An interesting report by Dotmed News Editor by Barbara Kram, Editor It may take a long time to read it but its quite informative and well written. Dotmed is a Medical Equipment Buying and Selling Portal.
———————————
It’s 10 p.m. and you’re the biomedical engineer on call at your hospital. An X-ray machine circuit board burns out on a high-volume system. What should you do to get the part? You have several options.
If the unit is still under an OEM service contract, you’re covered. But the costs in terms of dollars tied to response time may be high. As DOTmed has previously reported, the current trend is toward hospitals, imaging centers and health care providers prolonging equipment life through careful maintenance and upgrades and shifting medical equipment service in-house to reduce costs.
“You are still seeing a lot of places holding onto their machines instead of buying new. Many have capital budget freezes from concerns about the economy. People are keeping their equipment longer and looking for lower-cost service and parts solutions to keep those machines running,” said Wayne Kramer, Vice President of Global Parts Operations, C&G Technologies, Inc. C&G Technologies is an equipment and service provider that went into the parts business, a common model in the medical equipment aftermarket. With their technical background, independent service organizations (ISOs) know how to handle, test, store and ship parts and they often maintain a significant inventory.
Another company that made the shift from service to parts is First Call Parts, formerly Blue Ridge Medical Imaging. The company was a refurbisher for Siemens and parlayed its technical prowess into parts repair and testing for many diagnostic imaging modalities and OEMs.
“We took our ISO refurbishment procedures and translated them to testing procedures for the parts,” said Steve Bush, Director of Business Development. The company has demanding quality assurance and board level repair capabilities, and provides a six-month parts warranty, one of the longest in the industry.
Many of these specialized shops focus on a particular type of system. For instance, Platinum Medical Parts is a dedicated GE MRI parts and service company that sells and warranties used, tested parts. Given customers’ reluctance to upgrade, ISOs like Platinum are faced with the growing challenge of finding systems from which to harvest medical equipment parts.
X-ray beam collimator w/
vascular
(Image cortesy of TROFF Medical)
“There is a dearth of equipment available. It has become more difficult to purchase used gear. There is just not as much in the marketplace right now and that is a function of the medical economy and the greater economy,” said Jeffrey Fall, President of Platinum. “At the same time, people who have stuff are hanging on to it longer. We are seeing customers that I don’t think would have looked to a third-party solution five years ago coming to places like Platinum and seeing how we can help them out. That trend will continue for some time.”
Saving the Day
Choosing a quality independent parts supplier can really save the day when equipment fails. It can also save your facility a lot of money.
“We generally are 65% to 85% off the OEM list cost. We are very competitive in pricing. If we have it in-house, we will meet or beat our competitors’ price,” said Mary Lampley, Vice President, J&M Trading, Inc., Goodlettsville, Tenn. The town is perhaps the nation’s medical equipment parts capital, with several DOTmed user parts specialists located there. Most of J&M’s orders are filled from the company’s large inventory, although they do source parts when needed.
“If it’s something difficult to find, we don’t have any problem reaching out to our contacts to find that part,” Lampley said. Despite the costs and overhead of the inventory, parts are still cheaper from a company with a large warehouse than from brokers who don’t stock or own parts, she indicated.
“We don’t have to mark-up the part 10% to 20%. We simply have a percentage we consider for warehouse costs-employees, inventory, packaging-and we don’t have a markup because we have those tested parts in house. It saves a whole lot of money,” she said.
Lampley’s reported discount closely reflects DOTmed.com’s overall user base. A recent survey conducted by DOTmed shows that aftermarket parts companies can cut 30% to 85% from OEM parts prices.
The other half of the value equation requires that you find a quality part.
“There are a lot of players out there, but only a few select quality suppliers. What distinguishes the good ones is their ability to thoroughly test parts,” said Matthew Charkhkar, President, Harmony Medical Solutions. “In addition to testing, the company must have an infrastructure to handle and support sensitive circuit boards and parts.”
A board being tested at
Ambassador Medical.
An example of parts handling care relates to anti-static measures in removing, handling and storing parts. Testing may entail ensuring that the part is operational prior to deinstall, testing in a system bay or bench testing on the component level. You’ll want to find out how the parts you buy are tested and what quality assurance is in place.
“The trend toward lowest price has come full circle. Hospitals find the lowest price part doesn’t always work and now they are down another day and have to wait for delivery of the part they should have bought in the first place,” said Jeremy Probst, Operations Manager for Technical Prospects and its division SiemensMedicalParts.com. “When you have a customer who is trying to save $500 or even $1,500 for the cheaper part and it’s on a CT that is critical to the revenue stream for the hospital that could cost $30,000 to $100,000 in lost throughput on the machine, it’s a questionable decision.”
