por Diana Bradley
, Staff Writer | September 17, 2012
From the September 2012 issue of HealthCare Business News magazine
Since the U.S. Supreme Court delivered its landmark ruling in late June, companies in the MRI coil business have been bracing for the anticipated impact on sales and repairs due to the effects of health care reform.
“The industry now has a new [medical device] tax to contend with, and we are going to have hospitals and other manufacturers looking at ways of reducing costs, because they will invest less while taking on more patients,” says Lauri Johnson, vice president of sales and marketing for ScanMed, a company that manufactures, sells and services MRI coils.
But this may actually be a boon for small businesses, according to Johnson. “People are going to be looking for lower cost options, and so for us, there is going to be an increase in customers wanting repairs, instead of throwing away a pile of coils. Customers will be looking for something outside the OEM coils, maybe something that is a little different, and something that costs a little less or fits their needs a little more.”
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Customers are hanging onto their capital investments longer than they have in the past. In an effort to keep these large investments up and running at peak performance, as opposed to investing in new equipment, end users are looking to extend the life of their equipment, and that is a service provider’s “sweet spot,” according to George Smith, technical operations manager for Medrad, Inc.
“The uncertainty surrounding legislation should show a slowdown in spending, because people are risk adverse and I certainly understand that,” says Mark Richard, vice president of operations for ScanMed. “From a repair point of view, that then becomes an advantageous equation. Customers suddenly want a coil repaired instead of buying a whole new system. Same thing for specialty coils – customers look at implementing capability by adding a new coil instead of replacing the whole system.”
Consolidation and expansion
But while coil repair service is booming, the overall landscape is becoming more desolate. Over the last decade, major manufacturers have purchased coil companies. Two big names - GE Healthcare and Philips Healthcare – purchased USA Instruments Inc. and Intermagnetics General Corp., respectively.
“Most of the coil companies ScanMed competed with are gone, have been bought by Siemens Healthcare, Philips, GE, or are in alliance with one of the vendors,” says Johnson. “ScanMed is still independent and providing coils for any vendor that comes to us asking for coils. Most of the other coil companies are specialized and do one type of product, whereas we can do a lot of different coils – like standard imaging, research and development coils.”