As the US economy continues down the slippery slope of recession, healthcare facilities continue to navigate the uphill trek that is today’s rising cost of doing business. The pinch is not a new phenomenon for hospitals and secondary providers across the country that have, for years, struggled to maintain an adequate level of technology and patient care in the face of insurance companies becoming more stingy with reimbursement rates. Most providers have been forced to develop new creative practices in order to make the dollars stretch. One such method employed in recent years is the purchasing of refurbished capital medical equipment as opposed to buying equipment brand new direct from the manufacturer.

The refurbished medical equipment industry began to hit its stride in the mid 1990s, yet most healthcare professionals still regard it as an industry in its infancy. Before the onset of Internet technology, refurbished medical equipment companies were launched as mom-and-pop operations with a relatively small client base and a corresponding just-in-time inventory level. In fact, the term ‘just-in-time inventory’ doesn’t give a true snapshot of the how the business worked in earlier years. At this time, the true product offered by refurbished medical equipment companies was not the equipment itself, but procurement and refurbishing services. Hospitals often contacted companies that kept no inventory at all, but would seek and find the equipment that particular facility requested- a medical equipment headhunter of sorts. The nature of the business created a steadfast bond between many hospitals and their refurbished equipment providers. This ‘let me help you’ mentality created an almost teamwork-like synergy between hospital and equipment provider. In many cases, these relationships formed in earlier years still stand strong today, although the industry landscape has changed dramatically post maturation of the Internet. Like most industries, the Internet changed the way business was done and the effect has been dramatic. The Internet has forced refurbished equipment companies away from the former mom-and-pop service mentality and into a fight for equipment to sell. The constant caveat plaguing refurbished equipment providers is the glass ceiling created by a limited amount of available inventory; however, the Internet has made the equipment procurement process much easier. On the flip-side of that coin, the ability for hospitals to locate equipment providers has also become much easier; this has forged a competition level not seen in earlier years. Existing companies are now forced to carry significant inventory for fear that competitors will use the Internet to buy up all the quality used equipment available for sale. And today, a lack of inventory leads down the path to certain death: small companies getting orders for equipment they do not have and cannot find. While the Internet has made the game more difficult to play for equipment providers, it has proven a healthy competitive stimulus for the industry as a whole. Several new companies have entered the market in recent years thus driving prices down for the end user. The overall pace has improved from equipment request, to order placement, to delivery. The overall quality of the refurbishment has also improved as more companies begin to specialize and fewer companies continue to carry a diversified product mix. In fact, there are precious few companies remaining that are large enough and well-established enough to employ the biomedical specialists needed to maintain a high standard of quality across a diverse product offering.

While the refurbished medical equipment industry continues to mature out of its infancy, Darwinism is sure to run its course- only the strong will survive. New market entrants have forced older companies to rethink their strategies, but only a few of the new players have the experience and, more importantly, the capital to carry the inventory needed to play the game. Furthermore, new equipment manufacturers have also taken notice and are starting to establish refurbished equipment divisions their own. All this activity equates to one end- quality refurbished equipment making it into the hands of healthcare providers. As the ripple effect of recession continues to be felt across the US, refurbished medical equipment has allowed hospitals and secondary providers to maintain an adequate level of technology and improved patient care while staying fiscally sound and saving dollars on the bottom line. Competition is a beautiful thing.

Tyler Bogan Director of Marketing Southwest Medical Corporation 21900 East 96th Street Broken Arrow, OK 74014