“Do more with less.” “Preserve the bottom line.” “Cut back on expenditures.” If your hospital or facility is like most, these phrases are thrown around incessantly. In fact, thanks to the current economic crisis, increasingly more healthcare institutions are forced to do away with “extras” and be more fiscally responsible.

For radiology departments, this may mean buying less imaging equipment or failing to acquire the latest and greatest technologies. For nursing departments, this may result in a hiring freeze or a lack of financial support for continuing-education endeavors. And for biomedical departments, this may mean cancelling service contracts with original-equipment manufacturers (OEMs) and utilizing third-party vendors. Although this is clearly bad news for a pricey OEM, it’s music to a third-party medical-equipment provider’s ears.

A Competitive Advantage
Arguably, third parties have been one of the key healthcare segments to capitalize on the recession. According to Paul Conrad, vice president of business development at Stockton, Calif.-based Conquest Imaging, going the third-party route offers cash-strapped facilities numerous benefits, in addition to dramatic cost-savings. In fact, in his role at the third-party ultrasound-equipment supplier, Conrad has witnessed firsthand the immense challenges affecting the healthcare industry.

After learning about the projected financial crisis of 2009/2010 in early 2009, hospital administrators decided to take action, according to Conrad. Not only did they demand more of their staff members, they also brainstormed about innovative ways to preserve the bottom line. “This,” Conrad says, “included the review of all outside goods and services with the idea to bring more in-house, whenever possible.” In fact, he maintains, hospitals are now utilizing third-party providers in areas where they wouldn’t have previously considered them. “What hospitals are finding out is that it’s not just money they’re saving,” Conrad begins. Instead, they’re also discovering that “third-party service industries offer many à la carte benefits, which fit into their hospital’s unique infrastructure better than the OEMs…at one-third of the cost.”

For instance, Conrad says, third parties offer healthcare facilities a plethora of advantages, including:

• Customized training to fit the needs of biomedical/clinical engineers: “This could be anything from ‘first call’ to training biomedical professionals for ‘A-to-Z’ repair,” Conrad says.

• Immediate decisions and changes regarding policies: “OEMs are very slow to change, as it’s the corporate culture and a matter of company policies,” he says.

• The fact that related problems can be brought to the immediate attention of the equipment owners by telephone: With OEMs? “Good luck!” Conrad maintains.

• Personalized service: In fact, he says, it’s not uncommon for third-party business owners and senior management personnel to put in some face time and visit the facilities they service.

Karen Waninger, CBET, the director of clinical engineering for Community Health Network in Indianapolis, agrees with Conrad. Citing the rise of financial cutbacks among healthcare facilities, Waninger believes that hospitals will find innovative ways to cut costs. Enter: third-party providers. Enabling hospitals to curb spending without compromising quality or efficiency, third-party equipment vendors are an increasingly attractive option for hospital financial executives.

After all, when you consider the sheer costs associated with equipment maintenance, it’s difficult for these expenses to go under the radar, Waninger says. “The large third-party vendors know this, and they routinely send [advertisements] via e-mail or flyers that are directed to the CFO level. This has raised [hospital executives’] awareness of other service options,” Waninger says. “Sometimes, decisions are made based only on the promise of savings; but, more often, there is a careful evaluation process that results in some areas of opportunity for reduced costs through the use of third-party service.”

What’s more, she says, proactive service departments are leading the way in third-party vendor utilization. Instead of remaining passive when hospital executives come to them regarding financial matters, they’re taking matters into their own hands. And they’re getting results. As a testament to the level of professional and expertise in the biomedical community, service professionals have been “successful in getting clinical areas to relinquish control of the vendor agreements,” Waninger says. In addition, many “in-house support teams [are working] to identify alternative parts and service providers, and often prefer to work with third-party organizations instead of OEMs.”

Take Jim Fedele, CBET, for example. As the director of clinical engineering for Williamsport, Pa.-based Susquehanna Health Systems, Fedele has a lot of experience dealing with equipment-service providers. In fact, his facility regularly works with Charlotte, N.C.-based Global Medical Imaging (GMI), a full-service, third-party ultrasound provider. To Fedele, one of the biggest advantages of working with third-party vendors, such as GMI, is their free technical support.

Not only do to third parties provider “faster and cheaper service,” Fedele says, “they also don’t usually charge premiums for afterhours work.” OEMs, on the other hand, will often bill facilities for support provided outside of the typical 8-to-5 window. “So that’s a big deal,” Fedele says. “A lot of OEMs will quote you on a 8-to-5 contract and then charge you extra if you need service at night.”

Still, not all facilities are apt to utilize a third-party provider. Although this bias is certainly lessening, it’s present, nonetheless. Perhaps it’s because certain facilities have always utilized an OEM and are afraid to upset the status quo. Or, maybe it’s because they falsely equate “less expensive” as “less knowledgeable.” But regardless of why some service departments are reluctant to embrace this option, one fact remains: Third-party providers certainly have hurdles to overcome.

Case in point: Fedele says, “Healthcare facilities that aren’t concerned about money may not use a third party because they have the belief that OEMs can do it better.” According to Fedele, this attitude is primarily found at large teaching hospitals, which often possess vast budgets and close ties with big-name vendors. However, in times of economic uncertainty, hospitals that would have previously balked at the thought of turning to a third party may reconsider their position. “I think that [healthcare facilities] are always evaluating what they’re doing and whether they can use a third party,” he says.

And while Fedele acknowledges that some service needs may be outside of third-party providers’ scope of expertise, he believes that most healthcare facilities are “willing to take that chance.” For instance, he reveals, two modalities that have been particularly inundated with third parties are ultrasound and endoscopy. “But, again,” Fedele begins, “the OEMs try to do everything in their power to not allow [biomedical professionals] to work with third parties.” Nevertheless, innovative biomedical departments are finding loopholes in their effort to converse the bottom line. After all, Fedele states, “Any fiscally responsible biomed shop would consider a third party in every situation possible.”

A Bright Future
Third-party vendors are here to stay, say many healthcare experts. As more hospitals and imaging centers are forced to do more with less, they’re increasingly turning to third-party providers for their equipment needs. Not only can these vendors provide high-quality service at a fraction of the price of OEMs, they’re also willing to cater specifically to customers.

Another reason? “In the short-term, hospitals are replacing less than half of the equipment that they would have replaced three years ago, which extends the need for third-party organizations,” Waninger says. “As the challenges increase for hospitals, more of them may close, which will mean more slightly used equipment becomes available.” Obviously good news for third-party providers, Waninger believes that “hospitals will continue to be more interested in acquiring proven technology for which there is a known reimbursement figure.”

Conrad is also optimistic about future of the third-party medical equipment industry. “Moving forward, biomedical/clinical engineers are becoming better educated as to the daily management and servicing of equipment not previously serviced by the biomed/clinical-engineering departments,” he says. “Now that they’re having to do so much of the work in-house, such as preventive maintenance once completed by the OEMs, they’re learning the shortcuts and many of the secrets of the OEM.” What’s more, he says, third parties are also educating biomedical engineers on many issues pertinent to their field. And, by ensuring that they remain at the forefront of cutting-edge technology, third-party providers cement their value in the industry.

To Waninger, third-party providers’ success is simply a matter of anticipating customers’ needs. “As the OEM profits are declining, they have not yet figured out that they need to improve customer service, instead of cutting out more support,” she says. “Historically loyal OEM customers are less inclined to simply renew a contract when the response from the OEM has been less than satisfactory.”
 

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This article is re-published by LabX with permission from Medical Dealer Magazine - MD Publishing.