by
Sean Ruck, Contributing Editor | January 24, 2011
From the January 2011 issue of HealthCare Business News magazine
Gauthier says those numbers basically hold close for all imaging equipment. With the equipment in the hundreds of thousands of dollars, it’s easy to see why service contract costs can be a big deal.
Another reason ISOs are able to carve out a niche goes back to the lack of corporate red-tape. “With ISOs, our agreements and prices need to be more flexible,” Gauthier says.
Be sure the savings are worth the price
Whether OEM or ISO, when it comes to advice for deciding on a service contract, the advice was similar. “Beware of the deal that seems too good to be true and look carefully at the full cost of the services needed over the life of the contract, including access to upgrades and applications support,” suggested Siemens’ Wynne Brooks.
Genesis’ Dakessian, offers the caveat that the savings should significantly outweigh the risks. “Recently, a customer shared with us a quote they received that was less expensive that the one we provided,” he said. “After navigating through the offer, we discovered their MRI service agreement excluded quench protection and some coils were not covered. In this case, I believe the savings didn’t justify the risks.”
It’s also worthwhile to work with a company that can stop a problem before it starts, or prevent a minor problem from becoming a major one. For this, a company with “predict and prevent” capabilities is crucial. More than just keeping equipment up and running and profitable, it also offers a savings. “The fact that we can reduce catastrophic failures across all our contracts helps lower our service costs and those savings can be passed along to our customers,” says Dakessian.
Philips’ Kennelly provided some further relevant advice. She recommended customers consider the purpose of the equipment being considered for coverage and base coverage decision on the level of critical importance for the uptime of the machine. If for example, it’s the sole machine of its type in a facility and it’s a major revenue generator, uptime will be more important and a higher level service agreement could be warranted.
She also recommended facilities consider the skill sets of their in-house engineers where applicable and determine what level of support they might need. Finally, she says it’s important for a facility to consider its risk tolerance and determine if it can financially absorb an expensive failure.
Gaulthier advises potential customers to focus on key points of service quality and reputation of a company, flexibility in crafting a tailored solution and longevity and financial strength. He also highly recommends customers be aware of two other potential contract landmines. “The traditional agreement will offer extended coverage for poor performance. This means, if you’re not happy with the service, you get more time to have a bad experience. In our contract, if we don’t provide the service up to the promised quality, you can fire us,” he says. “Another contract point to be aware of are the exit clauses, or lack of them. If a hospital decommissions a machine or sells it, they shouldn’t have to continue to foot a service contract bill. Yet, many contracts will require that. It’s something to be aware of and to try to avoid.”
Hitachi’s Miller also offered some words of advice. “In an environment where reimbursement rates are being slashed, private pay customers are not able to pay and competition is high, it’s easy to focus only on the cost of the service contract,” he said. “To make the most educated, complete decision, the factors of consideration should include cost, quality of parts, education of on-the-ground service providers, history of success and the ability to offer technical support. The end goal should be a complete service provider that is going to maintain the system at its peak performance level.”
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