Once imaging equipment is financed and installed, what are the best service options?
There are many variables in the medical imaging equipment equation. Which equipment is right for a facility? How does a facility finance new equipment? How are administrators persuaded to invest in the new purchase?
And finally, once theequipment is securely financed and safely installed, what is thebest service option for the equipment?
Today there are more service options than ever. Not only has the number of options multiplied, but also the very meaning of service has changed. Cost and labor pressures on the health care industry have yielded a redefinition of service. Art Larson, service operations manager for GE Medical Systems (Waukesha, Wis), says, “Service is about more than fixing things. It’s about our company and our customers working better, smarter, and faster.”
GEMS and other service providers operate in a fiercely competitive climate. Original equipment manufacturers have gobbled up smaller service companies and dropped prices for service contracts over the last few years. They are also attempting to deliver value in other ways. These days, hospitals can select from a portfolio of OEM service options to best meet their needs. This can be an attractive solution for many facilities.
There are, however, a few downsides to the OEM options. The biggest downside to a full-service OEM contract is its price. A fair number of cash-strapped hospitals are finding that full-service contracts are more than their budget can swallow. And while remote diagnostics are a great tool, some hospitals prefer a more hands-on, personal approach.
Declining rates on service contracts have made life more difficult for many independent service organizations, which are struggling to compete with OEMs. Some ISOs are succeeding by relying on their ability to provide personalized, independent service. And many of the more successful ISOs are peddling consulting services in addition to service. ISOs, after all, are unbiased and uniquely equipped to discuss the pros and cons of various technologies.
There is one final service category: A number of hospitals are opting to go it alone and rely on their in-house service department. One of the primary advantage of going it alone? In-house groups can be quite cost-effective, which can result in significant savings.
The Ins and Outs of In-House Service
Thomas Jefferson University Hospital (Philadelphia) has a relatively long history of in-house service. The hospital program is nearly 25 years old. Initially, however, the in-house department steered clear of imaging equipment. About 12 years ago, the department began servicing radiology equipment, and 5 years ago it began servicing high-end medical imaging equipment such as computed tomography and magnetic resonance imaging scanners.
Ira Tackel, director of biomedical instrumentation at Thomas Jefferson, describes the basics. “Our program is quite large. It includes our institution, and we sell our services to other institutions. Total staff is just under 70 full-time employees, and 12 engineers are dedicated to high-end equipment support. Annual expenses for everything we do, from infusion pumps to CT and MRI, are in the $10 million to $12 million range. This includes both internal and external parts and labor.”
The numbers only scratch the surface of the in-house story. For starters, Tackel points out that the institution has not completely spurned outside vendors. He explains, “Not everything we do is completely insourced. We do call outside vendors for help. Some contract for parts coverage. Some provide preventive maintenance. We have a smorgasbord of different approaches to service, each of which makes sense for that area.”
What are the nuts and bolts of an effective in-house program? It is actually fairly simple. A critical mass of equipment and access to training and parts are essential. A critical mass of inventory at any technological breakpoint allows the hospital to train its engineers and spread its risk over several machines. For example, if, in a hospital with eight linear accelerators, a tube blows on one machine, the hospital can make up the cost on the other seven.
Tackel adds a final ingredient to the in-house equation. “There should be a commitment by the administration to look at the 24- to 36-month picture, not just [the picture] for 12 months.”
One part or a streak of bad luck might blow the 12-month budget, but over the longer term the hospital will make it up. Although the fiscal uncertainty may sound a bit daunting, Tackel says that, historically, he has been proven right every time.
Selling the In-House Option
Tackel concedes that OEMs have one major advantage over in-house programs, “We all agree at the end of the day [that] a full-service contract with an OEM is the safest approach a hospital can take. It is also, by design, the most costly. My contention is that, with dwindling health care dollars, we cannot afford a full-service contract. The challenge is finding some more cost-effective arrangement that doesn’t compromise the quality of support.”
A hospital can typically shave 20% off the cost of a full-service contract by opting for medical-instrumentation maintenance insurance. Tackel says, “I believe we can do better than 20% savings.”
Where does Tackel find the savings? A field service engineer might have responsibility for anywhere from 6 to 12 geographically dispersed CT scanners. That engineer could spend about half his workday time traveling between sites. When the service engineer is located in-house, the amount of travel is cut significantly. Tackel says, “On that score alone, we are bringing back efficiency. We aren’t working more. We are working smarter.”
