In the competitive ultrasound market, name recognition and customer loyalty are important qualities, something that Paul Conrad, vice president of business development, Conquest Imaging, Stockton, Calif, knows as well as anyone. From customer and biomed surveys, to regional association involvement, to branding and state-of-the-art advertising campaigns, Conrad continues to grow the Conquest footprint through his active community involvement. 24×7 recently spoke with Conrad about used versus reconditioned parts, the shifting economy, and the recent influx in biomedical/clinical engineer training.
24×7: Tell us a little bit about Conquest Imaging.
Conrad: Conquest Imaging recently celebrated its 10-year anniversary in the ultrasound business. The business was started by my brother Mark Conrad out of his garage; just he and his wife. We do ultrasound training, we sell ultrasound parts and probes worldwide, and we have a repair facility here, so we do our own repairs of our parts. We don’t sell used parts. Our parts are reconditioned and tested, and they meet or exceed manufacturer specifications. We also do regional service in all of California, Arizona, Illinois, and Wisconsin.
24×7: Of your four business components, which has been the most successful in the down economy?
Conrad: Our parts business is growing the most, and then our training and service businesses. But all of our divisions, because of the industry trends, are growing by leaps and bounds. Conquest Imaging just moved into a brand new 40,000-square-foot, state-of-the-art building in the industrial area of Stockton, Calif. As soon as we moved into the building, we realized that it was too small. Prior to that, we were leasing six offices and we probably had about 25,000 square feet there. We thought 40,000 would be fine, but we already realize it isn’t big enough.
Since the economy’s moved south and with the anticipation of national health care, hospitals now are telling all department managers, including clinical engineers, “You need to come up with a substantial amount of savings for your department. You need to look at everything.” What these hospitals are doing, essentially, is canceling the full-service agreements that they had with the OEMs. Hospitals can’t just cancel the contract, but what they’re doing is coming to Conquest Imaging for training. When they need a particular board, they call Conquest Imaging because that’s where they’re getting their training, tech support, and reconditioned—not used—parts.
24×7: What is the biggest challenge facing Conquest today?
Conrad: I surveyed 200 biomeds at the Biomedical Association of Wisconsin and the MD Expo. I spent my whole time there doing surveys and asking the same questions, and I would say our biggest challenge, based on the surveys that I did, is to educate the biomeds that they’re not getting new parts, what the difference is between a reconditioned and used part, and that the cost associated with buying a used part may be cheaper up front but in the long run, with lost exams and hospital and user frustration, it is more costly.
One question I asked them was, “Do you know the difference between a used and reconditioned part?” All of the directors and managers in clinical engineering knew the difference, but more than 80% of the biomeds did not know the difference. There are only maybe two other companies besides Conquest Imaging that do what we do, that sell reconditioned parts that meet manufacturer specifications. A used part is where a company—and there are many of them out there—pulls a part off the ultrasound systems they have in their office and ships it. They’re not testing it or cleaning it. They’re just sending it out to the customer. The problem with getting a used part is that there’s a patient safety issue, the part generally doesn’t last as long, and it can arrive not working—there are a whole bunch of problems with putting in used parts.
24×7: How do you inform biomeds about this?
Conrad: Based on my surveys, we’re changing our entire advertising campaign in 2011 to educate clinical engineers and biomeds about the difference between used and reconditioned parts. The guys that we have that are reconditioning the parts are highly skilled individuals. There’s a cost associated with taking a part out of a used system, reconditioning that part, and putting it through a battery of tests so that it meets manufacturer specifications, and in some cases, exceeds them. There’s a cost to that. We put that cost into the part. I had a customer recently who I asked, “Why won’t you buy a part from us?” He said, “You guys were asking $2,800 for the board and I ended up finding it for $2,300.” I told him that he bought it from a broker and that it was a used part. Ours are reconditioned and go through a battery of tests, but he didn’t know the difference. I told him that if he’s going to compare Conquest Imaging to someone, that he should compare apples-to-apples. I can compete with our two competitors because they do what we do, but I can’t compete with people who just pull parts off of systems and sell them to biomeds, when biomeds don’t even know the difference.
24×7: Can you explain what you mean about not getting new parts?
