The following article was written by Joseph Keane, director of ASC/GI sales for STERIS Corp.
In our professional and personal lives there are risks associated with items we purchase; warranties that expire, certain components that aren't covered if they break, models that change or companies going out of business shortly after purchase. These same risks are amplified in purchasing environments such as the healthcare supply chain. Hospitals and health systems cannot afford to risk their capital investments and their productivity — they need to have a certain sense of security when purchasing equipment.
The purchase of remanufactured or refurbished equipment is now a standard practice in healthcare. Facilities with limited funds and declining reimbursements look at this option as a cost-reducing alternative to purchasing new equipment. However, ASC clinical and purchasing personnel must understand that in the remanufactured equipment market, there are different levels of quality and different types of refurbishment processes. Healthcare facilities must invest in high quality equipment that is safe, durable, reliable and well-maintained. In addition, the useful life of the equipment needs to far exceed its depreciation in order to ensure a strong return on investment.
There are many companies getting into the remanufactured/refurbished equipment business these days. They search in healthcare facilities, on the internet and in industry periodicals to find used medical equipment for sale, and then prepare the products for resale based on what they want to offer to the market. This could mean a complete teardown and reassembly (this is most often done by original equipment manufacturers (OEMs)) or they clean and repair the product in order to resell it (refurbishers).
Hospital purchasers can take a proactive approach to assure they purchase optimal pre-owned equipment. To be properly prepared, however, they must understand the differences among offerings and learn what to watch out for. In order to select the pre-owned equipment provider that can best meet expectations and ensure the value of the investment, here are nine key factors healthcare providers should take into account.
1. When possible, consider purchasing directly from the manufacturer. Most OEMs offer a remanufactured equipment program for customers seeking an economical alternative to new equipment. This is a huge investment for the manufacturer, but is worth it if their pre-owned equipment is in demand. The OEMs have several advantages over third-party providers: they have direct access to the parts, product development support, training, system upgrades and services for the equipment. Also, the OEM typically tests all equipment as if it was new; something non-OEM vendors can't duplicate since they didn't manufacture the equipment and are not likely to have the testing equipment to ensure that the system meets manufacturers' original specifications.
2. Remanufactured vs. refurbished: Understand the difference. The industry makes a very clear distinction between these two types of pre-owned equipment. According to Wikipedia, R. Lund (1998) described remanufacturing as "… an industrial process in which worn-out products are restored to like-new condition. Through a series of industrial processes in a factory environment, a discarded product is completely disassembled. Useable parts are cleaned, refurbished, and put into inventory. Then the product is reassembled from the old parts (and where necessary, new parts) to produce a unit fully equivalent and sometimes superior in performance and expected lifetime to the original new product."1 In contrast, the term refurbished means "The process of restoring a product by cleaning, repairing, recovering, and reusing the item for its original intended use."2 Remanufacturing is a more thorough and costly process because it is more rigorous and works toward a higher standard than refurbishing. If the vendor cannot meet the actual definition of remanufactured (reassembling to meet or exceed the OEM specifications), then it should be considered a refurbished product.
3. Compare apples to apples. Many times, product offerings and pricing don't match from one company to another. A lower price may be more attractive, but in reality, the product and quality may not be comparable. It's important to ensure that all model numbers, accessories, software, and other components match. Ask for itemized quotes that spell out all the necessary detail to make an informed decision. If the price of one product is significantly different from another, there could be something missing. Remember the two different processes in play; although the more extensive remanufacturing process may be more expensive, it may also provide more long-term reliability, process assurance and useful life.
4. Ask for documentation. If you decide to entertain offers from companies that you have never worked with or heard of before, make sure you request:
- Reference accounts
- Industry certifications
- Insurance detail
- Financial information
- Regulatory and quality credentials
If you need additional assurance, check with the Better Business Bureau or other business sources online. Speak to your local, state or national professional groups to get some background on their experiences with the vendor. Completing more thorough research before purchasing from unfamiliar companies will pay off in the long run.
