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Flexi-Q auto injection unit.

Socialized Medicine: "Hardcore Left" Kibbutz Leads World In OEM Disposable Medical Devices

A communal business on Kibbutz Baram in Israel near the border of Lebanon, Elcam Medical produces innovative medical supplies such as the "CatFinder" for subsidiaries in Italy, Colorado, and New Jersey.

If peacekeepers from the United Nations Interim Force in Lebanon near the border of Israel look hard enough across the Blue Line at Kibbutz Baram, they can almost make out the innovations at Elcam Medical.

Founded in 1970 as a mold and tool manufacturer, the kibbutz firm briefly dealt in plastics before settling on the production of medical components in the 1980s. Now it boasts annual sales of over $80 million, produces almost 200 million stopcocks and manifolds each year for medical device giants such as Baxter, Medtronic, and Teleflex, has subsidiaries in New Jersey (Elcam Medical Inc.), Colorado (Injectech), and Italy (Lucomed), and is developing a number of innovative technologies based on new clinical research.

The kibbutz dining hall.

Chief among these new products is the CatFinder, a system trialed at hospitals in Albany, NY, and San Diego, CA, that helps the clinician navigate a catheter inside the vein to determine the location of the catheter tip in relation to the heart. Elcam hopes to bring this product to market by the end of the year and help eliminate the need to use x-rays—which are less efficient and can adversely affect the patient’s health—to verify the catheter tip location. The CatFinder is designed specifically for use with peripherally inserted central catheters, or PICC lines, a type of intravenous access used in long processes such as chemotherapy and antibiotic therapy.

One of the most innovative technologies Elcam has already placed on the market is the Flexi-Q, a disposable precision-mode Auto Injector that allows users to self-inject drugs for multiple sclerosis, psoriasis, rheumatoid arthritis, and other diseases. The next product in this range, which it is developing in cooperation with a large global partner, is the Flexi-Q eMU, a multi-use Auto-injector designed as a gadget resembling an iPhone that collects vital statistics on the patient such as when they last injected, and allows such information to be transferred to their doctor.

Despite all this, Elcam CEO and Baram native Ehud Raivitz believes his firm’s real innovation is the way in which it relates to its customers. As Elcam was founded without any special technology or resource, it was essential to make customers “love us,” he says, adding that it achieved this by offering a one-stop shop of high-quality products alongside exceptional customer service.

Raivitz says the key is helping customers integrate Elcam’s products into their own: “Consider the fact that we prepare one component that costs, say, 10 cents, but they place it inside a product that has 30 components and costs $100. If that 10 cent product doesn’t arrive on time and doesn’t function properly, it costs them $100.”

Baram is still very much a socialist enterprise, from the “hardcore left” of the kibbutz movement, Raivitz proudly points out. Important decisions on Elcam, such as the 2010 Lucomed acquisition and selection of its 10 board members, are put to the kibbutz’s 300 members (quorum is 20%), who vote with a show of hands in the central dining hall. Everybody has the opportunity to speak; once, Raivitz even presented a Flexi-Q to his peers.

Elcam CEO and Baram native Ehud Raivitz and fellow kibbutz members gather in the dining hall to vote on Elcam Medical's acquisition of Italian firm Lucomed in 2010.

“Obviously the kibbutz culture has some sort of influence on Elcam; above is socialism, and below [on the management side] is capitalism, but it is a softer, more enlightened form of capitalism,” Raivitz says. “On the other hand we have to work with regular customers from all over the world. I don’t think Baxter care if there is socialism or capitalism here; they just want to receive good products on time at a fair price.”

At first glance Raivitz looks like the CEO of any other medium-sized company, except it quickly becomes obvious that he is more at home than an average executive; at one stage during our conversation he excused himself to answer a phone call from his son, setting a time to meet for lunch in the kibbutz dining hall.

He acknowledges that being in charge of his kibbutz company puts him in a unique situation:
“I love to tell people that I am responsible for my mother’s pension, for my own pension, for my daughter’s pension, and for my grandson’s pension. There is a sort of obligation to ensure the company’s success. Today, Elcam is the kibbutz’s main source of income, accounting for, I suppose, close to 80% of total earnings. So on top of the usual motivation every CEO has, there is that element of being like one big family company.”

Ehud Raivitz

Unlike other chief executives, Raivitz has no direct financial incentive to perform better. Although he earns more on paper than his colleagues, he—like every other Baram member, whether they work at Elcam or elsewhere—forwards his entire net salary to the kibbutz. In turn, the kibbutz allocates him a monthly budget just as it does for everyone else.

For the three quarters of Elcam’s 300 local employees who aren’t from Baram, the culture can take some getting used to. Raivitz admits that it even creates some constraints—the kibbutz does not want to be seen to be encouraging income inequality, it cannot provide an outside wage-earner with a better car than it does its own members.

Located in the sparsely populated but ethnically diverse northern part of the country, Elcam plays an important role in the wider community, operating a mentoring program at a local school and sending employees to volunteer with underprivileged children. Some 40% of its workforce is non-Jewish; many are from Israel’s 4,000-strong Circassian community, Sunni Muslims whose descendants arrived in the Levant in the 19th century after being expelled from the Caucasus by Czarist Russia.

Inside the Elcam Medical factory.

“The kibbutz members are very proud of this factory,” says Baram’s chief secretary, Chamutal Milo. She explains that the presence of such a large company has helped the kibbutz in many ways, whether from the fact that its other industries are connected to Elcam’s computing system, or that Elcam will always provide a suitable job for members with special needs.

As for the eternal debate about whether the successful company allows the kibbutz to remain collective, or whether the collectivist mentality creates the successful company, Raivitz says it’s a bit of both.

“Undoubtedly, it costs a lot of money to be a collective and egalitarian kibbutz with a high standard of living. At Baram, all the people, whether they’re skilled or unskilled, healthy or unhealthy, hard working or lazy, everybody earns the same. The quality of life is good because over the years we have managed our finances well, and that influences the company too.”

[All images: Elcam Medical]

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