"The repercussions of the DRA are now being felt. There is less demand for used systems and I thought there would be more demand because of the cuts. I thought it would be better for [ISOs] because there is less money to buy new capital equipment, but that is not the case," said John Pereira, CEO, United Medical Technologies, Inc., Fort Myers, FL. He has a client with a dozen multi-site, multi-modality imaging centers that typically upgrade each year, but not in 2008. "They are starting to feel the pain. We see people being frugal because they don't have the money to upgrade their systems. So there is a shortage of buyers and not many trade-ins coming out." He noted that although hospitals are not directly affected by DRA cuts, they are holding off purchases of used equipment, perhaps because of lower prices on new equipment. (Also, many hospitals have imaging centers within their operations and the DRA affects their bottom line.)

So, have current market conditions been beneficial to third party providers? "Yes and No!" Billy Paniaha emphasized. "'Yes' on the service contract side because of the high costs that these smaller hospitals are required to pay from the OEM. So hospitals are looking to third party [service providers]. 'No' on the upgrade side for the multi-slice CTs because of the smaller reimbursements [making] it hard to cover operating costs."


International markets for CT equipment remain strong - in part because of the weak dollar - and many ISOs, like OEMs, are positioned to take advantage of it. One example is ElsMed Ltd., Holon, Israel, with U.S. offices in Tampa, FL doing business as Relaxation. Inc. (named for a non-claustrophobic MR design).

"We have a lot of demand for fully refurbished CT scanners worldwide and are active mostly in Eastern Europe and Africa," reported Vice President Rami Marom. The company, which specializes in Philips, purchases used CT equipment in the U.S. then refurbishes the systems at its technical center in Israel for installation worldwide. They also provide parts and service. "Medical centers that cannot afford new equipment can have the same performance in used, like-new equipment and get return on investment in one year, which is excellent," Marom said. He has noticed more systems becoming available in the U.S. in the past year.

Service Comes in Many Flavors and Prices

Inside a CT scanner are carbon brushes that are worn down by spinning gantries. The machines need regular cleaning of carbon dust and maintenance to prevent damage from electrical arcs. The dust can also clog the cooling system and bearings. Preventive maintenance or PMs, which include cleaning and lubrication, are a minimal service need.

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