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by Barbara Kram

[This report originally appeared in the July 2008 edition of DOTmed Business News]

The most critical and expensive component of today's CT scanners is the X-ray tube (glassware). Replacing one can cost, depending on the make and model, in excess of $150,000.

When a CT X-ray tube fails it needs to be replaced immediately to avoid downtime. The $64,000 dollar question - no pun intended - is how many times, if at all, will a healthcare facility need replacement tubes during the year? There are several factors to consider, such as the number of scans/month a machine performs and the number of machines a facility has in use. If replacement costs spike, it can cause financial headaches.

This is why several major X-ray tube manufacturers now offer what essentially are tube insurance programs. The goal is to help predictably manage glassware costs going forward for an annual "premium."

Dunlee has a menu of options

Dunlee, a division of Philips Medical Systems, offers its Glassware Solutions program to help alleviate unpredictable and costly tube expenditures. The program is used by service providers, asset managers and in-house clinical engineers for hospitals and imaging centers.

"The idea behind Glassware Solutions is to pay a fixed monthly fee for as many tubes as needed for any particular system," said Thomas T. Spees, Director of U.S. Sales for Dunlee. "We are matching the expense they would have to pay with the potential revenue they could receive from the CT system."

The company would not provide specific pricing information, as it varies greatly by customer and product type. However, they explained the program's customized pricing structure, including three types of contracts, typically 36-months in duration:
· Glassware Solutions Classic provides fixed pricing and no glassware risk.
· Glassware Solutions Risk Pool has stable monthly pricing, but at the end of each contract year, price adjustments are made to ensure the customer receives a 10 percent savings compared to the transactional value of the tubes consumed.
· Glassware Solutions by Design is a custom solution that can be developed with a customer's specific glassware coverage needs in mind.

Each type of contract has three usage tiers. The tiers are based on the amount of scans consumed on the warranty:
· Low Use Tier: For customers consuming less than 30% of the scans seconds (a measure of single-slice scanner usage) or amp seconds (multi-slice usage) allowed under the tube's warranty each year. An example of a typical low-volume application might be outpatient oncology.
· Medium Use Tier: 30 to 100% of scans seconds/amp seconds of the tube's warranty used within one year.
· High Use Tier: Usage exceeds 100% of the tube's warranty usage level within one year. High volume applications typically include emergency rooms.

For example, if the CT scanner's tube warranty provides for 100,000 scans seconds in one year and that scanner was using only 25,000 scans seconds each year, it would be in the low-use pricing level. If the scanner was being used for 130,000 scans seconds per year, then it would be put at the high-use pricing level.

"For as many sites as we can, we try to get the past usage history on the scanners; the scanners contain that information," Spees explained. "This allows us to get a pretty good idea of where to slot each scanner....We fit the customer into the right usage level to guarantee they will save on their tube costs."

Dunlee Glassware Solutions was launched in 2004 and currently has about 15-20 customers with nearly 300 scanners under contract. Some ISOs that use the program have more than 50 scanners on a contract.

GE Healthcare has two major plans

GE Healthcare also offers Full Service and shared risk glassware service coverage. GlassPro is their shared risk option, available for customers with a GE service agreement. The program is for GE equipment only, and is available not only for CT, but other GE X-ray modalities.

"With Full Service, the customer has the peace of mind of being able to spread out payments evenly and plan monthly payments over more than a year and know that all their equipment in service is covered," says Kristin St. Martin, Diagnostic Imaging Services Marketing Manager, GE Healthcare, Waukesha, WI. "In this economy with reimbursement where it is, shared risk is a flexible option that allows [customers] to take on some risk and be rewarded with savings in service dollars."

With GE's GlassPro shared risk program you pay a monthly subscription fee and that entitles purchase of replacement tubes at a discounted price. Installation by GE engineers is included.

"With Full Service, you pay one annual fee over the life of your contract every year and the tube is included so you don't have that additional outlay of cash. When the tube blows, you can spread that out over the life of the contract," she says.

In either approach, the cost is tied to usage and the type of application. "Usage can vary dramatically. So to say you will replace a tube per year, you can't make that generalization. It has to be tailored to the needs of the customer."

St. Martin noted a trend toward Full Service contracts for glassware. "As equipment gets more complex and the interaction between the equipment and the imaging subsystem becomes even more tightly woven, that desire for Full Service coverage certainly is increasing."

GE manufactures its own X-ray tubes around the world. "When you have a scanner down, timing is absolutely everything. It's not just the expertise of the installer, but also having the right part available when you need it. And that's where GE is well equipped no matter where you are located in the world to handle those needs in a very timely and efficient way."

Siemens takes an incremental approach

Siemens also manufactures glassware and provides tube coverage for their CT systems. The company has more than a dozen CTs and types of tubes. Pricing depends on the system in question and on usage.

"We have an unlimited coverage plan...what I call an 'all-you-can-eat' plan," said John Barbati, Service Product Manager for CT, Siemens Medical Solutions USA, Inc., Cary, NC. "If you're our customer and you buy unlimited tube coverage, no matter how much you use it... if a tube goes bad we replace it."

They also offer options for less than unlimited coverage at a variety of usage levels. This menu includes many incremental tiers so that customers pay only for their likely volume.

If a customer exceeds their intended volume, they simply move into the next tier of usage from extremely low use (25,000 scans seconds on some CTs) up to unlimited coverage. Customers get 5% overage without any additional charge.

"By offering a plan at a low level, you aren't exposed financially paying for a lot of usage that you don't need," Barbati said.

The likely usage depends on patient volume, scanner type, medical specialty, and other factors. "In an oncology situation where they use a CT for simulation, the usage would be much lower. A typical radiation oncology facility that has a CT would typically buy 100,000 scans seconds per year," he said. "In using the same type of CT in a radiology setting, they are more likely to buy 300,000 or unlimited because they'll
use it that much more."

Installation is done by Siemens field engineers. Siemens also offers tube coverage for other modalities such as general X-ray and cath lab.

**

Varian, the independent X-ray tube leader, likes the view from the sideline

Varian occupies a unique position in the world of X-ray tube OEMs. David Hurlock, International Marketing Manager, Varian Medical Systems/Interay, is well aware of what the other big three are doing, and stated Varian's position this way: "Varian Medical Systems, the largest independent X-ray tube manufacturer in the world, distributes our replacement X-ray tubes through a network of independent distributors and service companies - these companies are our customers. Some of our customers offer an X-ray tube insurance program. We choose not to compete directly against our customers."