Numerous respondents in 24×7’s 2020 job compensation and salary survey revealed that they were experiencing at least some difficulties sourcing parts as a result of the COVID-19 pandemic. On the heels of this revelation, four individuals with a vested stake in the medical equipment parts sector—Joseph Graham, Jr., Canon Medical’s vice president, service sales and marketing; Frank Lewis, vice president of global parts operations and sales at Probo Medical; Sam Bello, regional sales manager for the Americas at Dunlee; Mara Paré, vice president of client solutions at PartsSource—discuss how the pandemic has affected operations and what their companies, in particular, are doing to combat the challenges.
24×7 Magazine: Can you please discuss how the COVID-19 pandemic has impacted the medical equipment parts market?
Sam Bello: The pandemic has absolutely brought about difficulties sourcing medical parts. Principally, there have been shortages in the supply chain. As a result of the uncertainty created by the virus, system owners are holding on to their machines longer than before. This has not only increased the price of older systems on the resale market due to decreased supply, but also increased the demand for replacement parts while decreasing demand for new systems. Furthermore, original equipment manufacturers, or OEMs, have also experienced a decline in their parts inventories because their raw materials suppliers are behind schedule.
Joseph Graham: In general, Canon Medical’s parts supply and inventories were maintained through the pandemic. Canon Medical already had established 40 Forward Parts Depots across the U.S. in an effort to place part inventories closer to our customers. Regardless of the pandemic, any natural catastrophes, or some other unforeseen issues, Canon Medical’s parts strategy was in place and ready to be utilized, so we really didn’t have many parts-sourcing issues. However, transportation costs and occasional speed of delivery did affect our customers. Quick, comprehensive customer communication was the key to identifying and resolving any of these unexpected issues.
Mara Paré: The challenges of the pandemic have illuminated the importance of a reliable, resilient supply chain. Because of high demand, many parts, including critical parts, have seen a rise in backorders. When clinical engineering departments cannot obtain the parts that they need in a timely fashion, it puts a great strain on patient care. Clinical engineering departments need to make sure they are partnering with suppliers who are reliable, have a process in place to proactively manage quality, prevent supply chain issues, and practice continuous communication to set and manage expectations for product delivery.
Frank Lewis: It is already difficult to source ultrasound parts, in particular, because of constant changes in supply due to part availability and market demand, not to mention quality inconsistencies. During the COVID-19 pandemic, the market demand went up while part availability went down. It was the perfect storm, on top of the chaos already occurring in the healthcare industry.
24×7: How is your company, in particular, responding to the parts challenges brought on by the pandemic?
Graham: Very early in the pandemic, our company decided to increase inventory stocking levels in anticipation of potential supply chain issues. In retrospect, this seemed to eliminate any gaps in parts availability.
Lewis: We recognized there was a shortage of high-quality ultrasound parts on the market, so we decided to harvest parts from our large inventory of ultrasound systems. In 2020, we grew our inventory organically to over 25,000 tested ultrasound parts from all top manufacturers. We are uniquely positioned to create an inventory of this size because we are the largest customer for ultrasound systems globally. As a result, we have the largest in-house inventory of ultrasound parts in the world, so we do not need to rely on sourcing parts for our customers.
In addition to the supply problem created by the COVID-19 pandemic, we also recognized consistent problems in quality control. Therefore, we brought all of the processes in-house—harvesting, repairing, and testing—to ensure our parts would meet our customers’ needs. Our tech support team is also free to our customers for installation assistance.
Paré: One way that PartsSource is working to prevent backorders is by staying in constant communication with suppliers to obtain actual dates that products will ship. We are moving beyond listing the number of days until a product will ship to providing customers with a concrete ship date, which is visible on our website. In addition, we have updated our customer notifications to provide details surrounding any delays for products.
This challenge has also highlighted the importance of data. Two ways we are leveraging data for our customers at PartsSource is with our guaranteed stock program and our Command Center. The guaranteed stock program leverages data science and micro-stocking to ensure availability of mission-critical products kept at the PartsSource warehouse. For example, one hospital system’s clinical engineering department was challenged with a lack of oxygen hoses for ventilators. But through our nationwide network and using guaranteed stocking, the department was able to obtain those for the hospital overnight.