For Thomas Jefferson University Hospital, working smarter also entails duplication, backup, and cross-training. With a staff of 70, Tackel can afford to cross-train engineers. A sick engineer or a vacation day does not spell emergency. For some in-house departments, duplication is not an option. Still, there are other ways to back up in-house service engineers.
Tackel says a few hospitals with one lone CT scanner have brought service in-house. In that case, when an engineer is sick or is on vacation, the manufacturer can supply the backup. While the OEM may claim that time and materials customers are at the bottom of the service list, Tackel pokes a hole in that argument. “That paying customer is additional revenue for the OEM. Wouldn’t the OEM be more willing to service the customer paying through the nose?”
Tackel admits that self-service is not right for everyone. It takes a deliberate approach and a commitment to the bigger picture. The result at Thomas Jefferson University Hospital is both cost-effective and efficient. Tackel concludes, “Overall, if you look at our cost and performance, we stack up against any vendor.”
ISOs: The Other Independent Option
Some institutions just cannot quite stomach the reality of servicing medical imaging equipment in-house. But that does not mean that an OEM service contract is the only remaining option. Although the service market has become somewhat tougher, ISOs are alive and kicking (and providing darn good service to boot).
Raymond Zambuto, president of Technology in Medicine (TiM) (Holliston, Mass), says, “How well the ISOs are competing against the OEMs depends on how they’re competing. Thanks to pressure from the ISOs themselves, many OEMs have become much more price competitive, at least on a contract basis. Those ISOs that go head to head with the OEMs on price alone are seeing their market share shrink as price becomes less of a factor.”
Nevertheless, Zambuto sees a bright future for ISOs and their customers. He continues, “Smart ISOs are bringing new strategies into the game, finding better ways to work with the customer instead of trying to capture the customer.” These smart ISOs bundle multiple modalities and high technologies such as imaging, medical, telecommunications, and IT under one roof to bring economies of scale to the table. With this volume of work, the ISO can support an on-site manager to triage problems and act as advocate for the customer. According to Zambuto, “The well-run ISO should look, to the clinicians, more like an in-house program than a vendor.”
This philosophy has been applied at TiM over its 30-year history. Most hospitals do not have the scale to support service for their imaging cost-effectively. TiM’s approach is to field the best combination of cost and performance for the individual situation. In addition to its own staff, TiM will utilize maintenance insurance for some items and even work with the OEMs. “For example,” says Zambuto, “by bundling a single modality from several hospitals into one contract and combining this with TiM’s triaging, we can negotiate better pricing from the OEM than the individual hospitals could achieve on their own.”
Zambuto believes ISOs are also very well positioned for the future because they work with a wide variety of equipment and can help hospitals with capital equipment decisions. ISOs know the technologies and trade-offs and can act as independent advisors. This consultative type of service solution enables the hospital to save money in the long run.
With integrating the health care enterprise on the horizon, a hospital’s ability to select “best-of-breed” or “best fit” for each modality will be opened up as equipment conforms to a single, vendor-neutral, technical framework for communications. Zambuto, who is also president of the American College of Clinical Engineering, foresees new opportunities for ISOs with this development. “Hospitals require a savvy, technically independent component as they plan and implement these new systems. If they don’t have that clinical engineering capability in-house, they need to find an unbiased partner to work with.” And as the systems are implemented, ISOs can continue to play a key role. Zambuto tosses out a common scenario. If the system includes components from different manufacturers, when the information stops, which manufacturer is called? “The hospital needs someone who understands how the technologies work together and how the information flows. That role can be filled by tomorrow’s ISO,” concludes Zambuto.
OEMs Rise to the Service Challenge
Yes, it is true, contractual rates for service are falling, but many hospitals still find themselves in the same boat as Thomas Jefferson University Hospital. That is, a full-service contract with an OEM is just too expensive. This presents a challenge to the OEMs. What value-added services can the OEMs offer to make full-service contracts more palatable for cash-strapped hospitals? Remote diagnostics, for starters. Throw in flexible, customer-oriented solutions and add a personal touch and you have an attractive service option on your hands.
Paul Murdoch, senior vice president of customer services for Philips Medical Systems (Bothell, Wash), says Philips’ service-improvement plan actually begins in the product design stage. “Product designs themselves are resulting in more reliable products overall.” The company has also focused on changes and improvements in remote diagnostics, monitoring, and servicing.
