We reached out to OEMs and ISOs and asked them to give us their best sales pitch. Here’s what they said.
By Chris Hayhurst
It’s one of those decisions that could go either way: Assuming a hospital lacks an in-house HTM team with the bandwidth to handle all service work on its own, should it leave that servicing to the original equipment manufacturers (OEMs), or should it look to third-party organizations that are qualified for the job?
The answer, of course, depends on many factors, from whether a device is still under the manufacturer’s warranty, to the costs associated with working with either party. And muddying the waters is what some HTM professionals see as a concerted effort by some manufacturers to keep the service work for themselves.
The bottom line: Medical equipment maintenance is big business, and is increasingly important to all parties involved, especially as hospitals look to cut costs and OEMs look to gain additional sources of revenue. In fact, a recent report by the research firm MarketsandMarkets estimates the global market in this segment of the industry will expand from $20.3 billion in 2017 to $32.9 billion in 2022.
There’s a lot of money at stake for service providers, and they’re jockeying for position to compete for their share. Hoping to shed light on this sensitive subject, we reached out to leaders at four different companies, including two OEMs and two independent service organizations (ISOs), and asked them for their best service sales pitch.
“Why,” we asked them, “should a hospital work with you?” “And when it comes to life-critical equipment, in particular—things like patient monitors and anesthesia machines—what can you offer that your competitors cannot?” Their responses are below.
The ISO Perspective
Denver-based HSS has been in the third-party-service business since 1975, says Ken Ottenberg, CHTM, CBET, CLES, vice president of the company’s medical equipment management division. With around 90 biomedical engineers servicing organizations in eight Western states, HSS offers everything from hood certifications to industrial hygiene services to sterilizer equipment maintenance and service.
The company guarantees a 24-hour response time, and all its technicians undergo extensive training, Ottenberg maintains. “We promote a very high level of certification for everyone we hire, and we’re actively engaged in educational opportunities,” including those with professional organizations like the Colorado Association of Biomedical Equipment Technicians and AAMI.
In addition, he notes, HSS works closely with several technical schools offering associate degrees in the profession, and offers internships to students every year. “Our feeling is, if you’re not in this field to learn and explore and become proficient in new equipment, it’s probably not the right career for you.”
Regarding the “choice” between contracting with an ISO or sticking with the OEM, Ottenberg is decidedly pragmatic: “There has to be a balance,” he says. “There is no third party that I am aware of that has the resources or the ability to support everything possible, but I also believe manufacturers don’t have the ability or resources to support everything, either.”
The same goes for in-house programs, he says. “So, it’s both a financial balance and a resource balance,” Ottenberg says. “If a hospital has one piece of equipment from a particular manufacturer, and it’s the only hospital in the state to have that device, does it really make sense for that OEM to have a service engineer available for that facility? No, it does not.” “
Would it make sense for that hospital to provide that service if they have one engineer and [he or she has] everything else they need to support and take care of?” he continues. “Probably not. Would it make sense for them to bring in a third party who can do that work for them when it’s needed? In certain cases, it probably would.”
HSS, Ottenberg continues, attempts to serve as an “engaged” third party. “We do not promote ourselves as a single solution for all of your needs. We promote ourselves as a resource—or in a lot of ways, as a consultant—who can assist you with making the right decisions” around support and service.
When purchasing equipment like patient monitors or anesthesia devices, he says, “you really need to look not only at the install side, but also at what happens after the warranty period, because different manufacturers handle that very differently.” Some OEMs, Ottenberg notes, will offer to train hospital and third-party staff so they’re able to handle most repairs themselves, while others are “far more restrictive, and try to hold everything very close to the vest.”
His suggestion: Put long-term serviceability high up on your list of requirements for any device you’re considering to purchase. “Does the manufacturer offer support for that device for 10 or 15 years,” he asks, “or are they going to cycle it out every three or five years, leaving you on your own?” And what will that service cost?
“Are their labor rates extremely high? Is there even an option for a third party to be able to provide the services you’ll need? I think a lot of these decisions are made in a bubble and hospitals wind up with contracts that aren’t in their best interests.”
