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Parts and Service - The Full Story

by Sean Ruck, Contributing Editor | November 04, 2014
From the August 2014 issue of HealthCare Business News magazine

Smith believes the consolidation is fueled by the increase in rules and regulations. Smaller health care facilities and service organizations simply can’t keep up with compliance requirements.

Taking the complications out of contracts
Hospital administrators often have a lot, or even too much on their plates. So when faced with 30 or 40 pages of legalese to decipher for each and every service contract they sign, it’s common for some points to slip through. That’s why Patrick Lynch, HTM specialist at GMI recommends hospitals follow at least one example set by the Veteran Association. “The VA doesn’t sign contracts. They write their own and put them in front of the company to sign,” Lynch says.
It doesn’t make sense for everyone — for instance, GMI and a number of other ISOs have very brief two or three page contracts— but if your facility is regularly signing contracts made up of dozens of pages of dense jargon, investing upfront with a lawyer in order to pound out some boilerplate contracts might be worth looking into.

Lynch also suggests customers have the capability to adjust their contracts quickly as situations change. Adjusting quickly is key in today’s world of fast-changes to reimbursements and service requirements. Being able to ramp-up the service contract for a system that has become more profitable, or being able to cut back on service for one that’s not bringing in as much may be the difference between staying in the black or floundering in the red.

And when it comes to determining what you actually want in a service contract, for the extended warranty Lynch suggests thinking about it as you would an extended warranty from a box store for consumer electronics. “It’s the exact same sales process, and percentage. I’ve asked people at conferences how many have taken the extended warranty at Best Buy and no one ever has. Yet, for hospitals, they purchase differently.”

While it’s a buyer’s market in some ways, there are some components of the service sector that aren’t necessarily end-user friendly. “Part of this depends on what the federal government will require regarding service literature. As equipment gets more advanced on the software side, it’s easier for manufacturers to lock out others (including in-house service),” says Lynch. “The OEMs are well-connected and I mean, the CEO of GE sits down with President Obama, has a relationship there and they’re able to convince people at the highest levels that the same degree of care we’ve been giving for 30 years for all kinds of equipment, that we shouldn’t be allowed to do it for imaging equipment.”

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