Another way we are using data is with the PartsSource Command Center—a service used to identify frequently stocked-out products and dynamically manage guaranteed stock for PartsSource Pro members to promote supply chain reliability and resilience. For one hospital system, the emergency department and pre-op areas needed to order critical patient cables, but there was a three-week lead time with their usual vendor. By leveraging the Command Center, PartsSource proactively isolated slowdowns in the supply chain and was able to have critical patient monitoring cables onsite within two to three days.
Bello: Dunlee has increased our efforts to invest our resources in developing extraordinarily relevant and meaningful connections with people, to ensure that customers feel valued every time they interact with us. We try to reassure both customers and prospective customers that Dunlee is eager, willing, and able to service them well, especially during this tragic pandemic. Our objective is to assure that the marketplace experiences us as a trustworthy partner with deep knowledge and sufficient resources to be relevant not only during this pandemic but beyond.
One concrete way we are responding to potential shortages is by leaning on the strength of our global supply chain. We source materials for our products from several locations and explore alternative sources proactively to prevent shortages. As a supplier, having operations on three continents helps us be nimble and mitigate disruptions. Our efforts included working with government organizations wherever we have facilities to determine how to keep production steady while also ensuring the health and safety of our employees.
24×7: How has the medical equipment parts sector evolved in the past few years? How do you expect it to evolve even more in the future?
Lewis: Back in the day, there were 16 different channel boards. Now, a system has one computer that typically causes most of the problems. There are not as many parts anymore, and the ones that break down are often the most expensive.
Additionally, the mom-and-pop shops cannot keep up with customer requirements of quality and supply. Therefore, consolidation is happening more frequently in the market to improve offerings for customers, which includes ISO 13485 certifications. Being ISO certified is more of a requirement for doing business in the ultrasound parts market—my line of business—than ever before.
Graham: Over the past year, virtual home office environments have become the standard and fixed office hours no longer determine one’s business day. As a result, customers may browse for parts any time of the day, educating themselves about their options and pricing. Anticipating customer needs—and being able to deliver a solution which satisfies those needs—is a key aspect to providing superior customer service. Moving forward, customers will likely continue to seek the convenience of online parts shopping, and don’t want to be restricted to just parts.
Bello: The U.S. medical equipment parts sector has become more welcoming of used or preowned parts. In addition, the sector is becoming better at testing and conditioning used parts. Well-known and well-funded hospitals continue to buy top-of-the-line systems and parts, while institutions with tight budgets are looking for ways to save resources until hospitals begin to recover from the pandemic.
We expect that customers will reward those parts suppliers who have been able to provide peace of mind by meeting demand during the pandemic by doing business with them after the pandemic is over. In the coming years, they will want to work with suppliers who have been able to demonstrate that they possess the resources and resolve to thrive during difficult times, as well as the long-term commitment to continue bringing to market new, innovative, and relevant solutions for years to come.
Paré: COVID-19 has accelerated existing trends within healthcare technology management. Clinical engineering departments will continuously face challenges as healthcare settings accelerate toward remote care and telemedicine, and as medical equipment becomes more sophisticated—often integrated into other healthcare IT platforms, and more interoperable.
In the short term, we expect hospitals to develop a more robust continuity plan and look more closely at their equipment lifecycle needs. We see them working with their vendors to take a quantitative look at their supply chain for not only equipment and parts, but service, accessories, supplies, and preventative maintenance kits.
As hospitals transition to a recovery phase, we expect to see further adoption of digital marketplaces and managed services platforms to increase supply chain reliability, increase technician productivity, and decrease HTM/CE department costs. We also expect increased demand for additional onsite maintenance services that expand the HTM department’s capacity to tend to mission-critical equipment through in-house maintenance and specialized service partnerships.
We will continue to provide solutions that empower clinical engineering and HTM leaders, charged with upholding patient safety through equipment uptime, to achieve high-performance HTM through measurable improvements in quality, productivity, and costs.
24×7: What should HTM professionals keep in mind when purchasing medical equipment parts?
Paré: With the current climate, clinical engineering departments are under great pressure due to a multitude of factors: capital constraints, staffing shortages, cybersecurity threats, COVID-19, more complex equipment, and more. With all of these pressures, searching for parts is becoming part of the job. CE/HTM professionals should focus on building effective capacity and taking on initiatives and solutions that reduce the time spent on low-value activity to shift to expand time spent on more strategic, high-value needs to address some of those pressures.
In addition, when it comes to the parts purchasing process, there are many options available at multiple different price points. It’s important for clinical engineers to make their product selection not just based on cost, but also based on the quality of the product. There are opportunities to help CEs with this process—by working with a partner to improve standardization of the process.
