This report originally appeared in the July 2010 issue of DOTmed Business News
End-of-life (EOL) is a phrase commonly used in the medical equipment marketplace. Most everyone you speak to has a logical definition. If you asked them for it you'd get something like this: EOL means that a piece of equipment has reached the end of its useful life and the manufacturer has decided it can no longer support the service and repair of the hardware.
Well, maybe not exactly those words, but something similar. It's common sense that a manufacturer would make such declarations at the time that the equipment is obsolete and beyond cost-effective repair for the company or the user. Unfortunately, today common sense is not all that common or sensible. EOL is now a marketing program term. It's becoming more common that marketing will declare EOL for the installed base so that owners of equipment will start to budget for and buy new replacement equipment.
EOL is used to frighten buyers who are not ready to replace their equipment and those who are considering the acquisition of pre-owned instruments. Before you reach into your department's piggy bank and pay for new equipment, it's important to understand EOL and why the manufacturer has chosen to declare end-of-life.
I spoke with a group recently that was evaluating the purchase of a used PET scanner for cardiovascular diagnostics. They were going through all of the usual determinations: clinical impact, reimbursement potential and price. They were homing-in on their requirement when a salesman visited from a manufacturer of new equipment -an OEM. He told them the used equipment was at EOL and that translates to a short supply of parts and service. The buyer panicked and started to focus on the new piece of equipment. Without an understanding of what EOL meant in this context the buyer ignored the new equipment's higher price tag, lower quality output and longer delivery. What was happening made little sense clinically or financially. But EOL claims can produce real doubt in the mind of the buyer.
I'm not aware of a standard definition for EOL that the marketplace has adopted. I think it's whatever people want it to be. For buyers, the equipment that is already or about to be declared EOL can elicit fears that play right into the hands of the seller of new equipment.
In my opinion, service usually has the most concise definition because it's based on something quantifiable, the availability of parts over some defined period of time. Unfortunately, today it's the unusual circumstance when the service organization at an OEM declares EOL. It's become a marketing and sales definition. Want to boost sales? Declare EOL. Want to stimulate a trade-up program? Declare EOL. Want to derail the acquisition of used equipment? You guessed it, make statements about EOL.
If you're planning to buy older used medical diagnostic equipment, don't let the EOL label stop you. Examine the situation with the same thoughtful consideration you give to all of your acquisitions. Are there parts available? Is there a local organization with expertise in servicing the equipment? Does the used equipment meet your performance requirement? If EOL is an issue, then is the price you're paying reasonable for the number of useful years left in the instrument? These are all important questions. Don't let the offhand comment about EOL concerns move you away from your clinical and financial requirement. Whether new or used, the reimbursement is the same.
Over my career, I've seen equipment 5, 10 and 15 years old. Sometimes, the OEM had declared EOL years before, yet the equipment was still in use and providing valuable clinical service. There are a lot of good reasons to replace old equipment with newer or new. An end-of-life declaration by the seller is not one of them.
Wayne Webster is a consultant in Medical Imaging Business Development. You can send comments or questions to W.Webster@Proactics.net.
