In March 2016, Banner Health in Mesa, Ariz., purchased two CT scanners from Siemens Healthineers for two of its facilities, Banner Desert Medical Center and Cardon Children’s Medical Center.

However, the health system’s relationship with the company went much further than a simple equipment purchase and included a full analysis by Siemens of its CT department to improve clinical, operational and financial outcomes.

The arrangement was part of an offering from Siemens called Advisory Services, part of a growing trend of original equipment manufacturers giving their customers the best return on investment.

In what is often referred to as managed equipment services (MES), these long-term, multimillion-dollar contracts often include procurement and updating of equipment, training of technologists, management of maintenance and repair and even advice on operation and best practices.

The agreement with Banner Health involved Siemens staff visiting the facilities for two weeks, observing the overall flow of the department and speaking to employees, to figure out how the facility could better utilize its imaging technology and technologists and improve efficiency during the time it was deinstalling its old CT scanner and installing a new one. Siemens staff recently returned, a year later, to make sure the facility was meeting the goals it set.

“We wanted to be able to provide some unbiased information to the C-suite,” says Gladys Correa, interim director of medical imaging, OTC and radiation oncology at Cardon Children's Medical Center/Banner Health. “Although the C-suite has the utmost confidence in the medical imaging leadership team, when coming from an unbiased third party, the information is more well received.”

Banner Health was seeing extremely high volume for its CT scanners and had a difficult time keeping staff because of the high volume. The facility had maxed out its table time and proved that it needed a new CT scanner.

The Siemens report showed that the system needed more staff and provided suggestions on how Banner could lessen the stress on its technologists. The analysts recommended funneling some patients out of the emergency department to a different CT scanner, using a 3-D lab to process images and adding a third technologist as a coordinator.

The facility also used the CT scanner it had purchased for the pediatric facility for outpatients, increasing the number of outpatients scanned from three to between eight and 10 per day, providing extra revenue and freeing up the scanner in the ED that had also been used for pediatric patients.

Staff turnover has also lessened, resulting in savings.

“We’re not having to go back and retrain an employee simply because someone has left,” Correa says.



Siemens’ Advisory Services program is a component of the company’s MES contracts. While Siemens has more than 38 MES contracts globally, the company has only begun offering them in the U.S. a little over a year ago.

Lisa Collins, vice president of Enterprise Services for Siemens Healthineers, says the company takes an “evergreen approach” to such long-term partnerships for managing assets, with ongoing refreshes of technology in a vendor-agnostic manner.

“We ensure that our customers always have the latest and greatest technology and holistically maintain and optimize all their assets,” Collins says.

The idea is that facilities can better predict what they will spend and still have control and input into key decisions.

“It’s completely up to our customer and dependent on how they’re clinically utilizing particular equipment. Our partnerships are always an evolving, living, breathing contract with our customer, where organizations can generally see a 12 to 15 percent cost savings with these types of agreements,” Collins says.

MES agreements seem to align with trends in the health care market overall, to provide the best value, outcomes and return on investment.

“As bundled payments and value-based care are kicking in, our customers are looking for creative ways to control their costs,” Collins says. “Traditionally, there has been a focus on simply straight price cuts on a set of service contracts. However, there’s a much more all-inclusive method to control budgets. Through a managed equipment service program, we can not only reduce costs and improve operational performance, but even assist in increasing revenue potential and competitiveness within their market.”

The right fit
MES contracts come in many shapes and sizes and each company executes them differently.

Toshiba Medical Systems Corporation has an MES solution globally that primarily includes capital acquisition and support. In the U.S., Toshiba has one program comparable to an MES solution, but refers to it as asset management, says Joseph Graham, vice president of service, sales and marketing for Toshiba America Medical Systems.



In the U.S., Toshiba began an asset management pilot program with Pinnacle Health in Harrisburg, Penn., with an agreement that includes service for not only Toshiba equipment, but all clinical equipment, including diagnostic imaging, medical lasers, cardiology equipment and laboratory equipment. The agreements stipulate that the hospital must purchase a percentage of all their equipment from Toshiba, though it does support equipment from other companies.