Conrad: The challenge is to get the biomeds to understand that the parts they’re getting from the OEMs are not new. Even though the OEM is telling them that they’re new parts, they’re not new. There are no new parts being sold by anyone in the United States or in the world for ultrasound systems—they’re either used or reconditioned. For example, a motherboard on a Sequoia system: Siemens sells it to the hospital for $20,000 with a 90-day warranty, but we’ll sell it for $3,800 with a 1-year warranty. The biomeds think that it’s new, but it’s not new. Our three biggest customers at Conquest are GE, Philips, and Siemens. All three of those OEMs have policies that they can’t buy from each other. GE will work on Philips and Siemens systems, and vice versa, but when they need a part for a system from someone else, they can’t order from Siemens or Philips. They’ll order from Conquest or one of our other competitors in the United States because they can’t buy from each other. So why would you pay $20,000 for the same exact part with a 90-day warranty when you can buy it from us for $3,800 with a 1-year warranty?
24×7: How has the market changed in the last 2 years?
Conrad: The industry is changing because hospitals understand that if they buy a used part, that system may go down again in a very short amount of time. When you buy a used part and it stops working, it’s not just an inconvenience to the biomed who has to ship it back. You’re down for exams. You’ve got patient frustration, patient backup, department frustration, and, more importantly, you’re losing money by the day. The hospital administrators are trying to get the biomeds to understand the big picture. When you order a used part and put it into a system, you’re saving money up front but not in the long run. You’re costing the hospital money. That’s why our business has grown. More and more hospital administrators are starting to trickle that information into the biomed shop.
24×7: Where do you see the industry heading?
Conrad: In the future, you will see larger clinical engineering departments and better-trained and educated clinical engineers, because hospitals now realize that if they train biomeds, they can cancel the service contracts. You’re going to see clinical engineers and biomeds doing 80% of the work in the shop, compared to now, where 50% or more is done through full-service agreements. There are some biomeds still working on hospital fax machines and telephones, if you can believe it. That is a job that is being phased out of clinical engineering and is being passed along to maintenance engineering or hospitals are outsourcing it. Biomeds are stepping up to the plate to be more educated and trained, and they’re getting a higher stature in the hospital setting because the hospitals realize the importance of them, more so today than they did 5 years ago.
24×7: Tell us about the training you provide.
Conrad: Our training classes are held at Conquest. However, we do on-the-spot training too. For example, we’ve been down to the University of California San Diego twice to do on-the-spot training for them. We ship the system, we bring our training people and manuals, and we go in there and do on-the-spot training. They have 40 clinical engineers. They’re able to train the majority of their staff over a 2-week period versus flying them out here to Conquest. They realize that they get more bang for their buck by having us come to them. We’re seeing more on-the-spot training at larger health care facilities where we take the training to them.
Half of our training classes used to be empty 2 years ago. Now they’re booked solid. We only allow a maximum of six students per class. Right now, you can’t get in any of our classes for the next 4 months. Generally, they’re booked solid and there’s a waiting list to get in all of the classes. It’s never happened before. Why are they all coming for their training? It’s because we train on every modality, we’re training on every different ultrasound system that’s on the market.
Why aren’t they going to the OEM for training? Sometimes they go to the OEM and get their training, and then get our training as well. Why would they do both? OEMs know that the full-service contracts are being canceled and they don’t want the biomed to know everything there is about repairing the system. They’re only training on certain portions of the system. They’re not doing the training on the back half of the system, and hospitals are still at the mercy of the OEM. We have found that biomeds go to the OEM first to train on a system and then come to Conquest. What the OEM doesn’t show them, we do. In some cases, hospitals say they don’t have the expenses to send biomeds to both classes, and then I tell them to come to Conquest because we show them A to Z, all the nuts and bolts. Our training is designed for biomeds; it’s designed to get them in the system, repair it, and get them out.
24×7: Do you train them to bring service in-house?
Conrad: We give presentations—we train directors, vice presidents, managers, clinical engineers on how to go about managing and bringing that ultrasound piece in-house. A lot of people think to just bring everything in-house without any training or education. Don’t do that; you’re asking for disaster. You need to have all your ducks in a row before you officially bring it in-house. And you need to make sure you work with department managers and hospital administration, letting them know what you’re doing to bring it in-house so they can buy in on the plan. I’ve seen situations where the director of clinical engineering brings it in-house and he never went to the director of radiology to tell him that he was canceling the hospital’s contracts with the OEM. You have some pretty angry radiology directors because they didn’t buy in.
There’s a process to bringing service in-house, and we work with hospitals on everything you need to bring it in-house. “Bringing Ultrasound Service In-House” is always one of our most popular classes.
The other class is the care and handling of probes—the most expensive device on an ultrasound system. Clinical engineering managers know that those probes are the most expensive. We’ve been giving the class on the care and handling of probes for 6 years, and when we give these classes at all the conferences throughout the United States, we used to have 20 people at the most. Now we’re seeing 40 or 50 attendees because hospitals and clinical engineering managers realize that those probes are the most expensive piece of that ultrasound system. Now it is a budget item that they’re responsible for, and they want to know all the tricks of the trade on how to handle those probes so they can minimize their bottom line.
