As margins grow tighter, many healthcare providers are seeking cost-effective ways to reduce their overhead, while still providing quality care.
Partnering with a reputable independent service organization for equipment maintenance has always been a viable option for cutting expenses, and ISOs are increasingly offering more tailored service agreements, meaning more customized options rather than a one-size-fits-all maintenance program.
For example, a hospital may have an in-house engineering team to perform preventive maintenance on its CT scanner but lack an inventory of replacement parts for it, such as CT tubes. Signing a parts-only agreement with an ISO provides access to replacement components and parts, without having to sign up for other services they are capable of handling in-house.
“Customers need to cut costs and are willing to take on more risk if it means decreasing their service expenses,” Don McCormack III, chief sales officer for California-based SouthWest Medical Resources told HCB News. SWMR specializes in MR, CT, and PET/CT scanners, and has a warehouse with over 20,000 GE HealthCare parts.
HCB News sat down with four ISOs to discuss the factors a provider should consider when negotiating a CT parts and service agreement, and the benefits and limitations that come with different types of arrangements.
Establishing a mutually beneficial relationship
While equipment manufacturers (OEMs) are more than capable of providing excellent service on the systems they’ve built, that expertise and organizational footprint may come at a cost that smaller providers simply cannot afford. According to Kevin Gill, chief revenue officer for 626 Holdings, ISOs have a lower fixed cost base and are more agile due to having fewer financial obligations. His company services CT systems from GE HealthCare, Siemens Healthineers, Philips, Hitachi, and Toshiba (now Canon).
“I would be more than happy to go into a hospital or imaging center and just get their CT, whereas an OEM or a large ISO is going to walk into that and say, ‘If I can’t get a million dollars out of this place, I'm not playing.’ Hungrier ISOs can live on slivers of a customer’s fleet,” Gill said.
Although lobbyists representing the interests of OEMs have tried to make a case that ISOs are dangerous, a 2018 report by the FDA found objective evidence “not conclusive” to determine independent servicers pose a safety threat or require additional regulation. In 2021, the FTC published a report based on a two-year investigation that supported the right to repair, and found little evidence to support justifications manufacturers have used to hamper competition.
For facilities that may have reservations about leaving the OEM for an independent servicer, Gill says partnering on a few scanners, as opposed to the full fleet, can be a great way to build up trust between the organizations.
Another benefit of ISOs, according to McCormick, is they tend to be more regionally focused and often have local parts inventories that allow them to respond quickly to replacement requests. He also asserts that ISO engineers on the ground level tend to have more technical expertise than their manufacturer counterparts.
“They do not have access to OEM proprietary diagnostic tools, so they develop their ability to troubleshoot from experience,” he said. “This troubleshooting ability developed through years of diagnosing issues, using things like the equipment error logs and manuals, develops them into more well-rounded engineers.”
Where ISOs are limited is in the types of CT scanners they can service, with brand new ones and scanners less than five years old almost exclusively requiring the expertise of the OEM, which has access to the parts, materials, and service engineers trained to work on them.
Providers need to be transparent about their needs and ask questions about the benefits and risks that come with any of the ISO's customized contracts. (Photo courtesy of SouthWest Medical Resources)
But some independent servicers, like TRIMEDX, have partnerships with OEMs allowing them to access parts, resources, labor, and expertise to service and repair these systems.
“Our comprehensive management system may ultimately determine if a device should be serviced by an OEM, an in-house TRIMEDX team, or third-party. We use data to make our decisions and have the resources and relationships to provide the best solution for our clients,” said Rob Moorey, the company’s president of clinical engineering.
Whenever entering an agreement with an ISO, providers should question the servicer about their expertise in specific CT scanners and the resources at their disposal to ensure quality service. While affordability may be a principal appeal for choosing an ISO, do not put cost above quality, says Chris Kinnas, national service solutions manager for Block Imaging, which was recently acquired by Siemens Healthineers and CommonSpirit Health, and services scanners made by Siemens, as well as GE HealthCare, Hitachi, Philips, and Toshiba.
“While facilities continue to see increased costs and reimbursements decline, we are seeing an increased willingness to discuss service to offset costs,” he said.
Asking the right questions
In full-service agreements, a facility counts on an ISO and/or OEM to handle all servicing needs for their equipment. But many hospitals and health systems are adopted hybrid service models, in which they carry out some maintenance and repair tasks on their own and leave the rest to the outside service team.
626 Holding’s most basic service offering is its preventive maintenance-only package, in which it is contractually obligated to only perform routine PMs. This typically provides all of the time and materials work as part of the relationship and means that the provider has accepted responsibility for all other aspects of servicing.
“If we sign that agreement, we expect that any time the system breaks, you are going to call us first,” said Gill. “It keeps the risk with the hospital or the imaging center because any time we are called on outside of the PM, it is a billable event.”
Remote diagnostics allow ISOs to monitor, detect, and respond to CT scanner problems before they occur. (Photo courtesy of TRIMEDX)
Even if a service is included in a contract, healthcare facilities should still ask about any clauses or conditions that dictate how and when the company provides it.
“Understanding a customer’s needs and customizing a service agreement around those needs is imperative,” stressed Kinnas. “For example, what are the inclusions and exclusions in a CT agreement? Are tubes covered? How can we get creative to serve the customer well?”
It’s also important to relay as much information as possible to the ISO about the CT fleets, including the criticality of each scanner. For instance, a CT in the emergency department of a level 1 trauma center is utilized more and therefore, more crucial than one in an outpatient clinic, making it a higher priority. Another important detail is when servicing will take place, because any work on scanners during busy work hours may delaying care and reduce revenue.
“Our in-house teams can work with health systems to find the least disruptive time to work on the CTs,” said Moorey. “Because we are on-site, we can be flexible in the case of an emergent patient.”
Remote monitoring technologies have allowed ISOs and other servicers to pivot away from traditional break-and-fix models by detecting signs of an issue before it occurs, further preventing unnecessary downtime and saving providers thousands in repair costs. Additionally, tasks like software updates and patch installations can be performed remotely. They can also guide in-house clinicians remotely.
“We are able to see what the technologist is seeing live,” said McCormack. “This allows us to give expert support to biomedical engineers, making them capable of fixing a majority of issues. It also allows us to diagnose the scanner remotely so that we can send the correct parts the first time we need to go on-site to complete a repair.”
Independent service going forward
As AI and automation change what’s possible with software applications, it’s possible that CT scanners will need to be replaced less frequently. Such a shift would have important consequences for the nature of equipment service.
“Those types of enhancements are going to get built up, packaged, and added to systems in a way that will make CT more powerful, and reduce the need to buy a brand-new system for $5 million,” says Gill. “I think people will get more life and more function out of older systems through this technology.”
The growth of remote diagnostics means servicers and providers must work with one another to overcome hurdles as they arise. Kinnas says this includes “collaborating with an IT team of an organization to ensure the smooth functioning of a diagnostics system."
Meanwhile, as dust settles in the ongoing debate over right-to-repair, it's possible that ISOs will gain greater access to service resources and materials from manufacturers, such as manuals, making it easier for them to compete on a wider array of modalities. In 2021, the Librarian of Congress approved an exemption to the Digital Millennium Copyright Act, which largely prohibits circumvention of technology measures that control access to copyrighted works, allowing it to determine what constitutes a “non-infringing" use of copyrighted works for diagnosing, repairing, and maintaining medical devices.
In any case, ISOs provide a valuable service that allows healthcare providers to save in the short and long term on expenses, enabling them to manage challenging financial situations, while still providing quality CT scanning and other forms of medical imaging to patients.