Pinnacle maintained its in-house clinical engineering organization, which was integrated into Toshiba’s program. Facilities like Pinnacle are looking for operational compliance and financial savings.

“Our program provided both,” Graham says.

By bundling everything together, Pinnacle was able to save more than 10 percent on its expenses.

“In my opinion, some of our competitors are passionate about controlling their service delivery,” Graham says. “Toshiba’s philosophy is very customer centric. We were ambivalent as to whether clinical engineering service was insourced or outsourced. It was more important to collaborate with clinicians and develop a mutually beneficial service delivery plan. These programs are highly successful when the customer and the vendor are collaborative and believe in a full partnership model.”

GE Healthcare also offers MES contracts, covering periods ranging from seven to 30 years. The average GE MES contract term is for 15 years, and it is tailored to meet each client’s needs, including the supply of both GE and non-GE equipment, installation and refreshes, service and maintenance and a comprehensive funding solution, says Helen Stewart, managing principal of GE Healthcare Partners. In addition, depending on the facility’s requirements, GE includes an element of consulting services as well.

GE recently began fulfilling an MES agreement with Humber River Hospital in Ontario, Canada. Since the implementation of the agreement, data indicate that aside from updating its technology, Humber has reduced equipment downtime and simplified the procurement process.

“The clearest benefit of shifting from an ad hoc capital strategy to the predictability of an MES is certainly the stabilization of a facility’s capital, operational and cash flow structures,” Stewart says.


Contracts as partnerships
Marin General Hospital in Greenbrae, Calif., considers its recent 15-year MES contract with Philips Healthcare a strategic partnership. In January 2016, the facility entered into the relationship in advance of a new hospital set to open in 2020 that would replace the majority of its 176 beds and include a new diagnostic imaging suite and interventional labs.

The contract includes the purchase of more than $30 million worth of equipment for the new building, upgrading equipment before the transition to the new facility and a technology plan through 2030. There is also an on-site services tech from Philips who reports to an on-site service manager, as well as training on new equipment for radiologic technologists and lean process training to improve workflow.



“We’re looking to be as quick and nimble yet as strategic as we can be while being cost efficient,” says Mark Zielazinski, chief information and technology integration officer at Marin General Hospital. “It allowed us to solve our problems for the new building and also provided a way to help us immediately.”

Zielazinski says the contract is a true partnership.

“They were picking us as much as we were picking them,” Zielazinski says.

While there were a few physicians who were skeptical of the contract, mainly because they have a preference for a particular manufacturer’s equipment, Zielazinski says they’re now converts.

GE’s Stewart notes that it is important for different stakeholders within a health system to be involved in the process.

“It is often believed that the MES is an off-the-shelf product,” Stewart says. “The MES solution is a flexible and fully customized structure, but to be properly deployed, an internal alignment needs to take place. GE works together with all the stakeholders to make sure the added value of MES is fully understood and in line with the outcome a facility is trying to achieve.”

Enticing with service
While MES contracts are relatively new, other OEMs continue to entice hospitals to invest fully in their assets, offering package deals with service, parts and equipment, creating a desirable alternative to in-house service departments and independent service organizations.

Along with extended warranties, Fujifilm Medical Systems provides upgrade paths for various types of imaging equipment.



“We can tailor those agreements to a fleet of equipment,” says Johann Fernando, chief operating officer at Fujifilm Medical Systems. “We offer flexibility.”

Todd Minnigh, vice president for worldwide service sales and marketing development for Carestream, says that while service contracts may not at first appear to be cheaper for a facility, they provide insurance for when valuable equipment goes down and helps facilities better manage budgets by delivering predictable expenses.

Carestream also hasn’t ignored the rise of in-house service departments or ISOs, and trains staff from both sides on servicing equipment. This is particularly important in remote rural areas where company service personnel may be hundreds of miles away. Facilities with their own biomedical staff may enter into an agreement with Carestream to buy parts and technical support.

“The cost of keeping the machines running is far less than having a day when the machines don’t run,” Minnigh says. “It really comes down to who can get you back online as fast as possible.”