This article is from in the April 2008 issue of DOTmed Business News. A list of registered users that provide sales & service can be found at the end.

Arthroscopy is a flourishing area of the medical equipment industry. Mr. John Dawoodjee, General Manager of Advanced Endoscopy Devices Inc., in Canoga Park, CA, says arthroscopy is "recession-proof." Arthroscopic devices are vital to sports medicine, orthopedics and even veterinary use. Sports injuries are on the rise in children and adolescents. Older generations are remaining active longer, incurring athletic-type injuries and looking for treatment that allows them to maintain their lifestyle with a short recovery time. J. Whit Ewing, M.D., Executive Vice President of the Arthroscopy Association of North America (AANA) in Rosemont, IL says arthroscopy procedures are significantly better than ten years ago. Success rates are higher, and complication rates are lower. The overall success rate of the most common arthroscopic procedure on the anterior cruciate ligament is estimated at 85-90%. Dr. Ewing also sees a continuing expansion of arthroscopy through new procedures of treating defects in the surface of the joint through regeneration of tissue. These factors contribute to the rise in arthroscopy equipment sales.

Arthroscopic instruments "fly off the shelf," says Mr. Mitchell Guier, Owner of North American Medical in Sweet Springs, MO. The demand for repair services is also growing appreciably. Arthroscopy components and parts account for approximately a quarter to a third of overall product purchases, according to companies specializing in preowned/refurbished devices. The same percentage applies to dealers in new equipment, such as Dawoodjee. The U.S. market for arthroscopic equipment was estimated to have reached a staggering one billion dollars in 2007. Mr. Cornel Cacuci, Manager of Apex Endoscopy, Inc. in Lawrenceville, GA says his repair/refurbishing business is 40% arthroscopy related. For OEMs, CONMED has reported a 31% increase in its 2007 arthroscopy equipment sales over 2006 numbers. Of Smith & Nephew's total 2006 sales, 22% were endoscopy/arthroscopy; this figure grew 7% in 2007.

The OEMs and ISOs have a cool relationship

There are several major OEMS across the U.S., and a few overseas. The prominent OEMS include Stryker, Olympus, CONMED, Linvatec, Storz, R. Wolf, Smith & Nephew, Dyonics, and Arthrex. Pre-owned equipment dealers note OEMS tend not to be too friendly with third-party ISO vendors and refurbishers, as the ISOs detract from new equipment sales. Other OEM concerns include the use of components within a scope that are not the original manufacturer's brand-which might reflect poorly upon the manufacturer if the repair/refurbishment is substandard. However, companies in the repair/refurbish field say the selection of reputable companies technicians eliminate those problems. A few OEMS will have a limited relationship with certain dealers, using third-party servicers as a secondary repair facility.

Medical and surgical centers can acquire equipment direct from the manufacturer, distributor, from pre-owned equipment dealers, or by fee per use contracts through leasing companies. Pre-owned/refurbished equipment sales and repair have a client base of hospitals, private medical centers, as well as distributors who are able to supply to hospitals through GPOs. More dealers nationwide are tapping into the veterinary market. For example, about 10% of Guier's customers are vet facilities.

International sales are strong

U.S. pre-owned/refurbished dealers have found a thriving foreign market. South America is one hot area. Mr. Cesar Martin, Owner of ProEndoscopy in Sunrise, FL, says he has many doctors visiting from South America: "they come here and they're able to see the facilities, [and] I give an explanation of the scopes." Dawoodjee also has customers in South America. European markets are also buying large quantities of pre-owned equipment. Guier has steady sales in Poland. Cacuci has business in Germany and Brazil. Mr. Dan Murphy, President of MetroMedical Industries Inc. in North Branford, CT has found internet outlets such as DOTmed.com have increased exposure of his business 60-70% and attracted customers from Great Britain, Dubai, Bulgaria, and South America. Mr. Edward Soto, Sales Representative for Sterile Med/Scope Exchange of Greensboro, NC says his company sells to places as diverse as Portugal, Italy, United Arab Emirates, France, Venezuela, Ecuador, and Argentina.

Pre-owned equipment is attractive for foreign markets due to the reduction in price-a necessity for medical facilities which do not have the budget of hospitals and private medical centers in the U.S.. Soto says, "The biggest factor for foreign companies and end users is that they are looking for equipment that is less expensive than what the major manufacturers are offering...refurbishing is a pretty good alternative for them." Pre-owned equipment saves up to 50%, sometimes more, over OEM prices. In addition, due to the current devalued dollar, foreign purchasing power is quite strong, and has led to a "dramatic increase" in business, says Soto.

ISOs are filling an important service gap

Another advantage for foreign customers contracting for repair services in the U.S. is the trend of OEMS to downsize or close repair and manufacture facilities in some countries and centralize the facilities in other locations. The previous locations, left without close access to repair, have found that shipping a part to the U.S. for repair is more advantageous both in cost and in turnaround time. Turnaround time is vitally important to a foreign medical facility to keep from having to cancel procedures. OEMS can sometimes have a turnaround time of two-three weeks. For domestic repair services it's just a matter of days.

