There are forces in play that could limit competition and raise prices for preowned medical devices in Europe.

Philip Jacobus

The United States has the world’s most well-developed preowned medical device market in large part because it was allowed to develop. Consequently, there are abundant, highly competent, and reliable refurbishment businesses that have considerable expertise, use OEM parts, and work closely with OEM engineers when they require support. Many refurbishment companies are staffed with former OEM engineers. Medical clinics and hospitals of all varieties can with fair ease and assurance acquire equipment refurbished to original condition. This well-oiled market makes the selling of refurbished equipment relatively easy and efficient. The evolution of sophisticated e-commerce over the Internet has made that much more so with widened markets, highly rationalized pricing, and unprecedented transparency.

This healthy business sector, largely self-policed, underpins commerce and competition that ultimately benefit the health care system from clinics to patients to manufacturers. Today, even the OEMs have started divisions to remarket their equipment. How is all of this in everyone’s interest? Hospitals and clinics under significant economic and competitive pressures can readily find preowned medical devices at significantly lower costs without compromising patient care and safety. Hospitals and clinics that wish to sell their equipment can find ready markets because buyers are confident of getting properly refurbished systems. Sellers have more funds to finance new equipment to meet consumer demands for the latest equipment, which in turn supports OEMs with new sales. This circle of commerce is symbiotic.

Other markets around the world are quite constrained. Turkey and China have banned imports of preowned medical devices. Others have significant restrictions because of harm substandard devices have caused to their health services to one extent or another. It is noteworthy that where the market has been allowed to develop such as in the United States and the refurbishment firms uphold high standards, this author is not aware of an instance where patient safety was negatively impacted or where people were hurt.

In nonprivatized systems such as in the UK, which is dominated by the NHS, there is virtually no use of refurbished equipment that is consumed by that government health system. Instead most devices are sent on to developing countries.

Continental Europe has a growing preowned market, but some are worried about further regulation constraining the market. In 2007, COCIR (European Coordination Committee of the Radiological, Electromedical and Healthcare IT Industry) produced a green paper entitled “COCIR Good Refurbishment Practice (GRP),” which was developed to assist health care providers to recognize properly refurbished medical devices from those of poor quality, to create process standards in order to prompt those in the industry to improve the safety and effectiveness of used medical equipment, and to provide governments and regulatory authorities with guidance for their regulations. It was drawn up largely by key OEM members who themselves have refurbishment services. (Some report the volume of these services has doubled or more since 2002. Some of these are very substantial operations indeed.)

That is noble and important, and sounds well intentioned. But one must ask: If the refurbishment businesses in the United States can be generally counted on to uphold high standards ? why not Europe? Do Europeans desire more assurances and control through regulation? Certainly, this is a mindset and distinct from that in the “Wild West”; arguably, it has merit in many instances, and it serves Europeans very well. Quality control is important, and Europe certainly has in many aspects of its commerce, and society in general, high global standards. But some critics have expressed concern that the OEMs with those refurbishment programs, and who wrote the guidelines, might be somehow gaming the system for their own benefit. If OEMs are the only firms that meet the standards of selling used equipment, standards created by the OEMs, then that means less competition and less competition means higher prices.

If so, which is not clear at this point, this has the potential to limit the range of options for preowned medical devices in Europe, as competition could be restricted, perhaps severely. Buyers and sellers, who through the beauty and transparency of very sophisticated Internet commerce, which can now connect them directly, could find this perfectly rationalized market skewed and skewered by regulation whether unintentional or by nefarious design as some would suggest (you decide). That would be a shame given what this new transparency and dynamic marketplace offer. In the United States, where the independent service and sales firms have grown, not only can hospitals sell their equipment for more but end users pay less to get operational equipment. It would be unfortunate under any economic conditions to make it more difficult to acquire cost-efficient, preowned medical devices. In today’s economic climate with very tight credit and fewer financing options, market restriction could truly undermine the delivery of patient care.

Philip Jacobus, is the founder and president of DOTmed, the leading public medical equipment marketplace, and the leader in online medical equipment auctions.