Tags: Tight Economy Fuels Demand for Used Medical Machinery

Tight Economy Fuels Demand for Used Medical Machinery

Tuesday, 14 Dec 2010 12:45 PM

Thrifty hospitals looking to cut health costs increasingly are buying refurbished MRIs, CT scanners and other diagnostic imaging machines that offer bells and whistles comparable to newer equipment, but at a cut-rate price.

Makers of diagnostic imaging machines such as Siemens AG, Philips Electronics and General Electric Co.'s GE Healthcare have been fixing up and reselling machines for more than a decade, but they say the refurbished equipment market is heating up as hospitals look for ways to cut costs.

"We've seen double-digit orders growth this year," Dave Elario, global general manager of Goldseal, GE Healthcare's refurbishing business, said in a telephone interview.

Global sales of new imaging equipment are slowing as patients delay care, forcing hospitals to keep new imaging machines longer.

Philips said last month it expects 3 to 4 percent growth next year in the global market for imaging equipment, but it too is seeing robust growth in its global refurbished business, Jeroen Gruben, general manager of refurbished systems at Philips Healthcare, said in a telephone interview.

Gruben said tight budgets, financial constraints and aging populations are driving independent healthcare providers, corporate healthcare institutions and even some government buyers to look for cheaper alternatives to new machines, which can cost several million dollars.

He said the North American refurbished equipment market is well-established at Philips, but the company is seeing interest from countries in Asia, where it is a newer proposition.

Frost & Sullivan analyst Dr. Gideon Praveen Kumar said the global refurbished imaging equipment market in 2009 was worth $1.5 billion, and original equipment manufacturers such as GE, Philips and Siemens have an edge over third-party companies because they make new imagers, too.

GLOBAL MARKET

GE's Elario said his company is seeing the bulk of its expansion outside of North America, especially in emerging markets such as Latin America and India.

"I don't think it's a blip. We've been at this for 12 years. There's a large market out there," Elario said.

Elisabeth Staudinger, chief executive officer of refurbished systems at Siemens, said her company has been in the refurbished equipment business for about a decade.

"It started out as a project and now it's a full-fledged business unit," she said in an interview.

Siemens had double-digit growth in the North American market in the past year, even though the market for new equipment was flat.

Staudinger credits the economy and uncertainty over healthcare reform.
"There was a lot of discussion about what will be reimbursement rates in the future and people get more cautious when they make their investment decisions."

Siemens gets the machines in exchange for discounts on new equipment, then cleans them up and sells them for 15 to 25 percent below the cost of an equivalent new product, a bit of a premium over the 30 to 40 percent average discount for other pre-owned equipment, according to Praveen Kumar.

"We do a lot more than just fixing it," Staudinger said.

"First, we clean and disinfect it. Then we take off the cover and we do a technical refurbishment inside. We replace all parts which might show tear and wear.

"In many cases, we replace all of the information technology around the system," she said.

In the end, customers walk away with a product that is equivalent to when it was new, Staudinger said.

But refurbished machines are not just a play at hospitals' thrifty sides. The companies also stress the environmental gain from keeping a closet-sized MRI machine out of a landfill.

"You're replacing equipment which is still very usable," Staudinger said. "We calculate it is about 20,000 cubic tons we save of carbon dioxide" each year.

Then Siemens doubles its impact by replanting trees in Indonesia, Staudinger said.

"It's an additional aspect. People really like it."

© 2017 Thomson/Reuters. All rights reserved.

1Like our page
2Share
Markets
Thrifty hospitals looking to cut health costs increasingly are buying refurbished MRIs, CT scanners and other diagnostic imaging machines that offer bells and whistles comparable to newer equipment, but at a cut-rate price. Makers of diagnostic imaging machines such as...
Tight Economy Fuels Demand for Used Medical Machinery
625
2010-45-14
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved