THE FINE PRINT

Know what to consider and what to avoid before you sign your next service contract.

If a pen runs out of ink, it’s fairly easy to grab another. If a watch stops ticking, the time can usually be ascertained close by. If a CT machine goes down, there typically is no backup. In fact, with much of the equipment in radiology, if a device fails, workflow and patient care can be negatively impacted. So it is important that service and maintenance for these devices be fast, efficient, and—ideally—preventive.

To ensure maximum uptime (at minimal cost), a service and maintenance plan should be in place. If something does go awry, who will determine what is wrong with the device? Who will repair it? Is certification required? Where will the parts be purchased? Who will perform preventive maintenance? How will patient information be protected?

The answers to these questions, and others, should be determined so that the process is smooth and efficient—if a unit goes down, time should not be wasted determining who is responsible for fixing it. But those answers should be determined early, at the time of acquisition if not before. “Contracting is the most important part of a service contract,” said Dheepak Raja, director of Biomedical Engineering and Nursing Clinical Support at Medstar Washington Hospital Center in Washington, DC.

Service contracts are typically signed for a period covering 3 to 5 years, so it is advantageous to approach them with forethought and detail. What is not in the contract can be as meaningful as what is in the fine print, and neither should be ignored. “I would recommend that the contract be reviewed by legal counsel,” Raja said.

There are a number of things to look for, but the specifics will vary with each facility. “It’s all about risk management,” said Raja. Hospitals and imaging facilities need to consider the actual in-house costs (not simply parts and time) and then compare them against similar metrics for the proposed plan.

If it does not work, there is likely another option that will. Vendors and third-party providers often offer multiple levels of service designed to mesh with an organization’s in-house capabilities. A new trend involves tailoring contracts even more specifically.

“Philips [Philips Healthcare, Andover, Mass] offered us their RightFit Service Agreement portfolio, which allows us to specifically pick and choose the level of service for whatever modality I need coverage for,” Raja said. The package was launched last year, but is not alone. Original equipment manufacturers (OEMs), such as GE Healthcare, Waukesha, Wis, and service providers, like Genesis Medical Imaging, Huntley, Ill, also offer a host of options designed to cover the full range of needs.

Full Service to No Service

The fullest coverage comes with a full-service contract. This type of agreement can cover everything: technician service Monday through Friday during business hours, with 24/7 all-inclusive labor and parts, preventive maintenance, and associated costs (eg, technician travel time, loaners, etc).

The next step down is shared service, where responsibility for the labor, parts, risk, costs, and other aspects is divided in some way between the service provider and the health care organization. Often, the in-house biomedical team handles first call and preventive maintenance. “If it’s something that cannot be easily fixed by them, they can turn to the technical support of the service provider,” Raja said, noting that parts are typically covered.

Parts-only contracts are another option. The in-house technician can still turn to the provider for technical assistance, but the health care organization will have to pay for the labor out of pocket. The parts, however, would be covered under the plan. Other options for service contracts include magnet maintenance, cold head and cryogen service, CT tubes, and MR coils.

A final option is the least rigid but has the greatest risk: time and materials. The in-house engineers handle all issues. “The hospital can still call the service rep to come in and take the call, but it would have to pay for everything—labor, parts, travel—everything,” Raja said.

OEM or Third-Party

Most OEMs offer these varying levels of service, as do many third-party service providers. Both also may offer multivendor plans, a response to the collection of equipment from different manufacturers that make up the imaging inventory within many facilities.

“Multivendor plans make contract management easier and help to build relationships with the service engineers,” Raja said. However, there is a risk that the technicians will not be as familiar with the devices of other vendors as they are with those from their own companies.

“It really depends on the level of expertise of the biomedical engineering team that’s managing the equipment in the hospital and also the level of expertise that is required for specific modalities, [such as] MRI and CT. You might want to take those to the original equipment manufacturer. But if it’s low-end equipment, and it’s not that complex, then you may want to entertain multivendor plans,” Raja advised.

Specific expertise can be a general concern regarding third-party providers as well. “OEMs usually have a higher level of expertise than third-party providers, but third-party providers have done an excellent job [over the past few years] catching up to the OEMs in terms of what type of service they can provide,” Raja said.

In addition, technicians at third-party providers often have broader knowledge across the market and may, therefore, also have higher capabilities, particularly when there is a low need for service keys (software diagnostics), according to Wayne Tschirn, vice president of operations for Genesis Medical Imaging.

Of course, the main advantage to the use of a third party is often budgetary: service from third-party providers tends to be less expensive than that of the OEMs. Third parties also can offer unbiased opinions and sometimes have different approaches to service that may benefit the hospital.

But a third-party provider may not always be the best solution—or even a possible one. In some instances, service engineers must have certified licenses to work on a device; often, this certification is available only through the vendor and may be difficult to obtain. The certification may not be offered to outside technicians, or the cost may fall outside of some budgets. The OEM’s technicians, therefore, have the advantage, and because they are within the company and more easily updated, they also have the benefit of the latest information.

