Are changes coming that will affect the sale and service of medical equipment and medical imaging equipment like MRI and CT scanners? Unfortunately there is no clear answer right now. What is known is that this October the Food and Drug Administration (FDA) will hold a public workshop focused on the ““Refurbishing, Reconditioning, Rebuilding, Remarketing, Remanufacturing, and 
Servicing of Medical Devices Performed by Third-Party Entities and Original Equipment Manufacturers.”
The event will be held October 27-28 at the FDA’s White Oak Campus in Silver Spring Maryland as well as via simultaneous webcast. For further information, click here. The public notice states, “the topics to be discussed are the current regulatory environment for these activities, the definitions of the various terms FDA proposed in the prior Federal Register notice on this subject, and whether these activities should appropriately be regulated by FDA or a non-governmental organization.”
If you work with medical equipment, medical imaging equipment or are in the market for previously used or refurbished equipment we encourage you to follow the workshop closely and make sure to check in with any professional trade association that could be affected to make sure your voice is represented.
It goes without saying that the large manufacturers will be presenting their perspective during the workshop. Based on past legal action and regulation, what they present could have the potential to severely limit the access to used or refurbished equipment as well as the repair of any purchased medical equipment.
How will this workshop affect those who own, sell, lease, repair or need used medical equipment? Here’s a real world example.
General Electric (GE) is currently the world's largest manufacturer of medical imaging equipment. It is also a leading provider of service for all types and brands of medical equipment. It remains to be seen what will come out of this upcoming workshop but we can take some clues from GE’s previous attempts to impose restrictions on the resale and repair of both medical hardware and the licensed software within.
In 1998 a Department of Justice report detailed the issue. “GE competes in providing service with independent service organizations and hospitals that service their medical equipment themselves. Many hospitals with in-house service departments also want to offer high-quality service to other nearby hospitals or clinics. And, in sparsely populated rural areas, these hospitals may be the only service providers other than GE that are qualified to service certain equipment.
Hospitals with in-house service departments may also license from GE special software that dramatically improves the speed with which the hospitals' engineers can service and repair medical imaging equipment. The Department's licensing lawsuit alleged that prior to 1996, GE required any hospital seeking such a license to agree not to compete with GE to service medical equipment of any kind--whether GE's or that of another manufacturer--at any other health care facility. For example, a hospital that licensed GE's software to service its own GE CT scanner had to agree not to service a Siemens MRI or ultrasound unit at a neighboring clinic.”
Sounds like a conflict of interest doesn’t it? In 1998 the DOJ ruled against GE. Obviously GE had a legitimate interest in protecting its intellectual property from misuse, however these restrictions went far beyond what was appropriate. GE forced hospitals to choose between licensing software, and thereby lowering their costs, and offering service to other health care facilities. The restrictions also harmed competition in the markets to sell imaging equipment by making it harder for hospitals to obtain service on some brands of equipment.
What does the future hold?
Health care providers in the U.S. spend more than $3 billion a year to have their medical equipment serviced. While what we’ve detailed here may not be exactly what the future holds, GE has recently shown signs of revisiting their concerns with the resale and repair of medical equipment.
The clear fact is that if equipment purchasers at hospitals, clinics and medical facilities do not have the ability to resell their equipment as complete functional units, with a warranty, and the new buyer has full-unlimited use of the software – then much of the residual value of this equipment is being lost. This limits the used equipment to basically becoming parts with only a fraction of the value they would have as fully operational units.
Sure, it can be confusing. But, take the time to talk to an expert who can help you determine the best course of action—and medical imaging equipment—for your needs. Give the experts at Atlantis Worldwide a call today.
Contact Jeff Weiss at 212-366-9100 or jeffweiss@atlantisworldwide.com
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Meet the author: Vikki Harmonay
