Transforming Wicked Ways of Selling Used Medical Devices

After 7 years of working in a medical field, I can say with certainty that healthcare professionals are more optimistic about Obamacare than selling medical equipment they no longer need. 

Almost everyone who works in a hospital has a colorful story about their experience with sale of used medical devices and vendors who purchased them.  

And, it makes no difference if they sell equipment at an auction, from the hospital's basement or online.  At the end of the day, most feel cheated and mislead by the buyer. 

Regardless of their title and location, the sentiment shared by folks who work in healthcare and have to deal with trading-in or selling equipment is the same:

“Three words: used car dealership.” – Respiratory Nurse, MI

“I was selling a new patient monitor and told by one buyer it's worthless because key options are not enabled.” – Cardiologist, MO

“We auctioned a truck full of equipment and received a check for $250. How’s that possible?” – Hospital Purchasing Manager, IL

Are these folks the ones to blame because they assumed prices published on the internet are actual prices vendors pay?


Did the vendors who purchased the equipment take advantage of them?

Or, is the medical device industry guilty as a whole because it deliberately keeps prices hidden from the public?   

Answers to these questions are irrelevant because each party will have their own truth. However, what is relevant is that none of the folks selling equipment followed a process.  

They either contacted a vendor they already knew, or searched for one on the internet. That’s not a process, that’s equivalent to calling Goodwill and asking them to buy a juice maker that was received as a housewarming gift and never used because “it's just a pain to wash after each use”. 

Without a process, resentment, frustration and mistrust will continue to plague the minds of healthcare professionals whose jobs require them to manage aging medical devices. 

And that’s too bad, because selling can help one’s bottom line (if done properly) and help medical communities that do not have first-hand access to diagnostic and life-saving equipment.  

So, if your facility is ready to transform how used medical equipment is sold, here are some helpful tips:

1. 
   Centralize and standardize the process.  Having one central location to process all devices that are being sold is more efficient then having 7 nurses trying to sell 3 IV Poles.  
2. Manage the process.  Accountability and understanding the process directly correlate to revenue that will be generated.  If your facility is content with $250 check for a truck full of equipment, assign the process to an existing, already swamped employee.  If your facility is ready to command $8000 for just one ultrasound, outsource the process.  
3. Don’t use the same vendor to buy all your equipment.  This is the same as investing all your money into one stock.  Vendor diversification is just as important as financial diversification.  Vendor who specializes in refurbishing patient monitors will pay more for the monitors but they will pay below market price for the surgical table.  Contrary to popular belief, international vendors are not looking for donations of crappy, old equipment and will pay premium to acquire working devices.      
4. Don’t use the same method to sell all your equipment.  Some devices such as ventilators should not be traded-in to the manufacturer, fixed diagnostic systems are simply not suited for auctions and hospital furniture does not sell well at onsite sales. 
5. Time the sale.  Did you know that same vendor will pay 15-22% more for equipment if they have a buyer and even more if their buyer gave them a PO?  Timing the sale leads to more revenue.  Isn't it fantastic?  There’re always problems related to budget deficits, unbudgeted expenses and missed annual targets. Without too much effort that financial gap can be reduced just by learning if equipment is being purchased for stock or for an end-user.

If the thought of selling used medical equipment is daunting and hearing the same old story of how equipment is not desirable because "it’s not painted orange with green polka dots" is annoying, take action.  

Without a process, valuable devices will be undersold, inefficiency and miscommunication will flourish and staff will continue to waste time and mistrust buyers.  Start the process, own it and rally the troops to support it!

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.

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.

Reflection and Few Words of Gratitude

Yesterday was a very special day for my family.  It was my son's second birthday.  Yes, he was born on 11.12.13 and as he grows up, his friends and those who learn of his birthday will likely think that it is the coolest birth date ever. 

However, two years ago today, instead of celebrating his birth, we were praying for his survival because shortly after being born, his left lung collapsed and he was intubated. 

That was the hardest time of my life and I do not want to relive it.  However, I do want to express my deepest gratitude to doctors and nurses that went above and beyond the call of their profession to care around the clock for my son.  Within ten long and painful days, they nursed him to perfect health and he was able to come home. 

I cannot articulate the gratitude and appreciation I feel each day when I look at my little boy.  Words also cannot express the honor and exuberance I felt when I found out that EcoMed was retained for a project by the same hospital that saved my son's life.  

"As we express our gratitude, we must never forget that the highest appreciation is not to utter words but to live by them"

~ John F. Kennedy

 
It was bittersweet to walk through the main entrance of this hospital for the first time since two years ago.  And, although I didn't have to be on the second level, I couldn't help but take the East elevator up and stand in front of the NICU hoping that all the babies that are there now can follow my son's journey and go home. 

 As my mind drifted away to that breezy and sunny November of 2013, I quickly forced myself to regain composure because this time I was here for a different purpose.  There was a monumental task at hand and it required concentration and undivided attention.   
 
I took the elevator to the ground level and reunited with my crew in Radiology Department.  As always, expertly and with scientific precision they were already dismantling one of the imaging systems that had served its purpose.  With great ease, they swiftly worked with simple tools and within hours parted out an imaging table, a gantry and removed overhead ceiling rails. 
 
Dismantled parts were laying in several meticulously arranged piles on the floor.  Later, each pile will be taken to an appropriate recycling plant where it will be stripped of oils, harsh metals and reprocessed.  But now, the hallways were buzzing with patient traffic and my crew had to work around these piles.  It wasn't until 8pm that a first handmade dolly made its way out of the hospital carrying all the dismantled parts of a system that once was used for patient diagnosis.    
 
I mention simple tools and handmade dolly for a reason.  Certainly, not because I would want anyone to think that my crew operates with cavemen technology, but because I want everyone to know that we carefully choose where and how we allocate resources.  While our tools may not be as shiny and new, they function extremely well. 

It is not the tools that do the job, but the crew who expertly know how to use them.  In a race to have the latest and greatest technology, simple facts such as this one are often forgotten.  I firmly believe the reason we were awarded this project is not because of my patient experience or because my crew had the latest technology but simply because we were able to provide quality, value, timely service and deliver significant savings. 
 

After two, grueling eleven-hour days, phase one of the project was completed.  I was left alone, standing in an empty hospital hallway overwhelmed with a business sense of accomplishment and an authentic, human feeling of gratitude.  I am convinced that those who have found their true calling in life, strive to execute it with meticulous precision and the last 24 hours proved that I was on the right path. 
 
The gift of working on a project for a hospital that saved my son's life was nothing short of a blessing.  I always inspire EcoMed team to take ownership and responsibility in everything they do, but for this project in particular, I aspired to supersede even my own expectations.  I'm overjoyed to say that it was a privilege to help and improve a hospital that saved my son and I could not have done it without the help of EcoMed family.