New Siemens Refurbishment Plant Reflects Greater OEM Interest in Secondary Imaging Market

Last week, Siemens Healthcare opened a brand new factory in Wood Dale, IL for the refurbishment of its devices, including its CT, MR, and molecular imaging technologies. According to a press release announcing the grand opening, the center “optimizes the value stream” of its pre-owned business strategy “by offering ample room for expansion as we continue to grow our thriving refurbished systems business,” while bringing onsite its preferred refurbishment partner, Hegele Logistic, LLC. Although the center is the only such facility the company currently maintains in the United States, it exceeds the size of its pre-existing refurbishment plant by some 10,000 square feet. Building in that capacity for growth, says Robert de Lorimier, Senior Consultant with Frost & Sullivan, is an example of the ways in which original equipment manufacturers like Siemens are recapturing their footing at both ends of the imaging market. De Lorimier says that as hospitals and imaging centers became “much more financially conscious in planning their capital purchases,” manufacturers are competing much harder against the third-party refurbishers and independent service organizations (ISOs) that exist in that niche between new technology purchases and longer and longer equipment life cycles. Manufacturers like Siemens, he says, are better positioned to leverage their brand power in a secondary market because their refurbished products “have the reputation” that those of some ISOs don’t. This strategy is not uncommon to major manufacturers—take, for example, the GE GoldSeal program, Toshiba SecondLife, or Philips DiamondSelect. “We’ve found that hospitals much favor OEM-refurbished equipment over third-party because hospitals are looking for quality assurance,” De Lorimier says. By taking possession of systems that are a few years old, upgrading their software and hardware, and returning the devices to service in the pre-owned market, imaging equipment manufacturers are increasingly capitalizing on second opportunities to gain a foothold in the hospitals and health centers that may have been priced out of new capital purchases in a down economy. “Service certainly is a big component of the rationale for selling this equipment,” de Lorimier says. “There’s always a drive to keep a customer, say a hospital or a system, under your wing, so to speak.” Those same price pressures, he says are driving the development and marketing of new, lower-cost imaging systems “that maybe have fewer bells and whistles, and are sold at prices that are similar to those of the refurbished systems.” What makes the second part of the Siemens announcement equally significant is the incorporation of Hegele Logistics into the fold—let alone the same building. Such a move reflects the interest among imaging equipment manufacturers in integrating their channel partnerships for service and re-manufacturing more tightly within their business models, setting them up to take the next hill on the horizon: parts. “Parts are going to become a bigger and bigger concern of radiology managers moving into the future because the machines that they own are going to have longer and longer longevity, and often times manufacturers don’t keep the parts they need in stock,” said Charlie Whelan, de Lorimier’s colleague at Frost and Sullivan. “If you don’t have that tube or that coil or that detector handy, the whole service delivery model breaks down.”