Tuesday, April 10, 2018

Internal Habits Are Hard To Break


Adviser: A person who gives advice in a particular field
~Oxford Dictionary~

Most companies in used medical device space operate as brokers, dealers or remarketers. 

They buy, sell, broker or market used medical devices.

It's a sensible business model that’s practiced in many industries.

This model, however, does not solve an internal problem many hospitals have related to used medical devices.  

As devices age and get replaced, hospitals often

 
  • Practice "out of sight, out of mind" approach where devices are stored until they become obsolete and require liquidation.
  •  Trade-in below market value. A popular method where supplier of the new device offers “nominal value” for the old device. Works just like trading-in an old car for a new one. Hospitals give up revenue in exchange for convenience.
  •  Sell to vendors who email them proposals that read "Sell us your equipment. We buy all equipment. We beat any offer. We pay top dollar!" Every proposal reads the same.   

And, every Department within the same hospital, has their own preferred way of handling devices they no longer need. 
 
Rather than taking advantage of this disorder, I've always advocated for hospitals to address this problem internally.
 
Until each facility and Department follows the same protocol, hospitals will lose revenue and never capture the true cost of equipment life-cycle.
 
It has become my mission and passion to help hospitals fix their internal process. And, to educate them about used medical device industry so they can make informed decisions. 
 
Reselling used medical devices became a byproduct of advice and recommendations that resulted in consistent revenue for our clients. 
  
In my last post, I offered to share 5 reasons that make EcoMed an adviser rather than a traditional broker, dealer or remarketer. 
 

With our mission to improve the internal process being Ground Zero, here are 5 reasons that set us apart:
 
Reason #1. Sales, Sales, Sales
 
Our expertise is managing resale of used devices. We refrain from offering hospitals products to purchase.
 
Why?
 
Because we prefer to represent best interests of facilities and ensure transparency.
 
Reason #2. Please don’t ask to buy your equipment
 
Buying devices from hospitals will put us in the same category as other brokers/dealers and violate our principle of transparency.
 
It also means that unless there's a buyer for your device right now, you will receive a low offer because of high acquisition costs (transportation, storage, refurbishing, uncertainty if/when the devices will resell and insurance just to name a few).
 
Reason #3. Remarketing is insufficient
 
Unlike remarketers whose objective is to market device until there’s an offer, we follow a thorough discovery process where we collect data from Department, service engineers, OEM and FDA if applicable.
 
To resell unique devices, we partner with leasing companies, medical associations and technology startups all over the globe because traditional resale methods are not sufficient.
 
Our marketing plan and selling strategy are determined by device type and not online platform with lowest fees.
 
Reason #4: Complimentary Services
Routine inventory of devices removed from clinical use costs our clients… $0.
 
Clients who need appraisals pay... $0.
 
Recommendations on what to do with devices removed from clinical use - sell? auction? trade-in? recycle? We analyze, our clients pay... $0.
 
Reason #5: Compliance is Everything
 
Are you sure device sold from your facility will not end-up in one of the countries with trade sanctions?   
  
Will your facility be protected if sold device caused injury or death to a future patient?
 
To protect your facility, it is imperative to have the right paperwork in place and we make sure it is.
 
In summary, there are several ways hospitals can handle used medical devices. 
 
Despite their preferred method, it all starts with internal organization, understanding of used device market and what each vendor who deals with used devices will offer your facility.

What are your thoughts on fixing internal process? Do you think it's attainable?  Will it improve efficiency and increase revenue generated from sale of used medical device?
 
 
 
EcoMed works exclusively with hospitals to resell medical devices removed from clinical use. Even if your hospital has another service provider, you may still have questions, need validation, or resources. Contact us with any questions you may have about reselling your medical devices. 
  
To learn more about benefits of being an EcoMed client, send us an email or visit www.ecomedhtm.com.

Wednesday, March 21, 2018

Who Are You?


"Is EcoMed a medical equipment broker, dealer or remarketer?"

I hear this question a lot.  

Whereas most companies in used medical device space fall into one of these three categories, EcoMed does not.    

EcoMed works exclusively with healthcare facilities to resell medical devices removed from clinical use. 

However, our services, business model and principles significantly differ from traditional brokers, dealers, and remarketers of used medical devices.  

I decided EcoMed must support healthcare facilities after studying used medical device market for few years. 


During that time, three facts became clear to me:    
  • All hospitals upgrade/replace medical devices.  Most hospitals have no defined process for removing devices they replaced.  
  • Most hospitals either traded-in replaced devices to OEM or used "liquidation" to resell them. The hospital staff were seldom pleased with results of either option. 
  • Brokers/dealers who bought used devices through "liquidation" all claimed to "pay the most." Some offered cash. All offered free pick up. 

If all brokers/dealers were paying the most (and cash, and free pick up) then why were hospital staff not pleased?  
 
This question sent me on a quest to interview Hospital Supply Chain staff, contract specialists, surgery center owners, department managers and biomedical technicians.
  
 
I discovered the top 2 reasons hospital staff were not pleased with OEM trade-in and broker/dealer liquidations were

  1. Lack of transparency
  2. Limited trust  
The other consistent issues noted during interviews were:  
  • Hospital staff had limited knowledge about used medical device industry.
  • Most hospitals were understaffed and employees were juggling too many projects. 
  • Staff often agreed to vendor's offer to buy or consign devices without any data to support their decision.   
During one interview, the Director of Purchasing for TN-based healthcare system said:
"When the same vendor who sold us equipment 3 years ago gave a quote to buy it back, it seemed like we were taken for a ride."  
Hospitals lacked partners to guide them through the process of reselling used medical devices.

They didn't have anyone representing their best interests. 

Some hospitals had 10,000+ vendors in their database.  But all these vendors wanted were to either sell an expensive product or service, or buy hospital's devices or supplies for pennies on the dollar.   

Most hospitals followed an outdated approach to reselling devices that gave mediocre results.

They've been stuck in this cycle for decades because there's never time, resources and budget to explore alternatives.   

All these findings lead me to conclude that EcoMed must be established as an advisor and a trusted partner to hospitals


We had to become the company to represent hospitals' best interests when it came to reselling medical devices.   

With EcoMed's mission redefined, we embraced the following 3 principles:         

  1. ALWAYS advocate for internal redeployment of devices.  Not many vendors will ask "Have you checked if other Departments can use this device?" when you contact them about selling it, but we do.
  2. Educate hospital staff how to resell equipment.  Only STANDARDIZED resale process will improve efficiency and revenue.    
  3. Provide UNBIASED advice, customized service, and solutions.    
EcoMed is not a broker, dealer or a remarketer. 
 
EcoMed is a healthcare advisers that specializes in medical device resale and decommission. 

Our mission is to empower hospital staff to make decisions that are right for their organizations and patients.

Do you agree that our principles and services place us in a league of our own?

If you're still not convinced, keep an eye out for the next post where I will share 5 reasons that illustrate how EcoMed's business model and principles set us apart from traditional brokers, dealers, and remarketers of used medical devices.



EcoMed works exclusively with hospitals to resell medical devices removed from clinical use.  Even if your hospital has another service provider, you may still have questions, need validation, or resources.  Contact us with any questions you may have about reselling your medical devices.  



To learn more about benefits of being an EcoMed client, send us an email or visit www.ecomedhtm.com.

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 demanded 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 offers that were marginally negotiable.
 
Vendors who chose to participate from the second group worked with us and agreed to 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 negotiated 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.