One way that partner organizations are helping with this process is through formulary controls. This is the use of formulary rules or purchasing policies to standardize the purchase of the recommended product with the highest value. That way, the clinical engineer can feel confident that they chose the product with the highest quality at the best cost and get time back in their day to focus on what matters most: servicing medical equipment.
Bello: While looking for competitive pricing, HTM professionals ought to consider medical parts depots. These companies have a long-standing reputation of trustworthiness and fairness, with an emphasis on delighting customers with excellent quality products and services.
Graham: The key component to purchasing medical parts is value. Lower-priced parts may be easy to find from time to time, but if they don’t work, don’t have the appropriate revision level, don’t meet manufacturers’ specifications, don’t come with a warranty, or can’t be delivered in a timely fashion, that low price point has little or no value. [Remember the adage,] “If it looks too good to be true, it probably is.”
Lewis: Not all parts are equal. When a company tells you their parts are tested, ask them to define what “tested” means. Probo Medical’s ultrasound parts, for instance, are tested in-house at our main technological facility to meet manufacturer specifications. We also offer free tech support to our customers from our veteran team of engineers.
24×7: What special considerations should HTM professionals take when handling and maintaining equipment parts?
Bello: Consult with suppliers regarding best parts-handling practices and, based on those conversations, develop clear and implementable processes and procedures to handle equipment parts—for example, using static bags and mats.
Paré: There are many considerations HTM professionals should take when handling and maintaining equipment parts, but here are some of the major questions to ask:
- Which parts support critical equipment that cannot afford to be down for extended periods of time? Thinking about this helps clinical engineering teams plan the items that they want to have in stock.
- How frequently is the part used and how many devices use that part? From there, CE teams should then determine an appropriate periodic automatic replacement, or PAR, level and maintain it.
- What is the cost of the part and how does that impact working capital within your department or organization?
- Does the part have an expiration date or is there a potential for the part to deteriorate from sitting unused?
- Do you have an inventory management strategy or system? Is it integrated in your CMMS, with your enterprise resource planning; barcode scanning, radiofrequency identification, or other method; PAR levels; digital inventory warehouse to track usage; availability; cost; etc.
Lewis: There used to be a lot of individual parts in a system. Now, many parts are condensed to higher-level parts. [From an ultrasound equipment perspective,] with the increased sophistication of ultrasound software, you need to consider your software level when ordering hardware because it may require a slightly different part. Additionally, you must be aware of proper electrostatic discharge practices when installing new parts.
24×7: What else do you want to tell 24×7 readers about the medical equipment parts market?
Lewis: Mergers and acquisitions are happening frequently now, so it’s important to vet your suppliers. Asking questions like, “How do you test your parts?” and “Is my part coming from your inventory?” will help you determine what company is your best partner for ultrasound parts, in particular. Due to the strengths created in consolidation, companies can now offer higher-quality parts at lower prices. Take advantage of those opportunities.
Bello: Conduct due diligence and research potential parts suppliers before placing an order. Cost is only one factor; don’t chase the lowest price at the cost of future headaches and hidden expenses. With more than 75 years in the U.S., Dunlee has had the privilege of offering not only world-class products but also care and empathy, which has enabled us to understand that thousands of medical personnel and millions of patients around the world count on us, especially during difficult and trying times.
Paré: More and more in-house teams are modernizing their approaches by working with a partner that can help them streamline and standardize their process so that they can focus on high-value activity. These services can provide many benefits to clinical engineering departments, such as maximized efficiencies, improved cost savings, increased equipment uptime, maintained quality, and increased supply chain reliability.
Evidence-based data is also an important point to consider when choosing a partner. Health systems typically are limited to generating data from their own purchases, and the preferences of health technology managers are not evidence-based, although they may have had a good experience with a particular vendor. Online marketplace solutions that allow health systems to implement evidence-based purchasing can increase quality and produce significant savings. Our PartsSource Pro solution, for example, combines data-driven decision support with automation to simplify medical device products and services procurement, resulting in measurable improvements across quality, productivity, and costs.
Graham: Canon Medical is pleased to present our new e-commerce website: Marketplace, an online shopping experience where customers can explore our parts inventory at their convenience and take advantage of our special online pricing. We look forward to connecting to a larger audience, including time-and-materials customers, so they can benefit from price discounts, 24/7 parts ordering access, and Canon Medical’s award-winning service—just to name a few.