CT service contracts, long held as the province of the original equipment manufacturer (OEM) with the purchase of a new system, are increasingly being looked to as a potential source of cost-savings. As radiology departments contend with constant pressure to reduce costs, OEMs and independent service organizations (ISOs), in turn, are upping the ante with new offerings to lure customers in a more competitive market.
Healthcare providers have three basic options for servicing CT equipment: a service plan through the OEM, an in-house service team or a contract with a third-party ISO. Currently, OEMs handle more than 60 percent of all imaging equipment onsite service agreements with hospitals, and no ISO is holding more than 15 percent of the market for replacement parts, according to IMV, a healthcare market research firm.
But another medical technology market researcher, Millennium Research Group, says the landscape of the medical imaging equipment service market is starting to fragment. While the larger OEMs still hold a dominant position, this could change in the face of stiff competition from ISOs.
The price tag of an ISO service plan can be 30 percent less than one with an OEM. As ISOs continue to grow and increase their inventories and economies of scale, they also will increase their shares of the U.S. service market over the next four to five years, Millennium predicts.
The OEM advantage
Most providers stick with the OEM for CT service, according to Ade Lawal, COO of Atlantic Medical Imaging in southern New Jersey. One major consideration is the level of expertise, as it takes time for third-party ISOs to catch up, especially with newer CT technology. ISOs become more competitive only as they grow their understanding, and as parts become more prevalent.
"Until that happens, it makes sense to stay with the OEM," says Lawal.
He says the in-house service model works better in the large hospital environment rather than independent imaging practices. There is a limit to cross-training beyond a few modalities. An engineer who services CT probably can't develop expertise beyond one additional modality, so a large staff is needed. Without a baseline volume of calls, it might not be worth it to employ in-house staff.
"The variety of imaging equipment and the skills required for each different modality makes it difficult to maintain an in-house service team," says Lawal.
Still, practices should ask tough questions of the OEM to ensure an optimum contract, including:
- Can the OEM guarantee uptime more than 99 percent?
- What is an expected response time if there's an issue?
- What does the field service coverage look like and how many engineers are in the region?
Keys to success
Another important factor to look for in a CT service plan is whether the OEM uses remote diagnostics to monitor the equipment status. IMV found that for hospital-based CT scanners with 64 or more slices, 84 percent of the OEM service contracts cover remote diagnostics, with the OEM able to remotely repair equipment in two-thirds of contracts.
Jason Kreitner, administrative director of diagnostic imaging at Hackensack University Medical Center in Hackensack, N.J., says the facility, which has had an integrated service management plan with the OEM for the past five years, has never had an issue with uptime. A large part of this success is attributable to remote diagnostics.
"If there are issues with a scanner that we are unaware of, they call to inform us that a tube, for instance, is overheating," offers Kreitner. "We have a high level of uptime, mainly due remote monitoring."
Through Hackensack's OEM service arrangement, they have a local service manager who works onsite. Rather than calling an operator, getting a service number and waiting for a return call, Kreitner says they can coordinate service for their six CT scanners through their local contact, who also takes ownership in making sure the equipment stays up and running.
"I've heard horror stories about [service staff] living an hour and a half away," says Kreitner. "When it comes to a downtime situation at two o'clock in the morning, you want someone there quickly. When you negotiate contracts, make sure you build in uptime numbers, as well as response times."
In addition to having local service engineers, there are two parts depots within 30 miles of Hackensack, which also gives Kreitner some peace of mind knowing he can avoid most delays in parts shipping.
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