A typical arthroscopy system can include camera, camera cables, light source, arthroscope, sheath, color monitors, printers, fiber optic cable and accessories. Accompanying instruments include shavers, cannulas, blades, burrs and forceps. A pre-owned arthroscopic system will run approximately $2,400 to $5,000, depending upon what is included. New equipment system prices range from $6,000 to $12,000. For parts, new scopes can cost up to $5,000, and sheaths range from $400 to $600. By comparison, a pre-owned scope 1-2 years old costs around $800 to $1,500. The most expensive component is the camera. The single chip camera head used in arthroscopes runs about $8,000 to 1$5,000 new. A refurbished camera can be 30 to 40% less.

Pre-owned equipment can be repaired or refurbished. With reputable dealers, both services have quality control inspections for the internal parts to make sure the product is in good shape. Refurbishing often takes an extra step of upgrading or replacing certain problem parts, and a cosmetic overhaul. Dawoodjee and AES offer refurbishing services. Dawoodjee says that in AES' refurbishing process they are able to carefully correct any preexisting design flaws in the system/components and make the instrument higher-quality. However, non-refurbished equipment is as useful. Guier specializes in selling preowned equipment without refurbishing. He inspects the internal components carefully for sturdiness and viability, and will make minor part replacements. Guier's products come with a guarantee. Cacuci will refurbish equipment obtained from sources such as hospitals in preparation to be sold, also with a guarantee.

Arthroscopy's popularity lies in its ability to examine joints through small incisions. That same micro-technology is also what leads to equipment damage-to the miniature cameras, lenses, light source and the fiber optics inside the scope. Repairs become necessary from sheer usage-normal wear and tear, or being dropped by medical personnel when changing hands for sterilization. The most frequent damage is the scope being nicked or sliced by other instruments (probes, shavers, burrs) while in the patient. Sometimes a practitioner bends the scope just a bit past its capability in an attempt to see the joint better. Occasionally, pieces are damaged in an autoclave when instruments are tossed on one another. Murphy estimates 70% of damage occurs through accidental nicks on the distal end of the scope. Other damage Murphy has seen includes wear to the camera cables that lead into the camera head, causing signal inference. Also, cannula and shavers need to be straightened or sharpened, and pins in instrument hinges break.

The quality and technology keep improving

Innovations in the arthroscopy industry occur slowly in increments, making standard equipment a bit better-smaller or with a longer reach. Cacuci sees monitors with clearer, crisper images. Flat screens are now becoming standard. High definition capability is becoming in demand. Instruments are more compact and mobile, and easier to sterilize. All of the latest arthroscopes are autoclavable-decreasing turnaround time previously spent soaking the components. This allows the instruments to be rotated to new patients in around an hour. Sellers of used and refurbished equipment usually don't see the latest innovations for several years down the road-such as when a dealer buys a hospital's former set of equipment.

Dealers agree that durability is an indication of top quality equipment. Guier says Stryker cameras are popular for that reason. The ability of preowned instruments to be autoclaved is becoming increasingly important. Martin would much rather purchase an autoclavable scope for its durability. Cacuci says the more desirable qualities depend upon the needs of the customer. "Storz has a brighter image because they have rod lenses that are longer but Dyonics has more durable rod lenses-not as easy to break. It's all up to the end user whether they want durability or a brighter image."

How to choose a good ISO

Preowned repair and sales companies need to have marketing points to attract customers. For Murphy, training of the company techs makes the difference. Murphy has been in the business since the early 90's when there were only a handful of dealers and repair technicians, and builds upon that experience. Murphy's techs train for two years and have frequent refresher training, remaining competitive with the now dozens of companies in the business. Murphy also has a software program his company has developed that allows the techs to offer before and after photos to the client. "When we repair the scope, we take the [before] picture and put it right next to the older picture, with an anatomy of the scope below with numbers showing different parts of the scope where it was damaged...that's our proof source."

Martin points out that the savings in repair and refurbishing depends upon who the product is sent to. Therefore experience and care can make the difference, understanding the nature of the equipment-how to treat the Delrin plastic casing on the scope and to break down the glue seals without damaging the scope. Martin's ProEndoscopy refurbishes/rebuilds to OEM specs. Soto's company purchase kits that the OEMS use for final inspections and repairs. Soto's company also design jigs to open a specific brand of scope with less stress to the internal parts. Soto says service is vital to the customer, with things like turnaround time and offering the customer loaner instruments important aspects. Cacuci also targets customer service through loaners and a 120 day guarantee on the work, and highly trained technicians who laser-weld parts.

Arthroscopy dealers know the importance of keeping up with what's going on in the industry. Many surf the internet for news, check out user reviews of new equipment online, and the buzz from other dealers. From all indications in recent years, the arthroscopy market will continue to grow domestically and internationally, as a major part of the medical equipment business.

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DOTmed Registered Arthroscopy Sales and Service Companies
Names in boldface are Premium Listings.

Domestic
John Woods, Advanced Endoscopy Devices, Inc., CA
Michael Dudeff, Metro Medical Industries, Inc., CT
Cesar Martin, ProEndoscopy, FL
Cornel Cacuci, Apex Endoscopy, Inc., GA
Gary Gross, S.R.I., IL
Jason Eden, Bio Basics Global, MO
Mitchell Guier, North American Medical, MO
DOTmed Certified/100
Edward Soto, The Scope Exchange, NC
Adam Rudinger, Lex-Tech, Inc., NY
Philip Mothena, Simple Solutions, Inc., VA

International
Maharajan Subramanian, S Systems, India

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