by Sean Ruck
, Contributing Editor | November 12, 2018
From the November 2018 issue of HealthCare Business News magazine
HCB News: From an HTM perspective, what are the pros and cons of working with ISOs versus OEMs?
If it’s in-house, you’re not margining your labor. The vast majority of your variable expense that you can cover in this space is labor. You are going to be stuck with an OEM for a part at some point, you could use third-party parts or you could venture into refurbed parts. But eventually what you’re going to have is an OEM selling you a solution that is based on them marking up labor. As it relates to an ISO, you have to be very careful to be fair to the OEM and to evaluate the service level you’re receiving. You would need to make sure that the ISO is getting the same quality of training as the OEM is providing its own individuals.
There are ISOs out there that are not making 50 percent margin, but they are still marking up parts 30 percent. So I would say an ISO doing something as arbitrary as that is moderately if at all better than an OEM driving the same kind of practice. There’s opportunity, but you have to know what you’re doing in order to make sure you’re not trading quality for expense reduction.
HCB News: In the wake of the FDA report finding insufficient evidence to regulate non-OEM equipment stakeholders, do you feel that new standards or regulations are needed to address patient safety or improve relations between OEMs and other equipment stakeholders?
The first problem is that there was never any information that would suggest that the FDA should even be looking at it. The MAUDE database showed no evidence that there was a problem with the ISOs that would suggest the need for a regulatory overview. In fact, ECRI came out and said that the evidence in the MAUDE database was actually decreasing, not increasing. So it was a trumped up review by the OEMs through MITA designed to drive costs up or ISOs out. So that was the goal.
When it didn’t pan out, the FDA came back and said ‘fine, then we should evaluate standardizing the use of a quality management system for ISOs as a means of getting a standard of performance.’ Once again, a standard of performance that is based on what deficit? There are certainly situations where there are ISOs that are underperforming that ought not to be performing anything. But at the end of the day, having the FDA come out and say that the OEMs are the ones who should be assessing and defining what kind of quality management system is going to be used by in-house quality management systems or ISOs is tantamount to letting those organizations decide exactly how they can overburden their primary competitors.
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