From the October 2014 issue of HealthCare Business News magazine

Additionally, service contracts for MRs can be obtained through a third-party. Third-party service contracts are often less expensive than the OEM. In some instances, depending upon your location, they may also be located closer to your organization than the OEM’s service representatives. However, the thirdparty provider service personnel may not be adequately trained to service all vendors MRs. They also may have some difficulty obtaining specialty parts available only from the OEM, especially if the vendor sees them as competition for service dollars.

When electing for coverage from a third-party, be sure to review the experience of the organization’s field service personnel and their reputation for service support. It will be important to determine the kind of access they have to parts and how long would it take to retrieve them as compared to the OEM. Typically, it is smart to choose a parts and labor contract if electing to go with third-party service as the costs will be capped. In some instances though, this cap is the vendor’s and so should you need further repairs after your cap is reached, then you will be paying for this out of pocket. When considering third party service contracts be mindful for CMS’ memorandum SC 14-07.


Other Considerations
Most service contracts are customizable:
Vendors may not offer this option at first, but you should always ask. This option allows a facility to choose the service type and coverage, uptime guarantee, hours, etc., according to their specific caseload or patient volume. These contracts can include transitional coverage from full service and in-house support over the contract term if
needed.

Point-of-sale service contracts are usually less expensive: Negotiating the service support contract with the purchase can lower your operating costs by 1to3 percent per year, when compared to a contract negotiated at warranty expiration. Negotiating after a system has already been purchased can significantly reduce your leverage. A multiple year service contract will provide additional value as these contracts are typically priced lower. With a multiple year contact, you will want to negotiate paying on a yearly basis. In addition, you will want the option to change contract levels depending on the performance of your system or renegotiate price depending on quality of service.

In Summary
Service contracts are a necessary part of any technology purchase and in some cases can help determine if the investment will lead to a positive ROI. One of the easiest ways to understand how service costs for MR can impact the ROI is with the simplified breakeven analysis seen below.

October 2014 Magazine

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