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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

“Just as we have with the OEMs, we have elected to partner with [in-house teams],” says Smith. “With these hospitals going in-house, we don’t see it as a competitive thing. We see it as an opportunity to partner and to expand our presence in each of the facilities.”

They help in-house teams become what they call “service independent” by evaluating the teams, customizing training programs and getting the engineers to the point where they can service the equipment on their own.
“As their people get competent and confident, then we start shifting those service contracts to be less encompassing,” says Smith. “In some instances, we will just provide remote or on-site support as needed.”

Oxford also has partnerships with several health organizations to provide the in-house teams with parts and technical support. However, the company thinks this trend has a much bigger impact on OEMs because they generate long-term revenue from point of sale service.

A vital ‘part’ of the puzzle
For hospitals, particularly those utilizing equipment no longer serviced by the manufacturer, parts are an important piece of the equipment maintenance equation. There is no single right answer for where to get parts and the options are increasingly competitive.

Advocate’s first choice is OEM parts, but if they’re not available, or it’s not an area the OEM is supporting, then it seeks out a part refurbisher. However, that strategy could change if the price isn’t right.

“If the price of the parts from the manufacturer is not keeping up with the market, then we will ask if they can match the market price,” says Vanderzee. “If they are willing to come close, then we will continue to use those parts. But if not, then we will start outsourcing outside of the manufacturer.”

For Richardson Healthcare, a provider of high end diagnostic imaging components, the right third-party parts provider actively supports an in-house service model.

“We believe alternative service offers the opportunity to radically change a hospital’s cost structure, and that is where we can help with parts, tubes, training and technical support,” says Pat Fitzgerald, the company’s executive vice president and general manager.

Because of the cost and complexity typically associated with CT tubes, having an established expertise in them has become a key part of Richardson’s value proposition.

Of course, not all parts providers are created equally. Fitzgerald warns that pricing shifts in the equipment market can lead to companies popping up without true knowledge of the platforms they work with, resulting in hospitals and imaging facilities getting burned by shoddy work.

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