Probst noted that administrators are keenly aware of this tradeoff but that engineers are not always. His ISO-certified company has checklists and procedures all along the way to handle parts correctly from removal of equipment to shipping of parts.
“Shipping causes the most trouble. We have had to adjust the way we ship and pack items. We have double checks on everything that goes out with another employee looking at the item to make sure it is clean and packed properly and will make it to the destination,” he said.
It is helpful to be aware that while ISOs offer a wide array of used parts, they also do sell new parts. On the flipside of the coin, OEMs aren’t necessarily selling new.
“You have to be careful with the term ‘new’ because if it is coming from the OEM, that doesn’t always mean new,” said Kramer. “It may mean repaired just like a repaired part from us. What is important to realize, is that when a company does repairs they are adding value to the part. In that way, they find not just the failures, but the weaknesses. When we do a repair, we are looking at the components that have failed in the field on top of those components that are about to fail. We replace them all upfront so that what we send out is as close to new as you can get.”
Modality Focus
As providers try to wring every bit of service life they can out of medical equipment, companies in the business of saving health care costs, such as parts suppliers, are well positioned. Ultrasound, an affordable, ubiquitous and versatile technology, is a prime example of a technology in constant need of parts.
Climate-controlled parts
inventory as seen at
C & G Technologies, Inc.
“The parts business is expanding rapidly. As hospitals and imaging centers are holding on to their systems longer, these older systems are more likely to breakdown and need parts. Hospitals are going to continue to look for reliable, yet reasonably priced parts,” said David Trogden of Ultra Solutions. The company provides ultrasound parts and service.
Small firms to large, OEMs can prove a reliable source of quality parts. GE Healthcare saw fit to acquire Ambassador Medical in 2002, boosting the OEM’s specialization in quality refurbished ultrasound systems and parts.
“We benefit from the trend in which ultrasound is becoming more powerful; you see more procedures done on ultrasound that had previously been done on the bigger modalities,” said Tom Seiler, General Manager of the Ambassador Medical Division of GE Healthcare. “There is more ultrasound equipment out on the market so there is greater demand for parts.”
It’s important to mention that Ambassador supports multiple vendors and not just GE. Ambassador also repairs parts including circuitboards, power utilities, back-end processors and peripherals such as printers and VCRs. (Note that major components such as probes for ultrasound, MRI coils and CT glassware will be covered in future reports.)
High voltage tanks, a
frequently needed CT part,
as stocked at C & G
Technologies.
Saving money isn’t the only force driving the refurbished parts business. Outright necessity also plays its part since older equipment of many modalities and applications may not be supported with new OEM parts. This has created a thriving and highly competitive parts aftermarket for all types of medical equipment. Finding parts is as easy as surfing the internet and DOTmed.com. But it’s more important than ever to do your due diligence on the source of the part. It turns out that the same economic stressors that cause hospitals to keep machines longer have also led to unscrupulous practices by some parts brokers.
“In these bad economic times, some companies will take the deposit and put off on supplying the product until they can find the equipment or part to match their proposed price,” cautioned Rick Stockton, president, Atlas Medical Technologies. “They don’t have the part, they take the money and it comes down to the doctor trying to get something that is beyond reasonable price, expectations or operational ability…. Sometimes too good of a deal is just that.”
One-Stop Shops
Since many independent companies have parts divisions that grew directly out of their service operations, they tend to specialize in certain modalities or OEMs. But what if you don’t want the hassle of maintaining a vendor list for all types of equipment?
Using a single supplier can save time and aggravation in finding quality parts.
The largest third-party inventory of parts is maintained by ReMedPar, with five million parts at its disposal.
“ReMedPar has been an early pioneer in providing parts that have been tested for a large spectrum of diagnostic imaging modalities. Our wide product portfolio offers customers one-stop shopping by providing more than just say, CT or MRI,” said Jay Oyakawa, Chief Development and Operations Officer. “ReMedPar’s primary source of parts comes from our inventory of tested parts. Our product marketing group identifies key modalities and manufacturers from which we will harvest parts for inventory. If we do not have a part in stock, we source from hundreds of qualified parts providers.”
These reliable parts companies are all well-known to each other and industry insiders. They have a very competitive relationship, but also help each other out to find parts for customers.
“Lots of companies are surviving on their parts right now. It is getting more competitive but I don’t have a problem with that. The competitiveness and growth forces the mature market to become more valid,” said Mike Helms, Troff Medical. “Credible people and good parts companies or equipment companies in the used market are going to stay and be sought out.”
So now you know your options in finding quality parts. These include brokers without parts in stock, sourcing companies that do the legwork for you, dealers with an inventory, independent service providers, large suppliers with significant warehouses, and original equipment manufacturers. Better start your online search now.