Sonora Medical Systems
Founded in 1991, Sonora Medical Systems Inc, Longmont, Colo, a subsidiary of New Yorkbased Misonix, specializes in the repair and refurbishment of ultrasound probes and systems. In addition, the company has a line of ultrasound testing equipment and provides training to medical engineering departments to help them maintain their refurbished ultrasound systems. The company has about 27 employees and annual sales of approximately $8 million, experiencing approximately 30% growth per annum. We recently spoke with Christopher Cone, senior director of business development for Sonora Medical Systems, about the companys niche in the refurbishment market and the future of the industry.
24×7: What are some of Sonoras niche markets?
Christopher Cone: Where we distinguish ourselves on the system side of the business is our focus on the mid and higher-end scanners, mainly ATL, HDI 3000- and 5000-type scanners, Acuson Systems, and higher-end GE [Medical Systems]. We put them through a rigorous multipoint inspection, upgrade process, and full refurbishment in accordance with ISO-certified and FDA (quality system regulations) procedures.
One of our greatest strengths is ultrasound probe repair. Prior to the existence of Sonora, every probe that was dysfunctional was either replaced under warranty or the end usermainly the health care providerwas forced to replace it with an expensive new probe from the [original equipment manufacturer]. We changed that paradigm by offering a repair option. A significant number of damaged probes, 70% or more, today can be repaired at a cost of about 10% of the cost to replace that probe through the OEM. We also have a large inventory of the main ultrasound probes in the installed base today and our own line of OEM replacement probes that we designed and offer as replacement options to end users.
24×7: You encourage your customers to take care of the equipment themselves rather than buying service contracts. How do you do that and why?
Cone: Our primary mission is the empowerment of biomed departments: to have the knowledge, to have the access to parts, to have the training, to have the expertise to support their equipment without the need for comprehensive OEM or ISO service agreements. We really want to provide them with the tools, whether that be training or test equipment or refurbished parts or systems to manage the support of their ultrasound equipment. If they would still like to have their equipment serviced, we do have a network of field-service technicians that we contract with to provide serviceprimarily for the refurbished systems that we sell. Again, we are trying to convince the industry, convince the health care network, that they are capable of taking care of their equipment and that there are support entities out there that can allow them to take on comprehensive service of their equipment.
24×7: How does empowering its customers help Sonora?
Cone: By empowering the group to take on the support of their equipment, we have a channel to sell our First Call 2000 probe tester, we have a channel to sell refurbished parts, and we have a channel to sell our training. So, clearly, it is in our interest to get more and more groups to take on support of their equipment and not enter into OEM service agreements.
24×7: Who are your customers?
Cone: We sell to OEMs through their multivendor service groups, and we sell to a large number of independent service organizationslarge national chains as well as regional. We sell to a large number of hospitals. We sell to dealers. We kind of address the gamut of entities involved with ultrasound service.
24×7: Are you considering any new markets or product lines?
Cone: One of the things we will do is expand the capability of one of our key platformsour probe testersto actually get into the front end of the system and test further and further up the imaging chain. Instead of just looking at the probe, the clinical engineering group then will be able to diagnose a lot more in a system. Another area we are looking at is taking that 70% or so of ultrasound probes that can be repaired and increasing that to 80% or 90%. The more probes that can be repaired, the lower the cost is going to be to the end user, the greater number of probes will be available, and the lower the total cost of ownership of ultrasound will be. Six months ago, we made a decision to support independent service organizations and a number of end users in depot repair and spare parts for MRI equipment. Well continue to expand in this area also.
24×7: What is the future of the refurbishment market?
Cone: It is growing now, both domestically and internationally. The international refurbished equipment business is a major pull. No OEM would tell you that the refurbished system market is not an important channel. It has to be robust and continue to grow in order for new systems business to grow. I think some of the interesting dynamics will be around the ongoing tension between OEMs and ISOs and steps that OEMs might take to make life difficult for ISOs and dealers in terms of technical barrierssoftware keys, locks, access to documentation, restricted partsthe things they can do to sort of wall off their total revenue stream. I also think there are some regulatory [changes] that will be imposed on the refurbishment market to get better control and to ensure that doctors and practitioners are getting equipment that is safe and effective.