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. 

Decoding Buyer Profile

Understanding consumer behavior is not an easy task.  According to Psychology Today “it is a hotbed of psychological research as it ties together communication, identity, social status, decision-making, mental and physical health”.
Collected data is further segmented by corporations to position themselves on the market, advertise products and forecast revenue.

While this information is not groundbreaking and slightly boring, you are probably thinking, how is it relevant to me?

If you are employed in a healthcare setting and involved with replacement of medical devices, understanding buyers that purchase pre-owned medical equipment directly from Healthcare Providers will help you target an appropriate audience for devices that are being removed from service.

To attain the most financially advantageous outcome in a direct sale of end-of-use medical devices, you need to recognize that your buyer is first of all, a consumer with specific needs that fit their business model. 

The following list summarizes services and products of most common buyers that purchase pre-owned medical equipment directly from Healthcare Providers.  Selecting the right buyer will result in additional revenue in your pocket, well technically not yours, but nevertheless, it will make you feel like a hero... or a hustler! 

1.      Remarketer – these companies specialize in Marketing used devices.  After obtaining manufacturer, model, production year and photos of equipment, they market it on the internet, by email and directly to medical equipment dealers. 

These companies seldom set selling prices and often solicit offers.  The highest offer received is reduced sometimes by as much as 60% before being presented as the purchase price for equipment. 

Occasionally, remarketers will accept equipment on consignment where the split may be as high as 60/40 (in their favor), but most prefer not to handle equipment directly, meaning it remains with the facility until buyer is located. 

Remarketers specialize in marketing and advertising services and seldom possess technical training required to check functionality, review service history or confirm eradication of ePHI before handing over device to the buyer.

2.     Reseller – these are the “Jacks of all Trades, Masters of ...” companies.  They purchase all types of used medical equipment. 

Resellers often purchase on site and by the “box”.  They contact Biomed, Materials Management and if they can get to, Purchasing Departments to inquire if any used equipment is available for sale.  They may send a truck directly to equipment storage area and make an offer on whatever is available.  

Since these companies pick up equipment by the box, they cannot predict if anything valuable is buried on the bottom, so at the risk of overpaying for scrap, they have no choice but to make low purchase offers. 

A lot of equipment they obtain is scrapped, some is resold to dealers, refurbishing companies or occasionally to end-users.  Resellers have some technical skills and may provide basic services such as minor repairs, parts replacement, cleaning and painting before reselling equipment.   

3.     Refurbisher – companies that actually refurbish medical equipment are highly skilled and often ISO certified.  They take great care and pride in their refurbishing process which is often documented and available for review. 

Technicians working at these companies are frequently certified and manufacturer trained.  Refurbished equipment is sold with a warranty to an end-user who may be a Healthcare Provider or an academic organization. 

Since refurbishing companies are dealing with end-users and have additional sources of revenue such as warranties and service contracts, they pay top dollar for used medical equipment.  With that said, they are more selective in their purchases and abstain from outdated technologies. 

4.     Original Equipment Manufacturer – “aka” the OEM enters the picture when older, not outdated equipment is being replaced.  OEM will do a trade-in, or “buy back” older equipment and apply price offered for a trade-in as a credit towards purchase price of the new device. 

OEM, rarely if ever, pays a fair price for trade-in equipment.  It is critical to review every dollar sign in the new device Purchase Agreement because price paid for a trade-in is likely embedded in it. 

Since OEM obtains most of the revenue from sale of new equipment, few have interest in refurbishing equipment they take on a trade.  Thus, they either destroy it to prevent from entering the secondary market or resell it to an OEM-contracted vendor. 

Either way, while it may be convenient to have an OEM pick up older equipment and it’s attractive to see lower price of new equipment on paper, in reality, this practice prevents underserved medical community from acquiring affordable equipment and bluntly stated “leaves money on the table”.    

Deliberately omitted from this list are Auction Houses that are starting to saturate the online marketplace.  Auction Houses do not purchase equipment. Equipment is consigned to them and their job is to sell it through an auction. 

Slightly simplified, but the auction process begins after substantial amount of equipment is collected from several facilities.  Prospective buyers stored in Auction House’s database are notified of date, time and location. 

Since Auction Houses provide an auction platform, they do not get involved in details that

may enhance price of equipment such as replaced parts or recent PM. Their scope of service doesn’t include operability verification, eradication of ePHI and conducting de-installation of fixed systems.  Those tasks are transposed to prospective buyers. 

Information provided to prospective buyers is limited to manufacturer, model and quantity. To participate in an auction, buyers are limited to those having a credit card and available during set auction time.  Buyers typically pay a premium fee that may be as high as 20% per transactions and some Auction Houses actually impose a fee on sellers thus further reducing the overall generated revenue for the seller.  

When working with an Auction House, it is essential to keep a very detailed list of consigned equipment, review items sold at each auction, audit items that did not sell and will be auctioned at a later date, review all sale prices and associated buyer and seller fees. 

This list is not intended to minimize or maximize buyer’s expertise but to distinguish between their service offerings which directly impacts their buying practices. Purchasing used medical equipment directly from Healthcare Providers is done all the time, but this practice is not regulated and buyers set their own rules and prices, thereby often claiming they “can offer the best price”. 

While receiving the best price is a sweet melody to one's ear, understanding buyer’s role and business model can guide Healthcare Providers into making an appropriate decision as to which buyer to engage for a specific device and what deliverables to expect from their joint collaboration.