Considering preowned endoscopes?

Here are 6 things Becker's Hospital Review wants you to know before you buy

Weighing value between new and preowned scopes

However, providers may not always want to buy refurbished scopes — it is important to understand when to buy refurbished and when to invest in new equipment. Few know more about the costs and benefits of preowned scopes than Eric Smith, a manager of clinical engineering and associate technology manager at Johnson City, Tenn.-based Ballad Health. Mr. Smith shared three key considerations for healthcare providers to keep top of mind when deciding between new and preowned scopes.

1. Technological advancement.

If healthcare providers want the latest imaging technology, buying new is the way to go. Before investing in new, however, it is important for hospitals to do a side-by-side comparison. Carefully assess just how different a new scope’s capabilities are and the effect those capabilities could have on patient outcomes, as compared to existing inventory and the newest available preowned scopes on the market.

2. Upfront investment.

If device quality is comparable between new and refurbished scopes, cost becomes the deciding factor. At the end of the day, the skill of the physician will determine the patient outcomes. “The bottom line is the dollar,” Mr. Smith says. Mr. Smith said many of their organizations are loyal to one endoscope manufacturer when purchasing new devices due to an enterprisewide effort to standardize all medical equipment through a single purchasing contract. However, the expense of buying new endoscopes, even with the option to trade in old models, was simply too much.

The cost eventually pushed the health system to explore alternatives by partnering with an ISO to repair devices.ISOs can offer preowned endoscopes for 30 to 50 percent less than OEMs. Although a preowned scope may lose some efficiency due to wear and tear, with a high-quality ISO, it should operate just as well as a new scope. “We use [an ISO] primarily as a repair depot purely because of cost,” Mr. Smith says. “The OEM is typically two to five times higher. Other than that, if it’s certified preowned and the quality is there, I see no reason not to go with the preowned scope.”

3. Long-term maintenance.

In the new healthcare economy, hospitals are challenged to derive more value from every dollar spent on endoscopes by maintaining quality and reliability of the device, as well as extending its lifetime with repairs. The estimated cost of maintenance over a medical device’s lifetime is 5 to 10 percent of the original device cost, according to the Association for the Advancement of Medical Instrumentation. With the price of new scopes starting at tens of thousands of dollars, device repairs and routine service are important components in the value equation.

It is critical for providers to note cost is more than a face-value dollar amount. The service component and warranty are hugely important when determining the value of using preowned scopes. “This is where it gets sticky,” says Mr. Smith. “If I have to send a scope back to the OEM that has been worked on by a third-party repair company, and they did not use OEM parts, then [the OEM] will not work on those scopes without replacing those parts.”

That means a provider could pay for replacement parts two times over. When they sign the ISO contract, providers need to ensure it includes service and maintenance functions and the device is covered by a warranty. Providers should require their repair vendor to honor the OEM warranty. Keeping in mind the risk of highly specialized issues that require OEM repair, providers need to ensure the value of the entire ISO contract is still worth the price.

“If device quality is comparable between new and refurbished scopes, cost becomes the deciding factor. At the end of the day, the skill of the physician will determine the patient outcomes.”

Tips and tricks for contract negotiation

Whether buying new or refurbished, Mr. Smith recommends three best practices to negotiate better contracts.

4. When looking for new endoscopes, buy — don’t lease.

Leasing is a popular option for providers seeking the latest endoscopy technology. While the upfront costs of leasing may be lower, the lessee forfeits that value at the end of the agreement whereas buyers keep the asset. Because there is a robust market for preowned endoscopes, buying and reselling scopes becomes a much more lucrative investment than leasing. Plus, leasing keeps providers locked into service contracts with the OEM. This means providers are unable to leverage ISO repair quotes in negotiation because they don’t own the equipment.

5. Third-party repair companies give providers negotiating power — use it.

Health systems or ASCs often buy from one OEM and stay with the brand in subsequent purchases. While this ensures seamless equipment integration, it leaves providers with little power in negotiating OEM contracts. With ISOs in the market, providers can find refurbished, brand-name devices and repairs from experienced personnel, who are often ex-OEM employees. Using an ISO or OEM doesn’t have to be an either-or decision. Contracts with both entities are often complementary and beneficial for providers at the negotiating table.

6. Research, research, research.

When assessing prospective third-parties for repair services, maintenance and preowned endoscopes, research is absolutely critical due to the lack of market regulation. Providers should leave no stone unturned: Check with the automated endoscope reprocessor manufacturer to ensure refurbished scopes can be cleaned properly; work with the third party to understand what models they can service; make sure replacement components meet OEM specifications; and carefully review warranty and service options. Check with colleagues and your extended network about the experiences they have had with third party repair companies and OEMs. Lastly, look for distinguishing factors that may set one third party apart from another, like the ISO 13485 certification, company scale and experience, and any potential partnerships with other major industry players.

“If providers can break the OEM chokehold and create a more varied portfolio of partners, they will have more leverage at the negotiating table.”

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