An Equipment Pricing Alternative

I read 24×7’s  March 2007 Soapbox article by Ismael Cordero, “Eliminating the Equipment Pricing Mystery,” and thought I might be able to offer a little industry “insider information” and an alternative.

For our nationwide client base of approximately 450 health care facilities, our company—Equipment Management and Technology Solutions (EMTS)—does exactly what Mr. Cordero asks for. EMTS tracks all major vendors across all modalities, across our client base, and across all group purchasing organizations. We track their discounting, quarterly and end-of-year promotions, closing packages, “silver bullets,” etc. We database this information down to the “per-part level,” and then leverage this information on behalf of our clients for all capital acquisitions and ongoing service, insuring that the pricing is the absolute lowest available.

The services we provide are not free, but are pay-for-performance—our clients pay us a portion of their realized savings. It is a true win/win. If we save them money, great, we share in that success. If we don’t, we validate their numbers and move on to the next project with no fees due. We perform this service on all types of equipment, including general patient care, imaging, lab, nuclear medicine, and more.

In business since 2001, we have a database that contains more than $880 million in acquisitions and service contracts, and we are adding to it daily.

I agree with the points made by Mr. Cordero (many of our clients share his frustrations), but the solution he offers may not be that simple. Over the past 5 years, even with experienced data-entry personnel we have had to go through several database iterations and cleanups to make sure the information we have is quickly accessible, easy to understand, and consistent. The idea of having untrained individuals enter the required information would almost certainly not work. In order for data to be useful, it must be reviewed, entered, and maintained by a professional organization that knows exactly what it is doing. Additionally, with a high percentage of quotes, the discounting often varies by line item, which would make it extremely difficult and time consuming for the individual user to enter.

The OEMs do not make it any easier, frequently changing their list pricing, preparing extremely long and detailed quotes with no line item pricing (only a final figure), etc. Overall, we have seen that the companies with the highest percentage market share typically give out the least amount of detailed pricing information. Like any for-profit organization, their job is to sell their products and services at the highest possible margin, and they do it very well. My opinion is that they do not want this type of information tracked and disclosed, as it would demonstrate that there is a great variance in prices paid for identical items.

Unfortunately, the facilities that pay the most are often the ones most in need, such as smaller, rural facilities. We work with many different-sized clients, from large, integrated delivery networks and 900-bed, stand-alone facilities, to the very small rural, critical-access facilities/clinics. The larger groups typically have several layers of resources they can utilize to help with their research and negotiations. And the pricing at these facilities shows it, because it is usually very competitive across the vendors. However, the smaller, independent facilities (150 beds and fewer) often get gouged. The vendors know these types of facilities have limited resources and market knowledge, and take advantage of it when they can. Most salespeople are extremely well trained, especially those at the larger companies. For example, a smaller facility might buy a CT once a decade. What chance does the person negotiating this purchase for a health care facility have against an experienced regional sales manager who negotiates 10 to 20 of these deals per month? The honest answer is, they lose almost every time, they just don’t know it!

To be clear, our company does not get involved with clinical or operational issues. We leave these decisions to the people who are going to use the equipment, which is where these decisions should remain. We also do not provide any type of user reviews or safety alerts. ECRI has this information, they do a great job of keeping it up to date, and much of it is available free on its Web site. We are strictly point-in-time pricing and negotiations. EMTS answers the questions: Who can provide the equipment you require, and what is the best price available in the marketplace right now?

Charles W. George is president of EMTS, www.emtsolutions.biz. For more information, contact .