GEMS also has incorporated digital intelligence into its new products; new digital products fall under GEMS’ Design for Serviceability undertaking and include broadband access. These supercharged products provide GEMS field engineers and hospital administrators with valuable information about the system. Field engineers are linked to hospitals via a virtual online center, which allows them to fix some equipment problems remotely. Larson estimates that 75% to 80% of software and application problems can be successfully resolved remotely. The impact of broadband extends beyond the engineer. GEMS provides information about use and operating patterns to radiology and hospital administrators, which allows them to assess the utilization of the equipment. These reports can also be used to effectively plan and manage the radiology department. The results? Smarter machines, smarter administrators, and smarter decisions.
Remote monitoring may be the ultimate smart tool. These monitoring services, typically available with a full-service contract with an OEM, entail screening of signals and temperatures, which can identify a problem that will occur in the future. Part replacement can be scheduled and planned. Jim Greaney, director of services marketing for Siemens Medical Solutions (Cary, NC), says proactive monitoring services are part of Siemens’ value proposition and can increase equipment uptime by reducing unplanned maintenance.
Still, remote diagnostics may not be the wunderkind of medical equipment service. Remote diagnostics does decrease face time between a service engineer and the hospital client, which makes for a more impersonal relationship. And not everyone is buying the remote argument. Tackel of Thomas Jefferson University Hospital opines, “Remote diagnostics is fine, but it usually doesn’t take the place of a service engineer coming in.” Vendors contend that when a problem does require a site visit, remote diagnostics enables them to dispatch a more fully prepared engineer.
The Kinder, Gentler OEM
Although high tech is a key variable in the service equation, high touch seems to be equally important. Greaney acknowledges, “One of the challenges of central service support is that it eliminates the personal relationship. This is an advantage of ISOs and in-house clinical engineering departments.” Within the last year, Siemens has focused its efforts on making its call-management center more customer-friendly and, at the same time, speeding up the process. The company has implemented call-voice options to streamline the call process and provide a more personalized approach. It has also added a triage group within the call center. The group directs call traffic and connects callers with a technician with knowledge about their specific product and problem.
Not all service solutions require high technology. Good business sense can go a long way. Take Philips. The company recognized that it needed to provide increased coverage throughout the day and geographically to help customers maximize equipment uptime. Philips employed a three-pronged approach: It increased service staff, staggered the hours worked by staff, and implemented far more cross-training of personnel. This, coupled with an investment in remote service, allows Philips to provide a 24/7 umbrella of support for its customers.
One of the most meaningful additions to the OEMs’ service portfolio may be flexibility. For a growing number of hospitals, the ideal service solution may not be an OEM or an in-house program but a combination of both. A growing number of hospitals are opting for a hybrid approach to service. Murdoch notes, “There is value to an in-house program. An engineer is always available, and there is never a long response time.” At the same time, service has become increasingly complex. Engineers no longer operate with a mere toolbox and wrench but rather with a laptop and sophisticated software. How can an in-house staff keep up with all of the latest technology? “For some hospitals, it makes sense to invest in an in-house department and partner with an OEM. We see that happening more and more these days. It’s a definite trend,” says Murdoch.
Siemens will partner with a hospital and offers three levels of shared services. The core of the shared services is training and knowledge transfer to increase the competency of the in-house group. At the basic level, Siemens provides all of the on-site support that an in-house department needs, some parts, and a designated response time. The company also provides on-site training, and engineers can enroll in classes alongside Siemens’ engineers at its Cary, NC, facility. As the in-house group’s skills increase, the department moves to an advanced level, which includes limited on-site support and continued training at this level. Finally, at the expert level Siemens provides unlimited technical support and remote service from its uptime center. On-site support is billed on a time and materials basis. The goal, says Greaney, is to shift services to the in-house group. Ultimately, Siemens will serve as a backup. He continues, “It makes good business sense. If we partner with the customer, we can gather more customer loyalty, and they will buy from Siemens in the future. It’s a win-win situation.”
Philips offers a similar range of solutions for its customers. A hospital might select various hours of coverage, a training and support partnership arrangement, or a multivendor arrangement where Philips’ engineers service equipment from all vendors. Murdoch explains, “One size fits all is not something we subscribe to. We can work to select the best remedies for the customer.”
GEMS also offers a continuum of flexible service options, beginning with a basic plan and extending to comprehensive, “no worries,” full-service contracts. Even the basic plan may not be so basic. Larson says, “Many of the options provide a virtual solution. For example, a hospital might opt for a contract for normal hours on a CT and 24/7 remote diagnostics.”
Murdoch concludes, “The changes that have been taking place in the service industry have been very positive and are to everyone’s benefit. There is more value and more choice.” The hospital may win with maximum utility on high-dollar equipment and better patient care, which translates into a more efficient radiology department and a better bottom line.
Lisa Fratt is a contributing writer to 24×7.