Michele Shahbandeh, president and owner of Integrity Biomedical Services in Broken Arrow, Okla., agrees with Ottenberg that it’s critical for facilities to look at the big picture before they agree to any service arrangement. Her company, Shahbandeh says, provides biomedical parts and services to more than 600 customers in the United States and abroad.
Specializing in patient monitors and other equipment from Spacelabs (They also handle equipment from Elo, Philips, and others.), Integrity operates with a staff of just 12 people, and yet guarantees a five-business-day turnaround on all their work.
“It’s part of our quality management system,” she says, noting that the company is ISO 9001:2015 certified. “It’s a costly and time-consuming process to meet the requirements for certification, but we’ve decided that it’s worth it. When an organization comes to us, they know they can expect high-quality work.”
Shahbandeh describes her company’s relationship with Spacelabs as mutually beneficial. “They have been good to us and have sent us customers if they can’t help them with end-of-life or older equipment. We’ve helped them when they didn’t have items in stock, and they were appreciative. They’ve been my main competition this past year in some equipment sales, but I always speak to them as a customer, not a competitor.”
When a hospital asks them to repair a device, Shahbandeh explains, they go to the manufacturer for parts, if necessary. “Often, we’ll have what we need in our inventory, and that’s one of the things that sets us apart from the OEM. Because we’re able to second-source our parts, we can offer a faster turnaround and we can keep our prices low.”
The other big advantage hospitals see when they choose to work with Integrity, Shahbandeh asserts, is the knowledge that the company always stands behind its work. “We offer a one-year warranty, while the OEM typically offers only a 90-day warranty. That can really make the difference in a competitive market.”
The OEM Perspective
For the OEM perspective on medical equipment service, we contacted Rob Reilly, vice president and general manager of the U.S. and Canada service business at GE Healthcare; and Kelly Feist, senior vice president, customer services at Philips North America, with Reilly up first: At the end of the day, Reilly says, if a GE customer goes with a third party for service needs, then that’s its choice. “What you choose to do should depend on what your priorities are, because there is no ‘better’ or ‘worse,’” he says. “It’s just different.”
Those differences begin with regulations, Reilly says. “As an OEM, we’re FDA-regulated, and we have to make sure that what we’re doing meets FDA safety and performance requirements.” For that reason, he adds, his North America team of approximately 5,000 service engineers must be at the top of its game at all times, no matter what.
“You can’t afford to not be great in an industry that is FDA-regulated,” he says. “So, we invest millions of dollars in training every year to make sure our service engineers are up to speed with the latest technologies—anything and everything they need to know.”
Another advantage that comes with working with GE involves the company’s capabilities around remote monitoring and repair, Reilly maintains. “We’re now at the point where we can repair 40% of all network-connected devices remotely, and we can do it in a matter of minutes, not hours,” he notes.
GE also uses artificial intelligence and remote-monitoring algorithms to help predict device breakdowns before they occur. “When we know something has a high probability of failure days before it becomes a problem,” Reilly says, “we can go in and make the fix in the middle of the night so there’s no effect on patient care.”
By minimizing device downtime, Reilly adds, GE can help organizations save money. “An OEM, on average, might be 10% more expensive than a third party, but if that OEM can help you avoid hours of downtime over the course of a year, what’s that worth to you? The answer is different for every customer, but we think it’s important to do the math.”
Lastly, Reilly says, consider the fact that companies like GE have service engineers all over the globe available to help customers around the clock, and a parts network to back that service up.
“It doesn’t matter when you need us, we have an expert somewhere who is ready to help you out. And if you need a part, about 50% of the time we can get it to you the next morning, and the rest of the time you’ll have it within 24 hours. When you’re in a high-uptime, high-availability world, that’s critical.”
Feist, like Reilly, notes that healthcare organizations do—and should—work with third-party service organizations as they see fit, but would be wise to consider their “unique needs and requirements” beforehand. “At Philips,” she says, “we believe that it is essential to adhere to OEM quality standards whether we are servicing Philips systems or non-Philips systems, and we believe all service providers should do the same.”
