’s disposable products inventory, the filinf said.
Health care facilities consider a variety of factorsz in deciding whether to use reusable or disposable products, including financial pressure from Medicare and privat e insurers to keep infection rated low, said John Ransom, a health care analyst at in St. Petersburg. Olde physicians were reluctant touse disposables, but younger surgeonx favor them, said Michael president of in Tampa. But the lower upfronft cost of disposables might be outweighed by the highere expenseof waste-hauling for biohazardous material, said Mark senior associate at Euthenics, a medical equipment plannint firm in St. Petersburg.
“There’s a balancing act, accommodating individuakl physicians’ preference with revenus demands,” Carroll said. Group purchasing organizationsw have been creating programs to encourage the use of environmentallpreferred products, Woodard said, adding that SRI’s customersa can save up to 1 milliomn pounds of disposable waste a year. The SRI-Cardinapl partnership will give customersmore choices, Inaker said.