Previous posts have highlighted the fact that autos are aging and that there is stiff competition to properly maintain those senior citizen vehicles and keep them on the road. But what on earth does that have to do with the Medical Devices Industry? You may be surprised.

How Cars are like CAT Scan Machines

According to a recent press release by Global Industry Analysts, Inc., (GIA) the recessionary forces that have extended road life for automotive vehicles are exerting the same kind of pressure on the healthcare industry. 

The GIA report also goes on to say that “… the market witnessed a sudden spurt in demand for the servicing of older equipment.”  

That means that hospitals and healthcare organizations are doing exactly what car owners are doing; they’re keeping their car (or in this case medical equipment) longer and relying on service providers to prolong the life of their X-ray, Ultrasound, CAT, MRI, PET Scanners and other medical devices.

Lost and Found Revenue

Because hospitals are fixing rather than buying new medical equipment, manufacturers are losing revenue and are looking for new ways to replace the lost income.

As the Automotive industry has shown, one logical place to find new revenue is in the aftermarket service (and parts) for their cars. Therefore, as medical equipment OEMs look for new business they may find that offering extended service and parts contracts is a good place to start.

But Who Will Get the Service Contracts?

Traditionally, medical equipment OEMs provided 60% of the aftermarket service of their equipment. But lessons from the auto industry’s battle for aftermarket parts and service dollars may provide some insight for ways to improve those numbers.

Regularly automotive OEMs see a sharp decline following the end of the car warranty when customers take their service and repair work to independent repair facilities (IRFs) rather than continue the dealer relationship.    

Although medical device OEMs enjoy higher aftermarket service retention rates, they can still expect keen pressure from Independent Service Organizations (ISOs) and in-house Clinical Engineering Departments.  ISOs and hospitals are both expanding their service offerings to aggressively bid for some of those maintenance and repair funds.

Consequently, much like the auto OEMs, medical equipment OEMs will have to step up their game and fight harder. In the auto industry OEMs have increased efforts to make it easier for dealers to do business with them and to purchase from them – key elements in dealer loyalty. Dealers in turn, with the help of their OEMs, are working harder to retain the customer’s service business after the warranty ends.

In the medical devices field, similar efforts will most likely be aimed at end users themselves – the hospitals that actually purchased the device – with the hope that better equipment support translates into higher loyalty, which turns into increased parts and service revenue.

A Common Tool

One tool that helps both automotive aftermarket and medical device OEMs nurture their dealer and/or client relationship is an integrated electronics parts catalogs such as Enigma InService EPC.  InService EPC helps service technicians (like those of Enigma customer Toshiba America Medical Systems) be more prepared on site with access to all equipment diagnostic information, parts and assembly illustrations, maintenance procedures, parts availability and price, as well as technical instruction, technical service bulletins and even sales brochures.  And because the system can be deployed via web to laptops, desktops, mobile devices such as iPads, tablets or even smart phones or traditional paper, it becomes an indispensable tool for field service technicians to have on hand.

So, even though cars don’t exactly look like CAT Scan Machines, we think there is well-founded cause for comparison. Medical device OEMs can learn much from their automotive OEM counterparts.