The Professional Buyer on Used Imaging Equipment
Aging imaging equipment presents a counterintuitive conundrum for facilities: even as a CT or MR system becomes less and less clinically relevant, lacking the features and power of newer models, it becomes more expensive to own and maintain. “In order for imaging equipment to be effective, it has to be utilized,” says Doug Fischer, CEO of Imaging Acquisitions LLC, Tulsa, OK. “If it is constantly being serviced, it’s not seeing patients, and is costing the facility the opportunity to do those scans. And OEMs [original equipment manufacturers] don’t lower the price for maintenance when equipment gets older. It becomes more expensive even as it gets less reliable.” Doug FischerWhen a facility replaces a legacy item of imaging equipment with a new model, the OEM generally offers some degree of trade-in value on the used equipment, and factors the cost of deinstallation into the package. But most facilities could be getting more value from their used equipment, Fischer believes. “What we’ve found is that a lot of the trade-in value offered by OEMs is actually just discounts, so if the end user can sell the equipment on their own, they have more flexibility negotiating a lower price for the used system,” Fischer says. From his time surveying the marketplace, primarily as organizer of the Imaging100 annual meeting, Fischer is aware of multiple issues buyers should be aware of before purchasing previously owned equipment—and multiple issues sellers face when attempting to decommission their used assets. With his newly launched company Imaging Acquisitions, Fischer is aiming to change this paradigm; the company will leverage a network of resellers to buy used imaging equipment from facilities at or above fair market value, then make it available to smaller health care providers at a fair price. “Our goal is to help organizations get that used equipment out of their facilities while saving them money,” he says. Challenges Associated with Used Equipment A prime concern for facilities purchasing used equipment is, as Fischer mentions, lack of knowledge of the equipment’s maintenance record; without this information, buyers are left with little information about what maintenance has been performed—and, perhaps more critically, who performed it. “If a system has been maintained under the OEM [original equipment manufacturer] service contact, you know it’s been well-maintained, that any necessary parts have been replaced by the manufacturer,” Fischer says. “That’s not to suggest that a third party is not an acceptable way to provide service, but when a manufacturer does it, you know a standard is being met.” Imaging Acquisitions’ primary focus will be the acquisition of quality, well-maintained imaging equipment. “We’re not trying to sell anything,” he notes. “Our only focus is buying the right equipment—the rest takes care of itself.” Fischer hopes to address some of the challenges often experienced by sellers of used equipment. Imaging Acquisitions will aim to top any OEM’s trade-in offer on equipment, he says, provided the equipment meets the company’s requirements for purchase: it must be currently installed and clinically operative, and it must still be eligible for OEM maintenance. “We ask the manufacturer, would you deinstall this, and also, would you provide us with maintenance where the system is going to be relocated?” he says. “If they don’t say yes, we don’t buy it.” He also hopes to add value to the process of deinstalling equipment that doesn’t meet these requirements. By working with parts brokers who can salvage usable components from a used imaging system and recycle the rest, Imaging Acquisitions will be able to offset a facility’s deinstallation costs. “It can cost as much as $50,000 to deinstall an MRI,” he notes. “Our goal is to help them get old equipment that represents a liability out of their facility. We won’t buy equipment the OEM won’t maintain, but we will help facilities dispose of it.” Commodity Market Creating a “commodity market” for used equipment is Fischer’s ultimate goal, and one that he believes will benefit buyers, sellers and OEMs alike. By getting a guarantee from the OEM that it will deinstall and continue to provide maintenance on its equipment, Fischer’s new venture comes as close as possible to providing an industry standard for used equipment quality, he believes. And that standard represents a high bar: “We don’t guarantee that we’ll buy every piece of equipment offered to us—these systems get a lot of wear. Typically, we only purchase about a third of the equipment presented to us. If a piece of equipment is sitting in a warehouse somewhere, we won’t buy it. We will only buy from end users, assuming the equipment meets our criteria.” Through this arrangement, Fischer says, sellers get the best value on their old equipment as well as their replacement purchases; OEMs have the opportunity to maintain their service business on equipment with an extended lifespan; and, most importantly, buyers can finally have some measure of confidence in their purchasing decisions. “There’s not a solid, structured organization out there that says how much a piece of equipment is worth,” he concludes. “There are a lot of different brokers out there. We saw a definite need in the industry for people who are brokers to buy and sell equipment at a fair price.” Cat Vasko is editor of and associate editor of Radiology Business Journal.