Tuesday, July 18, 2017

Are you asking the right question?

 

Hospital Departments and Supply Chain teams, are you still asking vendors to make you offers on devices you no longer use? 
 
Asking this question makes you vulnerable. It exposes you to receiving value the device is worth to vendors, not its market value. 
 
You must know your device's value.  Asking vendors to name a price for your device is the same as listing your house on Craigslist and asking home buyers to tell you what your house is worth.
 
We tested this theory last month while reselling highly desirable surgical device.
 
For the same device, we asked one group of vendors to submit offers.  And, we asked second group of vendors to pay our asking price. 

Both groups were comprised of equipment dealers, brokers, remarketers, manufacturers and private 3rd parties located in various regions around the world.
 
Results were exactly as projected.  Vendors who chose to participate from the first group, gave offers that were considerably lower than our asking price. 
 
This is not because they were trying to be insulting, but because they gave us offers based on their perception of what the device is worth. 

We positioned this sale by stating: "Taking Offers! Make An Offer!"  Vendors from first group did just that, they made us an offer.
 
Vendors who chose to participate from the second group agreed to our asking price.  

Since multiple vendors agreed to pay asking price, it gave us leverage and position to negotiate with multiple parties. 
 
After negotiations, final price was 94% higher than the lowest offer and 41% higher than the highest offer received from vendors who submitted offers.
 
Takeaway of this experiment is simple.  Know the value of your device.  Don't ask vendors for offers.  Tell vendors your asking price.  
 
The only questions you should be asking vendors when reselling used medical devices are their expectations related to functionality, inspection and pickup.
 
This approach sets expectations, keeps you in control and makes resale process more transparent. 


EcoMed works exclusively with hospitals by reselling end-of-use medical devices. Even if your hospital has another service provider, you may still have questions, need validation, or resources.  Don't hesitate to reach out and ask.
 
To learn more about benefits of a managing resale of end-of-use medical devices, visit www.ecomedhtm.com or send an email to med@ecomedhtm.com.          

Thursday, June 29, 2017

Mistakes Hospitals Make When Selling Used Medical Devices

With great uncertainty looming over the future of healthcare, hospitals are revamping internal processes to save money. 

One of the least discussed processes and most mismanaged is the resale of end-of-use medical devices. 

These are not  the "end-of-life devices" with obsolete technology and zero market demand.  These are working devices, supported by OEM, just no longer needed by the hospital, with moderate-to-"I REALLY NEED IT!" market demand.   

To generate revenue from end-of-use medical devices, hospitals either auction them, trade-in to OEM or resell to vendors.  

Each of these methods has its flaws and benefits, but the underlying problem is the absence of a dedicated person trained to resell equipment.  

Person tasked with reselling equipment usually joggles multiple projects.  Reselling equipment is seldom a priority.  Without proper training, this person likely follows an antiquated formula for reselling to vendors that goes like this: 

"Email at least 3 vendors to buy equipment.  Get 3 bids. Pick the highest.  Show it to the Boss.  Get Boss's approval.  Notify highest bidder.  Get paid when bidder picks up equipment.  Deliver payment to Finance.  Light up a cigar for a job well done... well, maybe no cigar"
In a nutshell, most hospitals across the nation use this antiquated formula to resell used medical devices.
 
