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Diagnostic imaging centers have long relied on the cost-savings benefits of buying refurbished versus new radiology equipment. But with the steep, across-the-board imaging cuts of the Deficit Reduction Act (DRA) taking a toll on radiologists, many are increasing their purchases of "pre-owned" equipment.

"We're opening our third diagnostic center in Orange City this fall," noted Leslie Olander, director of operations for Advanced Imaging Center of Leesburg. "Every piece of equipment in the new center is refurbished–including the rad room, mammo, CT and MR."

Since the DRA took effect in January, the practice has seen a 38 percent drop in reimbursement for MR, 22 percent for CT and 18 percent for ultrasound, according to Olander. "Our total reimbursement has dropped an average of 40 percent this year," she stressed. "Purchasing pre-owned equipment helps us pick up the slack–translating into capital costs savings well into the six-digits."

Since its inception five years ago, Advanced Imaging has purchased various other remanufactured and refurbished equipment (see sidebar for difference) for its two current centers, in Leesburg and The Villages.

"We've found they produce fine images," Olander maintained, "and at a fraction of the cost. Each piece of equipment is roughly 30-40 percent off the original equipment manufacturer's (OEM) retail price."


Out with the new …
Advanced Imaging buys the bulk of its pre-owned equipment from Orlando-based Amber Diagnostics, one of only a handful of companies in the United States licensed by the FDA to fully remanufacture medical equipment–and the only one in Florida.

Bobby Serros, owner and CEO of Amber (named for his daughter), has witnessed a moderate, steady increase in sales of refurbished equipment over the past 15 years as reimbursement continued to decline. But he's never experienced anything close to the DRA imaging cuts since opening his doors in 1991.

"Diagnostic centers that were either disreputable or not financially feasible are closing because they can't absorb the hit, so many 'new' used items are coming onto the market," he explained. "At the same time, many reputable diagnostics centers that were financially feasible are now expanding, and they need additional equipment."

Most practices buy refurbished equipment so they can offer a wider range of services to their patients. Limited budgets potentially force them to choose between buying only one brand new unit and upgrading multiple modalities by purchasing pre-owned units.

Since a significant chunk of a diagnostic center's finances is sunk into acquiring new equipment or upgrading existing technology, Serros said more practices are opting to purchase pre-owned radiology equipment.

"It's just like buying a new versus used car," Olander added. "Once you drive it off the lot, it depreciates. With radiology equipment, especially, that initial depreciation is a huge hit."

'Spray and pray'
Advanced Imaging has utilized remanufactured and refurbished equipment in its centers for years, "without compromising patient care," Olander noted. "In fact, many times the equipment is even better than new because the kinks were critiqued and worked out by previous owners, OEMs and vendors."

If your practice or hospital is considering purchasing pre-owned, Olander said there are several important questions to ask: What type of equipment do you need (closed or open MRI, or both)? What are your space constraints? Do you need the newest bells and whistles to obtain the necessary outcomes? Do you need the most advanced piece of equipment to get the results you want?

Tie the decision to your business plan, she suggested. Certain equipment is critical and calls for regular replacement. The latest 64- or 128-slice computed tomography technology, however, might not be necessary for your organization to remain competitive. "If you conduct only a few simple procedures each day or do not perform major cardiac studies, a refurbished CT might be the right choice."
Once you've determined what equipment you need, the next crucial step is making sure to deal with a reputable dealer.

"Some shady distributors work out of their garage and do what's called 'spray and pray,'" Serros warned. "They just spray paint the exterior of the equipment, leave the interior as is, and pray it still functions properly."

To avoid these scams, and potential liability nightmares, it is important to obtain references and contact them personally. "If you can, take the time to go on site and actually look at other magnets and equipment the company has installed," Olander said.

Ask about warranties and service agreements as well. "If they take out a piece of equipment for service, will they reinstall it? Get it all in writing," she stressed. "Don't just take 'Joe's' word for it."

Product liability insurance is another important issue practices often forget to inquire about, Serros added. "Not just product liability for accidentally knocking down your wall during install. I mean product liability for human beings as well. There are many dealers out there who carry no insurance at all."


The process
Amber Diagnostics' engineers completely recondition all used equipment, replacing worn-out parts and bearings. The company will custom refurbish equipment with a new x-ray tube or other upgrades to meet customers' specific requests. Amber also offers a one-year parts and labor warranty.

"Each item is taken through a rigorous test called a 'burn-in,' where we try and make it fail," Serros explained. "It's then stripped down and brought back to manufacturers' specifications, repainted and decals put on. When they go back in the field, the equipment looks and runs like it originally should."

Amber technicians install the equipment and, within Florida, provide onsite service. Outside the state, the company subcontracts with service organizations.

Serros also encourages new customers to visit his 25,000-square-foot staging area, and will fly doctors in to see his engineers preparing pre-owned equipment for resale.

"Check out a potential dealer's storage and service facility. It's just like looking at a kitchen or a garage. If it's small and only has a few pieces of equipment, you might want to reconsider."


June 2007

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