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AAMI Attendees Discuss Potential Health Care Cutbacks

by Rabia Paracha, Staff Reporter | June 17, 2009
Health care cutbacks
was all the buzz
AAMI attendees found the halls of the Baltimore, MD, Convention Center buzzing with talk of the Obama administration's cutbacks on health care.

The U.S. Office of Management and Budget's Director, Peter Orszag, is publicizing an administrative plan to save $100 billion over the next 10 years by tightening health care facility budgets. Foreseeing a bite out of their budgets, health care facilities are cutting costs wherever they can to prepare.

"This is the first time in my 25 years in the industry that I am seeing the economy have more of an effect on health care," Robert Broschart, Axess Ultrasound Director of Sales and Marketing, told DOTmed. "We just never noticed past recession and past downturns. This time around, we are noticing it. Our end-user customers are really being forced to watch every dime they spend."

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When asked what this meant for medical device makers as a whole, Broschart replied that the capital equipment market has taken a downturn, refurbished equipment sales have gone up, and facilities are shifting their attention from OEMs to third party vendors to save money.

Other leading medical professionals, including Echoserve C.E.O. Chris Cone pinpointed this trend leading the medical device market as well. "The recession is a blessing for us," commented Cone paradoxically.
The Echoserve AAMI
exhibitor team
from left to right:
Derek Giulianelli, Chris Cone,
Lyle Mussman, and Brian Neikam.

When asked if the shift was significant, a major player in the medical device industry told DOTmed that it is at trade shows like AAMI where you see these trends take life. According to this source, GE Healthcare alone operates a $200 million a year business just out of their sourcing division. Over the past three years, 90% of their sourcing has been to OEMs. However, now they are forced to shift that model to dealing only 60% of their products to OEMs and 40% through third party vendors. By this reckoning, $60 million will get diverted from the OEMs to third party vendors by GE alone.

GE was not the only company reportedly following this trend. AAMI Exhibitors found biomedical and clinical engineering representatives from facilities all over the United States, and a few international attendees, willing to hear how third party vendors could save them money.