5. If it's remanufactured, be sure it was with manufacturer-specified parts. While most rebuilders use cleaned, repaired or externally purchased OEM parts, not all of them have access to OEM proprietary equipment. There have been instances in which facilities have purchased non-OEM remanufactured equipment and discovered when the system failed that non-OEM parts were used. Some parts are made with specifically designed tolerances that cannot be purchased on the open market. Having customized parts replaced with any similar commodity part could lead to a catastrophic failure, which could injure staff or increase the risk for patients. In order to ensure smooth, safe and reliable operation, within the original design specifications, make sure the vendor can get OEM-specified parts.
6. Get all accessories, updates, manuals and tools. Not all third-party remanufacturers have access to the latest software, improvements or equipment upgrades. If a facility needs equipment to do something specific or needs specific accessories, get written confirmation that the equipment will have the necessary parts or upgrades to perform as required. Also, operator manuals should be included with every purchase (these should come standard without cost). In addition, many pieces of equipment require calibration that is essential to proper operation and is performed with special tools. The vendor you are dealing with may not have these tools and may not be aware they need them. If any calibration is necessary, be sure that the company of choice has the required equipment to support your purchase.
7. Make sure there is a warranty. Regardless of the quality of equipment, there is a good probability that a problem will occur in the first 30-90 days. The solution could be a simple adjustment or a major component replacement. Whether it happens to used or new equipment, the support you get after the sale will affect your purchase satisfaction. Make sure you get the warranty in writing and fill out any warranty cards that come from the seller. Have the company you are dealing with define their response times, clinical support and emergency numbers to call.
8. Include service coverage in your purchase. Healthcare facilities should have their equipment inspected on a regular basis to avoid costly repairs down the road and more importantly, to assure continued safe operation. While facilities often don't purchase a service program at the time of purchase, or even during the warranty period, it is recommended that the equipment be inspected at least twice per year. Most manufacturers offer periodic inspections that are not as detailed or costly as comprehensive parts and labor service programs. These simple inspections can ensure that equipment is in proper and safe working order; and if something needs to be replaced, can provide notice.
9. Ask for training credentials of the vendor's service team. If a vendor's service technicians have not been to OEM training for the rehabilitated equipment they sell, can they assure correct and timely equipment repairs? Many OEMs offer service training to third party or in-house biomeds. If the vendor you are negotiating with cannot provide documentation that its techs have been trained by the OEM, it's a good bet they haven't been. The quality of a service provider's equipment knowledge may affect the quality of the repairs, and could mean the difference between having a productive, uninterrupted schedule and having to cancel treatments or cases.
Spend wisely and do your research
Hospital administrators need to stretch every budget dollar, especially when it comes to major purchases for capital equipment. However, there is a fine line between cutting costs and losing money. A wise purchaser will learn where to spend a little more for the quality that yields a greater long-term return on investment, and especially on safety. The OEMs are your best resource for pre-owned products because they have the resources to support you and will want to continue to do business with you in the future, so they need to ensure you are satisfied with your purchase.
It is essential that healthcare facilities to do their homework on all aspects of the purchase. First, know the difference between refurbished and remanufactured products; it will empower the best decisions for the facility. Next, evaluate and collect documentation on any company that is unfamiliar or that makes a claim to be a remanufacturer. Finally, confirm that any purchase will include ongoing service, OEM parts and clinical support. Preparing this way will stretch budget dollars more effectively and assure that the equipment will provide the kind of safe and long-lasting return-on-investment that all healthcare providers are looking for.
References
1. http://en.wikipedia.org/wiki/Remanufacturing
2. Massachusetts Environmentally Preferable Products Procurement Program glossary: www.mass.gov/Eoaf/docs/osd/epp/massepp_glossary.doc
Joseph Keane is the director of ASC/GI sales, an internal sales team for STERIS Corp. that supports ASCs and GI facilities. He has 27 years of experience in the healthcare industry, and has held positions in healthcare service, sales, management, distribution and consulting. Mr. Keane holds a certification as a biomedical equipment technician from Edinboro University of Pennsylvania and is a U.S. Navy veteran.