Let's review 7 reasons why this formula doesn't work.
1.  Wrong Start:  How do you decide which vendors to email?  Do they need to be "in the system"? Are they current service providers?  Or, do you go to DOTmed and select top 3 companies?  By the way, those companies pay to be displayed at the top, that doesn't mean they pay fair value for used devices.   
Used medical device industry is GLOBAL.  Emailing 3 vendors you know, found on DOTmed or Google is the wrong way to start this process.  Before finding vendors to bid on equipment, you must determine average global resale value of your device. 
2.  Three Vendor Dilemma: Asking same 3 vendors in your digital rolodex to buy your used equipment is like going to the same hairstylist you don't particularly like but you go because it's convenient.   
In reality, unless your vendors specialize in refurbishing, warrantying and reselling equipment to an end-user, they will give you a low, below market bid.  Only vendors described above know true value of equipment and have the confidence of reselling it later.  These 2 elements are essential in attaining the best bid.    
Also, if you only contact 3 vendors, it's very likely that they know each other.  Used medical device industry is a small, niche market and most vendors work together and resell equipment to each other all the time.   
Have you ever wondered why sometimes, received bids are identical?  
Could it be a coincidence... or a scheme?  You will never know unless you expand your vendor network.     
    3.  Vendor vs. Real Estate Agent: Asking your vendors to buy your equipment is like asking your Real Estate Agent to buy your house. 
    Imagine how devastated (and pissed and foolish) you may feel if you sold your home to a Real Estate Agent, who sold it for $15k more the following month?! 
    Houses don't appreciate by $15k in 30 days, but equipment does in the hands of someone who understands used equipment market. 
     
    Of course, this will never happen with your house because Real Estate Agents are governed by state laws and follow strict NAR code of ethics that prohibits them from conducting certain transactions. 
     
    Vendors that buy medical equipment directly from hospitals are not bound by any laws or code of conduct and can do as they please. 

    For this sole reason, it is safer to outsource resale of end-of-use medical devices to an independent company that works for your hospital instead of approaching vendors directly!
4.  Trade-in Drama.  During equipment upgrade, you ask OEM supplying new equipment to give you a trade-in value for old equipment.  You do know, that the value OEM offers is not market value, right? 
OEMs are not obligated to offer fair trade-in values.  According to OEM documents, trade-in value needs to be nominal. (Hint: If it's not in OEM Master Agreement, then it's in the Service/Product Agreement OEM has with your GPO.) 
So what's a nominal value and how do they arrive at it? 
In most cases, information about your old equipment goes to OEM "trading desk" which is just a fancy description of an obscure process that follows. 
Trading desk personnel share information about your equipment with OEM contracted dealers and distributors and asks them to bid on your equipment. 
After bids are received, OEM will take their slice off the top bid and Voila, you have your nominal trade-in value!
5.  Negotiations, what's that? Bids vendors submit to purchase used devices are seldom, if ever negotiated. 
You hustle over new equipment pricing, service terms and other perks to add into Purchase Agreement, but somehow negotiating best price for the same equipment you are selling years later is not of interest
Sure, if you are selling a run-down Cyto Tek Centrifuge, it's not worth the effort.  You should scrap it and not waste time on finding someone who will buy it. 
But, if it's desirable equipment such as C-Arm, why are you giving it away for a top bid of $5000?
6.  Top Dollar Marketing Bait.  All vendors claim to pay "Top Dollar, Highest Value, Best Price for Your Equipment".   
In reality, no vendor will pay top dollar unless they need your equipment at the moment you are selling it.   
Vendors buying for inventory WILL NEVER pay top dollar.  


To get top dollar, takes time, patience and large network of vendors in United States and overseas. 
Is it worth the time building that network?   
Definitely not if you plan to sell Level 1 Fluid Warmers or its equivalents. 
But if you're serious about generating revenue and selling Hospital Beds, Infusion Pumps, Surgical Equipment, Ultrasounds, yes, it is absolutely worth it. 
You will generate double or triple the trade-in value offered by OEM by selling to US dealers, or get 4x as much by selling the same devices to vendors in Africa and Latin America.
7.  Missing Paperwork:  More hospitals are getting into trouble with  CMS, FTC and EPA for making mistakes when reselling equipment.   
Why?   
Because in this industry, almost every vendor who buys equipment from the hospital (again, unless they specialize in refurbishing, warrantying and reselling) will resell it to another vendor.   
Equipment can exchange 4 sets of hands until it finds its second permanent owner.   
Not every vendor will remove patient information from an EKG machine.  Not every vendor will check whether their buyer is located in the country that has trade sanctions imposed by US Department of Treasury.   
Failing to have proper paperwork and lack of due diligence, lands hospitals in hot water with governing authorities.   
When that happens, time required to correct mistakes and fines for hustling are astronomical. (Fact: Medical Center in New York was fined $113,000 by EPA because vendor retained to de-install an obsolete imaging system improperly disposed oil from the generator.)
Selling end-of-use medical devices to vendors has been practiced by hospitals for decades.  When it's done properly, it's a great way to supplement budget deficits and create additional revenue. 