She recommends asking service organizations about their capabilities. “For example, what is the degree of support they can provide? Are the technicians trained up to and including the current release of hardware and software in your equipment fleet? Can they provide a long-term asset management strategy?”
“Are they willing to share risk? Can they apply lean principles and concepts to eliminate or reduce non-value-added activities and processes? What sort of cybersecurity tools and capabilities have they already deployed to preserve, protect, and defend against malware attacks?”
Healthcare providers, Feist says, “should implement a rigorous vetting process to choose a service provider and initiate a successful relationship.” Feist also points to FDA oversight as a reason to trust an OEM like Philips.
“With the prominent and continuous focus around standards, regulations, and legislation, Philips recognizes the importance that regulation be equally applied to any service provider to ensure quality in service, documentation, and communication,” she says.
“Additionally, Philips looks to understand the priorities of our customers in terms of business needs, as well as adversity to risk, in evaluating key decisions. Dynamics for consideration include age within the expected equipment lifecycle; cost constraints; ability and need to be on the cutting edge clinically; and the combined importance of uptime, utilization, productivity, throughput, and asset management. Working together, we develop a plan that addresses their service requirements and meets organizational needs.”
Feist also agrees with Rob Reilly that true cost of service can be a complicated calculation. “Service coverage is only as good as the skill and proficiency of the engineer remotely guiding or performing the repair and the company that stands behind him or her,” she says.
“We believe customers should consider beyond the cost of coverage to the value of a service agreement, which is expressed in other ways such as access to parts, mean time to repair, remote capabilities, uptime, security, and compliance.”
Are the experiences and opinions of four service pros going to sway healthcare organizations one way or the other? Please let us know what you think.
Chris Hayhurst is a contributing writer for 24×7 Magazine. For more information, contact chief editor Keri Forsythe-Stephens at [email protected].
Obviously, cost is going to be a huge factor when hospitals decide who they should go to for maintenance, even the GE rep. was saying that OEM repairs are on average 10% higher and citing the short equipment downtime would be their main advantage along with the ability to fix equipment remotely. The biggest issue I saw with that is that GE only used their network connected, AI backed equipment as an example of why to choose them. It would be unreasonable to assume that every hospital out there has got the latest and greatest equipment that manufacturers make, which in my opinion would leave a strong argument for a third-party.
Some customers might argue for OEM saying that since they’re the manufacturer that they would know the equipment better than anyone else. While that may be true on the design and systems side of things, I don’t think it carries over to the maintenance. Shahbandeh says in her last paragraph that her company offers a one-year warranty as opposed to OEMs which typically offer a 3-month warranty. A company that didn’t have the utmost confidence in their trained workforce wouldn’t be offering those kinds of benefits to their customers. I’m sure there’s some things a third party wouldn’t be able to fix, such as equipment with faulty software. In those cases going with OEM would be sensible, but in the end it’s up to the customer to carefully consider their options and make a choice on which would be more beneficial depending on the case.
Obviously OEM parts availability is a differentiating factor in making a decision between 3rd party service and OEM service. Are OEM’s required to sell replacement parts to their servicing competitors? If so, is there case law that supports this?
this appears to be centered only on hospitals. What about the needs of surgery centers, clinics and doctor’s offices, as well as the individual at home market?
Just glossing over the article it seemed to me that the third party comments were to the point and I saw nothing that would preclude a hospital or surgery center or a clinic from using them. I believe they fill a vital role that is not always practical from an OEM’s perspective. Some of the OEMs have been very unabashed at charging for calls to the service techs or portal to portal hourly charges from across the country. I have always been a proponent of taking care of the life cycle of the device when the PO is cut. Always, always include a service school for at least one tech and also have them stipulate the scheduled end of production/support date in the PO!
I guess that’s my 3 cents worth!
Another point to consider:
Would you consider purchasing proven compatible medical devices such as IV sets for volumetric pumps or patient plates for electro surgical devices once they have been approved by local academic hospitals?