24×7: Why is it important for Conquest to be involved with regional associations?
Conrad: I manage and work with the advertising agency here at Conquest. I’m responsible for the creative design and company branding. I’m also an account manager and spend about 30% of my time on the road bringing in clients. That advertising, branding, large company accounts—all of that ties in with company exposure. In my 6 years, I’ve realized that if you want to grow your company, you have to mend your company with the folks that you’re doing business with, meaning, “How am I going to rub elbows with them?” You can’t go to a bar every night with them and you can’t take them out to dinner, so when I found out that there were these associations, I got active in the California Medical Instrumentation Association—the CMIA.
The CMIA has eight chapters, and I got active in the capitol chapter. I started off on the ground floor, and now I’m officially the president of the capitol chapter of CMIA. We are the largest chapter, and we boast 130 members in our chapter. The CMIA is the largest instrumentation association within the United States, more so because it’s a large state, but we have about 1,500 members. When I started getting active in that association, in a very short period of time I realized that people saw me giving back to them and they started giving back to the company.
Biomeds are loyal, and if they see you giving back to them, they will give back to you. When I saw that, I said, “How many other states don’t have something as special as the CMIA?” I looked where we were doing business, and 3 years ago, we were doing business in Arizona. I went down to Arizona and spent a lot of time there, and I am the founder of AZMIA, the Arizona Medical Instrumentation Association. I founded that organization, and it is healthy and running today. I’m also working with the OBA—the Oregon Biomed Association. I’m working with them on their April 2011 symposium. Since they are a smaller organization, they want to rejuvenate and start providing educational offerings to their members and the biomedical/clinical engineering community. I’m also working on putting a biomed association together in Salt Lake City right now.
I do it because I love it. Now that I’m so active in it, all of my friends are biomeds, and I realize that if I give to them, they give back to Conquest and me. I am running for chairman of the board for 2011 with the CMIA. There are eight chapters that feed into a very large board. The chairman of the board’s responsibility is to fly around, visit all of the chapters, and help them get their conferences together. I’m running for that position. What I look forward to is that instead of being able to give back to just one chapter, I can give back to all eight chapters.
24×7: How much does customer feedback influence company decisions?
Conrad: In my surveys—and I surveyed Medical Dealer magazine, DOTmed, the AAMI newsletter, Tech Nation, and 24×7—96% of the readers read 24×7 every month religiously and spent an hour or more reading it per month. When I asked them, “Which of these magazines do you consider the industry leader?” 98% said 24×7.
What has led to our success is our customer feedback. As an example, we are a customer service-oriented company. In our customer services offices, if you’re going to get in trouble with the president of the company, it’s by not telling the customer, “Yes, we can do it.” I can’t remember the last time we had a customer complaint. That feedback is critical because, even if it’s not our fault, you’re accused on page one and acquitted on page seven. So it’s critical that, as customer feedback comes in, the good is great, but what’s even more important is the bad because you have to take that bad and find out what happened and make it right.
Recently, we ran a sale on certain ultrasound parts. A customer called and said, “I’ve never used you guys, but I’ve seen your ad in 24×7. I talked to April.” April is our customer sales lead. We had our people ask how they heard of us, and they said it was through 24×7. So they asked us, “How do I know your parts are any good? You offer a 1-year warranty and that’s impressive, but how do I know that you’re going to stand behind that warranty, and what happens in month 13?” April told them, “Talk is cheap, and all you can do is try us out. I will tell you, I have yet to turn down a warranty.” That’s standing by your product.
24×7: What new products or services do you have on the horizon?
Conrad: Conquest Imaging’s research and development department had partnered with a major university in the United States. We are working on releasing a new ultrasound product at the AAMI 2011 show. We believe that this will further advance our company’s profile within the ultrasound industry.
Conquest Imaging is also looking more regionally in terms of where to put service. As I said, we’re in Wisconsin and Illinois, which is fairly new. We’re looking to put more engineers in the Midwest: Milwaukee, Chicago, and Detroit. We’re also looking at the Northeast. When we move into an area, you can’t just put in one service engineer. You can’t tell a customer, “You have to wait for him to come back from vacation.” So what we generally do is put enough service engineers into an area to support it.
The things that are on the horizon are a combination of the research and development project and going into more service areas nationwide.
Chris Gaerig is the associate editor of 24×7. Contact him at .