In addition, OEMs can typically offer access to software diagnostics, factory support, parts availability, and other resources, often on an immediate (or overnight) basis. But, depending on the device, the third-party provider may be able to match these capabilities enough for the hospital to find value.

Flexible Enough?

Ultimately, the health care organization will need to determine what the best service arrangement is based on the criteria related to its resources and needs. Today, the analysis may fall, at least in part, to the biomedical engineering department, but imaging administrators will want to be sure that their expectations are covered—at a reasonable cost, of course.

Both groups will want to ask if the service provider is a solution for the short and long term. “How a hospital views a contract today and 3 years from now is very different,” said Bud DeGraff, general manager of Clinical Asset Management and Multi-Vendor Services at GE Healthcare.

Flexibility should therefore be built into all aspects of the contract. For instance, if a hospital today maintains certain types of diagnostic imaging equipment, in 5 years, they may want to incorporate MR and CT. “Flexibility says we can provide what you need today and lower the service level as you ramp up internal operations so that the contract ebbs and flows with the current and future strategy,” DeGraff says.

DeGraff notes that he sees a lot of customers question their current models, “no matter what their models are.” But they should not be lured simply by a lower price. It is important to completely understand the cost structure, internally across all cost centers as well as externally, and compare the value, quality, and capability of the options.

Cost and Comparison

“The more educated the customer is, the more advantage they’ll see in finding a service provider that can bring quality, expertise, and operational efficiency,” DeGraff said. So facilities must first know what their costs are, or would be, on both the front and back end. What will it cost, really, to provide the service in-house? And what will it cost, really, for the service agreement?

Hospitals will often make a decision regarding service for an imaging modality based on estimated usage, but the organization or the provider may under- or over-estimate this figure—and even if accurate, usage is not necessarily the best indicator. “Just because something is brand new doesn’t mean it can’t break, and it could easily cost $100,000. Or just because a room is not used that often doesn’t mean it won’t go down. The chances are lower, but you have to take an amount of measured risk when you decide to put it under a service contract,” Raja said.

How much tolerance the administration has for risk will impact the final decision. “The service contract allows the in-house biomedical engineering department to make their budget. If they are comfortable with paying out of pocket, it’s up to the department to decide that,” Raja said.

In comparing various plans, it is also important to evaluate them intelligently, not simply by price. “Try to look at the service costs and compare them using whatever benchmarking tool you have to make an apples-to-apples comparison,” DeGraff said.

Focus on the Nitty-Gritty

Apples-to-apples means comparing the big and the small items, including what is included and what is omitted from the fine print. A big question is how much uptime will be guaranteed—97%, 99.99%? “Whatever the hospital finds acceptable needs to be put in writing in the contract,” DeGraff said.

What hours will be covered? Who will handle calls outside of this time frame? Will training for users and/or technicians be included? Who will pay for test equipment? Is there a dollar limit to parts covered? Who pays for misuse and abuse? “What’s considered misuse? What’s considered abuse? And how is the determination made?” said Raja.

Tschirn adds more questions, such as what are the contact options; is glassware or cryogen coverage needed; and what are the expectations of the referring physicians. How would this group answer questions regarding risk, uptime, and use?

With less risk, there is typically more upfront cost so it is smart to carefully balance the two. It is important to make sure a service agreement is not wasting resources. Facilities don’t want to purchase service contracts that exceed their needs, but they also don’t want one that doesn’t meet them, notes Tschirn. Do the terms provide service that matches regulatory requirements? Do the terms provide more? Do they provide less?

And do they address the regulations regarding protected health information or PHI? “Usually, there’s a business associate agreement done between the hospital and service provider that clearly states what the responsibilities are for third-party representatives when they come across patient information,” Raja said.

Just in Case

Making sure these small details are covered within the agreement offers clarity as well as protection for both parties. “The contract should spell out exactly what the deliverables are for both sides,” Raja said.

Terms also should address what happens when something does go wrong. “Typically, you put in the terms for escalation of issues—what is the time period for fixing those issues, and if they don’t get resolved, what are the next steps in canceling the contract? There should be a clause where either party can terminate the contract,” Raja said.

Ideally, such a situation won’t arise. If flexibility has been built into the contract, it may more easily allow for adjustments to address any issues. The good news is that health care organizations are doing a better job developing their contracts.

“About 10 years ago, biomedical engineering departments never worried about reading through the fine print and disputing certain clauses of the contract. Nowadays, time and resources are spent reviewing a contract and making sure it’s acceptable to both parties and both parties’ legal teams,” Raja said. When they’re ready to sign, it should be fairly easy to grab a pen.

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Renee Diiulio is a contributing writer for Axis Imaging News.