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ISO consolidation matters, and it won’t stop soon

por Gus Iversen, Editor in Chief | August 07, 2015
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From the August 2015 issue of HealthCare Business News magazine

As the vehicles of health care — hospitals, physician groups, urgent care centers, imaging centers — are being tied together in the interest of funneling patients to the best care, so too are the independent companies servicing their medical imaging equipment.

According to Alvarez, there are two reasons people sell their ISOs to BC Technical: legacy and money. He says they either need financial security, or they want someone to carry on their legacy of success while tending to the employees and customers who depend on them.

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“ISO consolidation is driven by the same thing that drives all consolidation: the dollar,” says Sloan. Hospitals are trying to get more mileage out of equipment that, in another era, might have been upgraded. “I tell [hospitals] we’re going through the same consolidation with the same benefits right now,” says Alvarez. “We want to offer all the hospitals an alternative to the OEM. When you consolidate at that level we become bigger, more national, wider scope, more people, more resources, thus, we can do bigger and bigger deals.”

“In this day and age, newer equipment does not necessarily mean you’ll get a larger amount of reimbursement. Frankly, in a lot of cases you could get as much reimbursement for a piece of equipment you’ve already paid off as you would for something you’re financing for a million dollars,” says Biddle.

To meet the needs of those hospitals and care systems, an ISO needs comparable size and resources. Oxford has ISO certification to 901 and 1345 standards, which Fall says are difficult certifications for smaller companies to obtain.

“We currently go through three on-site audits every year, those audits cost money,” says Fall. Before each audit, Oxford hires a consultant to ensure they get off on the right foot, in addition to keeping a full-time staffer to ensure they retain their certifications.

If a smaller ISO’s client joins a larger health system, that ISO may have a difficult time either servicing that entire health system or convincing their old client that there are benefits to remaining subcontracted.

For customers, integration is everything

For hospitals working with an engineer they’ve known and trusted for years, finding out they’ve been acquired by a larger institution can be a tough pill to swallow. They might wind up sacrificing some of the direct and personal contact they had valued in that provider, and it’s up to the acquiring company to integrate those engineers accordingly, while illustrating the added benefits of the larger footprint to the customer. In most cases, those customers will have to become accustomed to a more process-based business model.

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