The problem is that 90% of the time it's done haphazardly and without much thought put into the process.  The process is either broken or doesn't exist

If you truly want to act in the best interest of your hospital and have C-Suite sing you accolades at the next Town Hall, stop hustling and using an antiquated formula that yields mediocre results and can get your facility in trouble.
 
Fix the process, stop segmentation that occurs when each department does its own selling, identify key person (and please, not the overloaded, swamped and frustrated Contract Specialist or Buyer in Purchasing) who will manage the process FULL TIME.  Train them!  The results will be unrivaled. 


We are here to help you decide the best way to decommission medical devices your organization no longer uses. Even if you work with another service provider, have questions, need suggestions, looking for validation or resources, EcoMed is here to help. 
 
To learn more about benefits of a managed Medical Equipment Decommission Program, please visit www.ecomedhtm.com or send an email to med@ecomedhtm.com.  

Monday, February 20, 2017

Negotiating Strategies or Excuses?

3 Minute Read | Decision Factors

“Asking price is too high. We buy same pumps for half the price.”
“Market is saturated with these modules. They are almost worthless.”
"System is old and worthless. Removal will be expensive."
 
Healthcare Providers and Supply Chain Professionals, do any of these sound familiar? 

How many of you heard these statements while selling medical devices after they were removed from use by your organization? 
 
Are these statements accurate, or is the buyer trying to corner you into lowering the price under pretense they know the market better? 

In some instances, yes, these statements are correct and your buyer is right.
 
However, that's not always the case. 
 
If your buyers are purchasing devices for inventory than it is unlikely you will receive fair market price.   These buyers have overhead expenses such as warehousing, transportation, refurbishing processes, etc. and there's never 100% guarantee that device will sell and their investment will be fully recovered. 
 
However, there are situations when devices sell at fair market prices or premium. This usually occurs when
  • Buyer has an immediate need for device  
  • Device is being purchased by an end-user
So how do you decide whether to sell the device, or keep it until the right buyer pops up on the radar?
 
Here 3 biggest factors that should influence your decision
  1. Equipment type
  2. Future use potential 
  3. Timeline
Let's explore the Big 3 in more detail.
 
Device Type: 
There are many types of equipment - general, surgical, lab, diagnostic, the list goes on. 

Within this mix, there are individual unique devices such as O-Arms, Portable Heart-Lug Machines and Mobile Hyperthermia Treatment Systems to name a few. 

Provided such devices are in working condition and supported by their manufacturers, it is possible to sell them 25%-60% above fair market price.  
 
The keys to getting a good sale price are
  • Correct Sales Strategy
  • Global Market Use and Demand Knowledge
  • Communications
  • Targeting the Right Buyers
  • Patience
Posting an Internet listing and sending few emails to vendors that fix medical equipment and soliciting an offer will unlikely yield any stellar results.
 
Future Use Potential:
Yes, your organization may have paid a lot of money when they purchased this device. Yes, it may be in pristine condition and well maintained, but offers you are receiving don't come close to what you feel the device is worth or asking prices you see on the Internet for same device so you decide to keep it.
 
It's a tough predicament but if you're not going to use this device, you should entertain a lower offer as it sits there, it will loose all remaining residual value and in the end, you will pay to have it removed and scrapped. 
 
Please don't assume you will get 40-50% of what you paid in 1995 especially if the device is no longer supported by the manufacturer. 
 
Also, keep in mind MD Buyline and asking prices on DOTmed do not reflect fair market price for end-of-use medical devices.  You will need to determine fair price by doing your own analysis, monitoring the market, following auctions and constantly communicating with multiple buyers.   
 
Timeline:
Occasionally, even with a good strategy, you will have no choice but to cave in to your timeline. Most unique devices eventually sell. It’s just a matter of time it takes to find the right buyer willing to pay the right price.
 
