GE confirms Serviscope acquisition, but is quiet on details of purchase

Competition tightens as more independent firms sell

GE Medical Systems confirmed that it has acquired independent service organization Serviscope of Wallingford, CT, but the Milwaukee vendor declined to provide details on the sale other than to acknowledge that the deal closed on Sept. 2. GE's reticence to discuss the purchase could be related to concern about the growing dominance of OEM providers in the equipment maintenance market.

Rumors of the acquisition first surfaced in September, in the form of court documents filed by an ISO industry group opposed to GE's purchase of another ISO, InnoServ Technologies of Arlington, TX (SCAN 9/30/98). The industry group, the Service Industry Association (formerly Independent Service Network International), claimed that the acquisitions would reduce competition in the service market, but GE got the go-ahead to close the InnoServ deal in July after announcing a settlement with the U.S. Department of Justice.

Some market watchers believe that ISOs like InnoServ and Serviscope are choosing to sell out to OEMs because of the extensive resources required to offer multivendor service and asset management. As hospitals seek the convenience that multivendor service can provide, smaller firms struggle to pay for the service expertise and spare parts necessary to maintain equipment models from a range of vendors.

Large OEMs have more resources to offer multivendor programs, but the result of the recent acquisition spree is fewer choices and less competition for service, according to Ron Katz, an attorney with Coudert Brothers in San Francisco and general counsel to the Service Industry Association. Katz believes that GE's behavior not only hurts ISOs by making it difficult for them to compete, but also hurts other OEMs by reducing the pool of partners for multivendor service.

"The fact that there is multivendor service should help ISOs, because the OEMs usually have to subcontract from ISOs to get that multivendor service," Katz said. "What's making it difficult (for ISOs to survive) is GE's monopolizing conduct."

Due to ISO consolidation, there are few other large independent companies left on the multivendor service landscape. One of these firms is COHR of Chatsworth, CA, which is beginning to stabilize its business after suffering a string of legal and financial difficulties earlier in the year. GE's recent acquisitions should prove beneficial to COHR, as the company is one of the few remaining alternatives to OEM service, according to Raymond List, president and CEO.

"We think this is a huge opportunity, because there's a substantial market position for a large national independent ISO," List said. "We believe there's a good situation out there."