by: Wayne Webster

I’ve been in the workplace for 37-years and most of that time I’ve been working in or around the medical imaging space. About 10-years ago I started my consulting firm and began working with dealers and servicers of used medical imaging devices.  I found this subset of the medical imaging device business very interesting. Sellers and buyers were somewhat different than those in the new equipment market. They had developed their own special expertise in order to work successfully. Demand is growing for used equipment but the drivers for the growth may be different from what most people believe them to be.

As with most things in life the answers don’t come easily without working your way up the learning curve. Understanding the sellers, buyers and servicers of used medical imaging devices is not without its challenges. These companies and their customers participate in complex selling and buying interactions.

Over the past decade I’ve assisted sellers, servicers and hundreds of end-users in the used medical imaging equipment marketplace. When I was asked to write an article about refurbished medical imaging devices for Hospital Imaging & Radiology Europe I was happy to have an opportunity to share my experience. When the assignment was expanded to a contrasting of the European and United States demand for used medical imaging devices I was pleased to explore the area.

When considering the two markets Europe and the United States I think most people immediately assume there is a difference in the way medical equipment is purchased. Europe with its socialized medicine and the United States with a profit driven system must cause purchases to happen differently. I don’t think that’s correct thinking and from my experience believe it is the institution and the way in which budgets are developed and funded that actually drives the acquisition process. In America we say you have to follow the money.

A Few Ground Rules

To be able to describe the used equipment market we should establish some definitions.  Pre-owned or refurbished labels on medical imaging equipment both mean the same thing. The equipment is USED. Over the past decade or more sellers in other markets, automobiles for example, have coined new terms for used product and the vendors of used medical imaging equipment have adopted these synonyms. Maybe it’s a good thing but a potential buyer needs to get beyond the advertising, get to the heart of the product description and understand what they’re buying.  It’s a critical step.

A device labeled as remanufactured is based on a used device but it has been upgraded and possibly changed to meet new standards or even a new use. Most likely the vendor selling remanufactured equipment is regulated by the local government medical device authority and is subject to similar scrutiny as the original equipment manufacturers. Remanufactured is not the same as used and really should be considered in the same category with new.

Understanding What Drives the Used Medical Imaging Market

As the economy slowed over the past few years articles speculating on the impact of used equipment both in the United States and in Europe appeared. Reading these articles brought me to one conclusion. If the author profited from the sale of used devices then he predicted a rosy future. For the reader, I guess during more difficult economic times predicting growth of less costly used equipment is obvious. It’s a visceral response; less available capital logically should motivate people to seek lower cost equipment. Unfortunately the obvious answer is not necessarily the correct answer. For if there was a direct correlation between the availability of capital and the choice of new or used equipment then used equipment should be making a huge impact in poorer countries. In fact it is just the opposite. Poorer countries around the globe are legislating against the importation of used medical imaging equipment.

I believe if you remove the geography from the equation and think about buying pressures there are many reasons for making a purchase of new or used equipment. The real challenge is to determine if change in the economy drives the purchasing patterns in any specific direction. I think a depressed economy does affect buying habits and we have direct evidence of this since the down turn of 2008. As available capital declined the sale of new equipment slowed substantially. You can read about this in the newspapers. All the major companies suffered as unit sales declined. If a depressed economy drives buyers to look for cheaper service and equipment, i.e. buy used equipment and parts, then from 2009-today the sale of used equipment, parts and service should demonstrate growth as a result of the down turn. Although accurate sales figures are not reported for used equipment, my observation is that the acquisition of used equipment is not directly tied to the economy.

We can speculate about the reasons but this would be a subject for another article. Let’s instead think about those situations that influence purchasing patterns. Larger medical institutions whether in Europe or the USA all act the same. By the nature of their size the organization demands the use of long range planning and budget justification. Departments wishing to acquire capital equipment must justify a budget request and then await the results of the budget review process. Certainly the availability of capital will drive budget line approvals, but if the outcome of the process is uncertain as it always is in large institutions how could you justify asking for anything other than new equipment? Who knows when the granting authority will shine favorably again?

We can draw from this logic that if Europe’s health care system is single payer, socialized medicine and generally consisting of larger medical institutions which are budget driven, then increasing the market share of used equipment will be a struggle. Having said this, there is a move afoot by the original equipment manufacturers to offer used equipment.  But what they are actually offering is remanufactured equipment. And as such these devices shouldn’t be a measure of the acceptance of used capital equipment.

In the USA we also have large medical institutions and just like their European cousins the budget process will override the objective of generating a profit from operations. When the requester doesn’t know what will be approved or when it will be approved he has no option other than to request the latest and greatest new equipment.

The Used Equipment Buyer

Used equipment has is important in the health care delivery system on both sides of the ocean and it is growing in overall share. The buyer is quite different from those in larger institutions. Generally his facility is smaller, serves a local market, is profit driven and competes openly with larger institutions in his locale. The owners are at risk for all capital resources expended for the operation of the health care delivery company. These buyers are generally much more technology sophisticated and buy the equipment that meets their need now and for the immediate future. They focus on throughput, reimbursement and the efficiency of the operation. These people as a group rely on their equipment suppliers to offer effective, high value equipment and services at highly discounted rates as compared to new equipment vendors.

Choosing the Proper Vendor

If you fit the description of a used equipment buyer what do you need to know to successfully acquire used medical imaging equipment?

1) You must have an appreciation for the health care needs in the area you serve.  Sounds quite basic but many do not and fly by the seat of their pants.

2) You must have the ability to develop specifications and requirements for equipment you need for your service area.

3) You must be technology savvy and understand the intricacies of the equipment you require and be able to judge the equipment offered.

4) You must know about installations, start-up and day to day operations for the device.  The used equipment company will be smaller than the OEM and may not have as many resources to call upon to satisfy your daily need for support.  If your group is not able or willing to work with the service company to solve a problem and just expect to be waited upon, used equipment may not be for you.

5) You must be able to demonstrate to your patient referral base that the used equipment you have is capable of meeting their patient imaging needs.

All Used Equipment Sellers and Servicers Are Not Equal

Used equipment vendors can be highly experienced and professional companies or they can be brokers who are in and out of business transactions without much chance of providing support after the purchase. Identifying the type of dealer can be difficult. You’ll need references and a description of the company’s capabilities. I advise an industry trade association called IAMERS the International Association of Medical Equipment Resellers and Servicers. It’s a worldwide organization and to become a member you must meet and maintain high business standards.

By making use of the IAMERS directory you will find many suppliers of used medical imaging devices as well as those who finance and service the equipment. If used medical imaging equipment is right for you, then IAMERS should be the first place you go to locate a professional seller and/or servicer for your medical imaging needs.