From the August 2014 issue of HealthCare Business News magazine


As a general rule, they don’t enlist the services of OEMs citing the higher costs involved. When it comes to parts however, the options are wide open. “We give everyone a fair shot with price, quality and delivery key components,” Buck says.

Still, with price concerns being a top factor, OEMs are not typically the supplier of parts for Fraser Health. “Buying from OEMs has gone down a lot over the past three to four years because of cost which has gone up, but sometimes the OEM part is the best choice,” he says.


Generally, they work with alternative parts providers, but the OEMs have been working to be more competitive with their pricing since Fraser is such a large organization, according to Buck. “We buy in excess of 60 percent on the open market, but of course, that’s hard to do with newer technology,” he says.
Bucks’ experience seems to mirror that of many of the other providers we spoke with. There seems to be a trend to buy more parts in the open market. And while independent parts dealers are not eclipsing OEMs in terms of parts sales, their market share is definitely growing.

Buck says by collapsing $6.5 million (roughly $6 million U.S.) in service contracts by bringing them in-house, the organization saved just shy of $2.8 million U.S. He acknowledges that overall spend is going up because the organization is growing, but total cost of ownership on individual pieces of equipment has gone down.

Parts supplies present a little more of a challenge due to the geographical location. “We found third party vendors have been very good with standing by their products. Parts become an issue when it is time sensitive,” Buck says. For instance, they can get CT tubes by overnight delivery from Chicago most times, but sometimes the delivery is held up in customs for a few days. “For a CT tube, we can’t afford those three days, so we keep two tubes on consignment at all times. They are in a warehouse here on consignment and we pay when we use it and order another.”

Freedom of choice

Legacy Health is the largest nonprofit, locally owned health system in the Portland-Vancouver area, according to information on the organization’s website. The organization largely depends on in-house service for equipment no longer under warranty, handling about 85 percent of the work, according to Russell Magoon, an imaging service technician at Legacy as well as the president of the Oregon Biomedical Association. “The OEM percentage is 13 to 14 percent with ISOs making up the last one or two percent,” says Magoon. “For things that we have OEM contracts on, it makes sense to use them. The driver for using OEMs is the lack of downtime,” he says.

Magoon adds that there are some modalities that no one can do as well as the OEM and their hospital relies on the OEM to service that equipment. When it comes to parts, the decision for most purchases are left to those that will be working with those parts. “The techs make the decision to use the vendor they feel most comfortable with,” says Magoon. That means some techs may look to the OEMs while others may have a familiarity and comfort level with third party parts vendors, so they’ll go there. “The relationship between suppliers is so important,” says Magoon.

August 2014 Magazine

Read more stories from the August 2014 issue

More Industry Headlines