However, if space is an issue or an asbestos abatement project is underway, time may not be on your side. Therefore, timeline will impact duration of the selling cycle.
 
If you pull the plug on selling cycle because you don't have time to chase buyers, answer their questions or just want device out, then you should probably delegate or outsource this job
 
Premature sale of medical devices only limits revenue that can be generated from capital investments made by your organization.    
 
At the end of the day, everyone wants a good deal. Everyone negotiates. Everyone hustles.  Ultimately, it is up to you or your trusted partner who works on behalf of your organization to sell end-of-use medical device equitably and smart.
 
 
We are here to help you decide the best way to decommission medical devices your organization no longer uses. Even if you work with another service provider, have questions, looking for suggestions, ideas or resources, please contact us and we will be glad to be a resource. 
 
To learn more about benefits of a managed Medical Equipment Decommission Program, please visit www.ecomedhtm.com or send an email to med@ecomedhtm.com. 

Thursday, January 19, 2017

Are You Ready To Do This Right?

It's that time of the year when goals were just set and New Year's resolutions are still part of our every-other day vocab. 

While this topic is still relevant, let's chat how those of you working in healthcare with medical devices can help your facilities set a goal for successful end-of-use medical device decommission/resale program.

Saying you want to sell or you already sell medical devices outside your facility is not enough. 


If you Google "used medical equipment" your search will return dozens of companies unanimously promising to "buy your used medical equipment" and pay "maximum for your used medical equipment".

How do you know which company to select? How do you know if they are paying maximum when all of them make the same claim? Is selling your end-of-use medical devices to a vendor or accumulating them in storage for an auction even constitutes a program?  Absolutely not.
 
A successful decommission program must be Measurable, Dynamic and Strategic
 
Before you set it up, ask yourself and all stakeholders the following 2 questions:
  1. Who in the facility will take ownership of the process?
  2. Who will be our service provider?
Second question is critical and will make the biggest impact on your program's success, revenue, and available resources.

You need to decide if you want to work with a
  • Liquidator - service provider that commonly liquidates devices through auctions.
  • Used Equipment Vendor - will offer to purchase all available devices for nominal price regardless of device type, condition or age.
  • Re-marketer - specializes in online and email marketing of equipment.
  • Consignor - likely to take physical possession of equipment prior to sale completion.  
  • Consultant - manages resale process, makes strategic recommendations, coordinates de-installations projects, manages logistics and standardizes process across the whole system.
  • Yourself - self-administration of the program.
Completing the following 5 tasks to create a roadmap, use proper sales strategy and leverage negotiations:
  1. Identify devices already removed from service.
  2. Identify devices scheduled for replacement/upgrade this year.
  3. Perform Market Demand and Price Analysis for both device groups.
    • Adjust for: cyclical price fluctuation, current FDA recalls and manufacturer's notices.
  4. Chart removal time line.
    • Put dates on monthly calendar. You will start seeing projects from different Departments and Facilities that can be consolidated for potential cost reduction (ex: removal of obsolete fixed equipment).
  5. Use this information to set an annual Sales Revenue Target!
These are the basic components to consider when setting a goal for successful program.
 
A goal will guide you and reduce surprises along the way. It will financially benefit your facility.  It will create consistency and transparency.  It will reduce liability. And, above all it will ensure you remain in control of the process.
 
If you continue to haphazardly handle end-of-use devices by storing them, misplacing documents for sold assets, consigning assets for mediocre service, chasing buyers to pick up sold devices, than you will continue to be frustrated by mediocre results and lack of process. 

Now is a great time to set a goal to implement decommission/resale program in your facility.  Do it the right way and you just may reach your Sales Revenue Target by June!
 
And, if you are planning to self-administer the program, Contact Us for a complimentary list of items you need to have in place before the launch.
 
If you would like to learn more about benefits of centrally managed Medical Equipment Decommission Program, please visit www.ecomedhtm.com or send an email to med@ecomedhtm.com.

Thursday, August 4, 2016

Keeping Your Options Open: Part I

Every healthcare facility has a handful of medical devices that at some point need to get replaced. Some of those devices are “used and abused” and deserve a proper burial, but some still have a pulse.

