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As in-house capabilities grow, contracts become customizable

by Lauren Dubinsky, Senior Reporter | August 14, 2017
Parts And Service
From the August 2017 issue of HealthCare Business News magazine

ISOs are partners, too
The latest IMV reports revealed that the average age of CT, MR, SPECT and PET equipment is growing year over year. That trend, largely due to shrinking hospital budgets, has contributed to a thriving and sophisticated market for independent service organizations.

Companies like Consensys, BC Technical, Oxford Instruments and the IMES division of Richardson Healthcare, just to name a few, have all carved out competitive ISO operations that offer hospitals a value proposition unique from OEMs and in-house teams.

Ken Smith, executive vice president of BC Technical, explains that CT scanners used to be upgraded every five to seven years, but that’s now become seven to 10 years. This trend is creating a greater need for ISOs, since they specialize in servicing equipment that the OEM has declared end of life on.

“We extend the life of the equipment by maintaining technical expertise and parts to support the systems far beyond the point when the OEM walks away,” says Smith.

These companies usually hire experienced field engineers with OEM training and provide ongoing training to keep them updated. They also implement parts harvesting and parts repair solutions to get the infrastructure in place to support the equipment as it ages.

Oxford’s field service staff is almost entirely comprised of former OEM service personnel. Because of that, the company claims that its quality of service is on par with, and in some cases exceeds, service offered by the OEM.

“Unlike titanic-sized OEMs, we are able to steer our service in many directions and craft our offerings to meet very specific and changing customer needs,” says Richard Geertson, director of service at Oxford.

Smith points out that the OEMs have different long-term growth strategies compared to ISOs. OEMs’ strategy is to sell more equipment, whereas ISOs’ are more focused on developing the resources and technical parts to extend the life of the system.

While some ISOs may partner with individual manufacturers, Smith says BC Technical partners with all of the major OEMs for its multi-vendor service lines. For example, when an OEM takes control of all the equipment in a hospital, it will give BC Technical contracts for the equipment that it doesn’t own.

Like OEMs, ISOs are also partnering directly with in-house teams. BC Technical offers different levels of service to help the hospitals meet their end goal, but they usually have a minimum contract that only includes preventive maintenance.

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