Imaging equipment service contracts: When is ‘end of life’ a death sentence?

by Gus Iversen, Editor in Chief | August 14, 2015
From the August 2015 issue of HealthCare Business News magazine

According to Rich Greb, manager at Image Technology Consulting (ITC), the parts and service ISO that Gonzalez is using, “OEMs typically own the systems for the first five years, then you have five or seven years where they can still support it.”

All told, he says a system that has been declared EOL could remain in the market for another five, or even 10 years with the right ISO parts and service. For ISOs and health care facilities alike, those years between the OEM contracts and the scrap yard can be the difference between survival and foreclosure.

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“If they can help me over the phone, they will,” says Gonzalez of his contract with ITC. “That’s what I need from service guys — it can’t feel like they’re just trying to get me for all I’m worth.”

For BC Technical, a large ISO specializing in CT, MR, and nuclear medicine, keeping those older systems in business is credited largely to a massive warehouse of older parts and equipment. Josh Trueblood, its director of parts, says that adding more of that legacy equipment to their warehouse is one of the advantages they get from undergoing acquisitions and expanding their footprint.

Over time, the install base for certain models can become so small that it’s difficult to service them cost-efficiently. Sometimes a model can become so rare that the spare parts become more expensive than they were when the machine was new. Greb says that although ITC has never had to stop servicing a particular modality, the diminished volume and return on parts for older systems ultimately has to be addressed by either servicer or end user.

In some cases they protect their customers through contracts specifying that if the value of the system becomes less than the cost of repair, they will buy it from them. According to Greb, some manufacturers allow their imaging units to evolve over time in a way that components can be upgraded incrementally. A particular system can receive improvements to speed or image quality without being completely overhauled.

“Philips sometimes runs out of the EOL parts because, in reality, they continue to maintain some of them for favored clients, and when they need those parts we’re a good source for them,” says Greb. He cites some of the early Philips Intera MR systems, as well as the Picker Eclipse MR systems, as ones beginning to hit the 20-year threshold. His company is seeing fewer of those at their facilities, but Greb notes that in certain international markets older systems are dramatically more abundant.

Medical imaging Darwinism

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