The question is, will the ones with the pulse be handled just like their battered counter-parts? 
Will the Hospital Departments trade them for shiny-new next generation models without consulting Corporate Office? 
 
Will they be forever retired into an offsite barn used as a storage or, live in the hallway until Joint Commission arrives and then get quickly relocated into a nearby closet or worse, a bathroom (true story!)?

There are five alternatives to consider in addition to the antiquated trade-in or the "out-of-sight, out-of-mind" methods when replacing end-of-use medical devices. 

Each has its pros and cons but all are better alternatives than locking equipment in barns or using as foot stools under the nurse’s station.

The five most common alternatives are:
  1. Internet Sales
  2. Auctions
  3. Hospital Site Sales
  4. Direct Vendor Sales
  5. International Container Load Sales
A 250 bed hospital has an average of 3,250 devices and since majority of devices are different, different selling strategies should be utilized. For the sake of keeping interest and time, let’s explore “Internet Sales” option in this post and reserve the rest for next time. 
 
Internet Sales Pros:
  • Setting Asking Price: let’s face it, we all have access to the internet and if we can
    self-diagnose the root cause of that annoying cough, we can probably determine ballpark price of the equipment.
Quick Tip: Prices published on websites such as eBay and DOTmed should be discounted by at least 33%.  Prices listed on these platforms are almost always negotiable which is why it is imperative for facilities to maintain own database with prices received for sold devices. Also, please don’t assume that asset book value Finance Department has on record is the same as street value. It’s not!
  • Unlimited Selling Cycle: you’re not bound by time limit and can continue selling until you receive a price that meets your expectations.
  • Reaching Global Buyers: you expand your reach beyond vendors personally known to you or working for your facility to a wide range of prospective buyers located in US and abroad.
  • 24 Hour Visibility: whereas online auctions and site sales provide limited visibility hours, the internet is always open.
  • Reduced Commission/Service Fees: establishing an online store can cost as little as $0 or as much as $200/month, depending on the platform used, but that pales in comparison to 20-60% fees charged by providers offering online auctions and equipment consignment/storage services. 
Internet Sales Cons:
  • Time Consuming: it can get time consuming (and irritating for anyone holding a full time job) to respond to prospective buyer’s inquiries, reply to emails, return phone calls, host inspections or verify if the screw holding the plastic case on the bottom of the unit is grey or silver.
  • It takes approximately 2-4 hours to sell common general biomedical device.
  • It takes approximately 40-60 hours to sell a fixed imaging system.
  • It can take months to sell a unique, specialty-focused system or laser.
Of course, sale process can be decreased if you give away the system for the cost of de-install, but if you’ve read this far, I don’t think that is your goal.
  • Choosing Selling Platform – there are plenty of online platform to choose from and it appears as if a new one pops up every day. From medWOW, DOTmed and eBay to SoluMed and MediBid just to name a few. Each platform has its own advertising criteria, fee structure and customer traffic that must be evaluated.
  • Payment Processing: when selling online, buyers need to have payment options and at very minimum, facilities need to be able to process payments by credit card, PayPal, domestic and international wires.
  • Logistics: managing logistics is a pain! And it will be even more painful if buyer is located abroad. It’s not a rocket science to figure out how to ship a 30lb box to Poland, however the process will take on a life of its own when the job calls for de-installation, crating and shipping via ocean-carrier to Australia or determining which consolidated clearing house to use for a shipment to Mexico.
There is definitely some effort involved when selling end-of-use medical devices on the internet, but the financial benefits almost always outweigh the labor involved. 
 
Don’t be afraid to incorporate Internet Sales into your equipment decommission program. Even if you determine it is more beneficial for your facility to trade-in that end-of-use asset, the vendor taking it on a trade just may be more generous with trade-in value if they know you have other options.
 
If you would like to learn more about the benefits of an in-hospital, centrally managed Medical Equipment Decommission Program, please visit www.ecomedhtm.com or send an email to med@ecomedhtm.com.