Buying new equipment isn?t always the answer. In today?s marketplace, sometimes it?s wiser to buy refurbished, go to auctions, or lease.
Purchasing a brand-new piece of imaging equipment is an expensive proposition, often consuming millions of precious capital dollars. But it doesn’t have to be that way.
As imaging facilities and departments from coast to coast have discovered, there are as many alternatives to buying new equipment as there are modalities on the market. Among the most popular are purchasing refurbished equipment, buying equipment via auction, or leasing.
While there is no right answer for every situation, each of these common options has its special advantages. But in every situation, it gives administrators an alternative to paying full price, and the opportunity to serve patients and referring physicians in equal measure.
Refurbished Isn’t Second Best
Block Imaging offers an array of refurbished equipment including this GE Lightspeed 16 Slice CT.
Jennifer Ledet, technical director for Radiology Regional Center, has been purchasing refurbished equipment from Block Imaging and others for the past several years.
The word “refurbished” may conjure up pejoratives such as “used” or “as is,” but this isn’t the case. In fact, Ledet says that all of the equipment she has purchased with the help of Block has been well maintained and upgraded, essentially resetting the clock on the modality, allowing Radiology Regional Center physicians to provide state-of-the-art imaging to patients.
While today’s tough economic and reimbursement environments made purchasing refurbished equipment an obvious alternative to buying new, the Southwest Florida-based network of nine outpatient imaging centers has an important advantage that has helped make this route particularly attractive—an in-house service department. “They have experience repairing and servicing our equipment, and we’re going to stick with that,” Ledet said. “They also can check out any equipment ahead of time.”
The key to buying a refurbished piece of equipment, she says, is knowing your equipment, knowing what you need, and working with a reputable company—like Block Imaging—that can find it. “I’m particular,” she said. “Sometimes finding the right match is tough.”
Ledet has purchased nearly every refurbished modality on the books from x-ray to ultrasound and everything in between. Many of these machines have been from Siemens, equipment well-known to her technicians.
Even after Block has found the perfect piece of equipment, fate may intervene and scratch the deal. For instance, equipment sometimes experiences what she terms “significant trauma” in transit, rendering it useless. This may be an inconvenience, but Ledet knows that the practice won’t be out any money and “Block will work until we’re satisfied.”
Block and other brokers can make a practice manager’s life easier by searching high and low for equipment, but sometimes it can profit to go right to the source—the original equipment manufacturer (OEM)—which may have received a used piece of equipment in exchange from a customer and then refurbished and upgraded it.
Following the refurbished route has been a good one for Ledet and Radiology Regional Center. Uptime and throughput are good, making the group’s centers efficient and profitable. And because Ledet makes sure that all the accreditations and upgrades are current, the group’s physicists and radiologists are satisfied with the refurbished modalities’ service and quality.
Refurbished equipment can leverage tight practice budgets, but, on occasion, purchasing a used piece of equipment is born less out of economy than necessity.
Scarcity Means Auctions
Necessity was the motivation for Diagnostic Imaging Affiliates to turn to online medical equipment auctioneers DOTmed to find an extremity MRI machine.
According to Diagnostic Imaging Affiliates COO Baber Eskar, the group, which operates 12 diagnostic imaging centers in New Jersey and one in New York City, had recently purchased several million dollars’ worth of equipment, but was unable to secure a second 1.5T ONI extremity MRI, due, in part, to GE’s recent purchase of ONI.
This is the first time that Eskar has used an auction service, but he found it to be a fairly straightforward process. An ONI extremity MRI was listed on the DOTmed site from a reputable facility, had a service contract, and was up-to-date on its scheduled software upgrade. Having the highest quality equipment was important to Eskar and his colleagues. “Being in diagnostic imaging, we have to use only the best equipment on the market,” he said.
After becoming a preapproved bidder, Diagnostic Imaging Affiliates inspected the unit, making sure that it fit their requirements and was, indeed, well maintained, and then submitted an online bid to DOTmed.
The unit has since been installed at one of the group’s imaging centers and Eskar says that it is working well.
Buying via auction might have been a new and necessary experience for Diagnostic Imaging Affiliates, but it may not be the last time that the group will explore this option. Eskar is keeping an open mind about purchasing via auction or buying directly through a vendor. “If DOTmed had something available that we really, really needed, then we’d do this again,” he said. “Imaging is a service industry, and our priority is patient convenience, customer service, and the needs of the physicians caring for them.”
While purchasing the used piece of equipment saved Diagnostic Imaging Affiliates quite a bit of cash, sometimes it pays to spend more money in the long run and less up front.
Leasing to Own—Sometimes
Of all the alternatives to buying a brand-new piece of equipment, leasing probably has the most potential pitfalls. But careful planning can help avoid them and turn this potentially expensive option into a lucrative one.
Mark Rita, radiology director of Grandview Hospital and Medical Center, Dayton, Ohio, has been leasing imaging equipment for the last 15 years. Among the reasons he says it makes sense to lease equipment is if your budget is tight and you want access to new equipment. The fees for many leases, short term, will be far lower than purchasing the equipment outright.
This has been particularly helpful for Grandview Hospital and Medical Center in its ability to build rural imaging services using mobile MRI machines, which Rita has leased from Shared Imaging. “You can grow your business, without spending so much if you don’t have the volume,” he said.
But leasing a piece of equipment long term will cost more than buying outright, says Rita. However, it may be worth it, he adds, if you make a significant amount of money. This is where careful planning comes in, and is another factor for opting for a lease over outright purchase.
Rita notes that, before entering a lease, he looks at all of the costs involved—not just the lease proper. Particularly for cash-strapped organizations, calculating the revenue versus the outgoing expenses is easy, since both a lease and the income streams are on monthly schedules. And among the costs he calculates is personnel—another factor that makes leasing, particularly from a company like Shared Imaging, more attractive. The company can provide technologists along with the equipment, removing additional expenses, such as training, from the picture. The leasing company is liable for keeping the equipment in tip-top shape, another advantage leasing offers.
The typical lease runs about 3 years, and Rita says that he purchases about 70% of the GE and Siemens equipment he rents. However, he notes that during negotiations he scrutinizes the entire contract, making sure that he can end the lease if he decides to place an MRI permanently in one of the facilities serviced by a mobile unit. And there are hidden costs to consider, he said, when ending a lease. For instance, the leasee may be responsible for paying for the return of the modality—a cost that needs to be budgeted for.
Saving money through buying refurbished equipment, going to auctions, and leasing is a reasonable alternative in today’s market. But sometimes, buying new is the best policy.
Radiology Regional Center’s Ledet says that, although she is committed to purchasing refurbished equipment, she will, on occasion, buy new, but only if “I can’t get what I need.” And she acknowledges that the refurbished option doesn’t always pan out. “It doesn’t work all the time—it’s not an end-all,” she said.
C.A. Wolski is a contributing writer for Axis Imaging News.
