The economy and health care are in trouble. That means that hospitals are in trouble. According to a recent DotMed.com news article (November 19, 2008), several factors, such as fewer patients seeking hospital care and the ability to borrow funds for updating technology is squeezed, are contributing to problems in hospitals. In the same issue, the article “Medical Imaging Tests Drive Up Health Care Costs” stated that the 100% increase in the number of imaging procedures since 1996 may not result in better health. Blue Cross and the federal government are examining their willingness to pay for these procedures.
What would happen to the carefully laid, long-term plans of hospitals if they were not paid for doing all of these MRI and CT scans? Obviously, their revenues would drop and they would be forced to reduce costs. Hospitals could reduce hours and lay off technologists, but they could not stop making payments on their machines, nor could they reduce their service agreement costs if they have a long-term contract with the original manufacturer or with a multivendor service provider.
Many of our hospitals have long-term, noncancelable contracts for the service and maintenance of their high-end imaging devices. CT scanners, MRIs, cath labs, ultrasound machines, and other expensive modalities are often purchased with a service contract that commonly lasts for up to 7 years. The contracts have fixed pricing—which is supposed to protect the hospitals from the effects of inflation.
I have always questioned the value of such agreements. Even in booming economic times, service costs tend to drop as specific equipment is in the marketplace for a longer period. But what happens in the case of reduced utilization, deflation, and economic downturn, as we have now? There are no provisions in the contracts for any reduction of services, reduction of prices, or the shortening of contract terms. In fact, as the equipment is utilized less, the maintenance needs decrease, so the holders of the contracts (usually the OEM) stand to make more profit. They receive the same money and have to do less work. There is absolutely no flexibility in these contracts, unless a covered item is totally removed from service and deinstalled.
This underscores the value of in-house service. As biomeds and imaging engineers, we should make sure that our administration is made aware that any services provided by us can be flexed up or down as demand for services increases or decreases. If a CT scanner is used less frequently, it consumes fewer CT tubes. The savings for these lower costs of maintenance would come back to the hospital, if we provided the service in-house. This does not happen when the hospital writes a single check each month to an outside service organization.
Read previous Soapbox articles in past issues of 24×7.
This emphasizes my main message: Point-of-sale service agreements are not good for anybody but the seller of the contract. Do not sign them. Instead, negotiate for technical training for your biomeds and lifetime access to diagnostics and passwords.
It is convenient for buyers and clinical department heads to sign up for extended service contracts when they are buying equipment. Why shouldn’t we buy the extended warranty and not have to make any decisions for the next 6 to 8 years? Administration can make informed decisions when things are stable. Did anybody see this economic downturn coming? How do you get out of a noncancelable contract? How can you manage something when you have given up all of your decision-making power? Is this what hospitals are paying their senior management for—to outsource their control and decision-making ability?
I urge every hospital and health care provider to view the recent events of the US economy as a wake-up call. Invest in developing a strong in-house service organization. Commit to growing and retaining the skills and talent within your organization to keep the high technology of health care safe, accurate, and ready for patient care. Invest in your people, not in a multinational company’s stockholders. If you aren’t large enough, find a good company to partner with. But, by all means, do not sign any contracts longer than 1 year.
Patrick K. Lynch, CCE, CBET, is a biomedical support specialist with Global Medical Imaging, Charlotte, NC. For more information, contact .
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