This No Longer Best Practice is Now Getting Old

Trading-in older medical equipment for new medical device, is an aging and unfruitful practice of a Healthcare Supply Chain.  Healthcare systems that separate these two acts have a financial advantage because they can

1. Resell older equipment at market price, rather than nominal price paid by OEM 
2. Calculate true cost of equipment ownership
3. Maintain leverage in negotiating best price for the new device

Acts of procurement and trade-in are like “bride and groom,” it appears one cannot exist without the other.  But in reality, it is a poor marriage of incompatible entities, destined for cataclysm from the beginning. 

Trading-in equipment only complicates an already arduous process of procuring new medical device.  Among many dissatisfactions shared, the single, most frequent frustration expressed by 100% of Healthcare systems surveyed on this topic was

"Receiving substantially less than the Fair Market Price for trade-in equipment from OEM"

There are a multitude of reasons behind low prices paid by OEM for trade-in equipment but the most common one is due to OEM Trading Desk process.  Most OEMs have a Trading Desk that is responsible for collecting trade-in equipment details from all sales reps. 

These details are than distributed mostly to OEM-only contracted vendors who bid on available trade-in equipment.  Vendor with the best offer gets awarded the equipment. 

Of course, this is an oversimplified glimpse of what actually takes place.  But, without getting into semantics of the bidding process and how much of the vendor’s received offer is in fact given to the Healthcare system, this process devalues trade-in equipment at least twice from its fair market price.

Knowing about the general Trading Desk process, is the first step in recognizing that the relationship between procurement and trade-in acts is toxic. 

By separating these two acts into independent tasks, Healthcare systems can

1. Maintain an advantage during purchase negotiations for new device while
2. Retaining full control over resale of older equipment  

While it may not always be possible to divorce these two acts due to prior contractual obligations, it is certainly advisable and financially advantageous (in most cases) to explore and establish a formal, internal process going forward.  

In the past, trading-in older equipment was customary.  Today, in the age of value-based healthcare, continuing this aging practice is equivalent to mishandling organizational capital assets and funds. 

Managing and controlling resale of older equipment earmarked for OEM trade-in, is one of the simplest and guaranteed ways of creating additional revenue from an already existing and owned resources.