Contract is a vote of confidence in ISOInnoServ Technologies scored a major coup this month when it landeda multivendor service contract valued between $25 million and$30 million. The Corona, CA, company will provide multivendorservice and asset
InnoServ Technologies scored a major coup this month when it landeda multivendor service contract valued between $25 million and$30 million. The Corona, CA, company will provide multivendorservice and asset management to hospitals and clinics owned byIntermountain Health Care, a group with 24 hospitals and approximately600 rooms of medical imaging equipment in Idaho, Utah and Wyoming.
The contract will be a shot in the arm for InnoServ, whichhas posted several quarterly losses due to declines in single-siteCT service contracts. InnoServ has emphasized its multivendorasset management service to catch the growth in this new formof capital equipment maintenance and move the company back toprofitability (SCAN 6/21/95).
InnoServ has 23 other asset management contracts, but untilthe Intermountain deal, none of the contracts was with a hospitalchain, network or hospital alliance. The contract is InnoServ'ssingle largest asset management contract and the largest evergiven to an independent service organization, according to ThomasOwings, executive vice president. It also puts InnoServ on firmfooting when vying with OEMs for future multivendor contracts.
"We think it validates our credibility to compete on anational level with large multinational organizations for thisbusiness," Owings said.
Competing against InnoServ on the Intermountain contract wereseveral leading OEMs, including GE, Siemens and Picker, accordingto Owings. GE and Picker have announced their multivendor programs,while Siemens has yet to go public with its effort. Owings believesInnoServ beat the OEM heavyweights because it can offer impartialadvice on equipment purchasing.
"Among the companies competing, we were the only trulyunbiased consultative source on future capital equipment acquisitionand replacement plans because we were the only one that doesn'tmake equipment," Owings said.
InnoServ plans to gradually ramp up its services for the variousmembers of the Intermountain network. When the contract beginsOct. 1, some of the equipment at these hospitals will still becovered under warranty or other prepaid service contracts. Asthese warranties and contracts lapse, that equipment will be broughtinto InnoServ's program.
In the first full fiscal year, the contract is expected tocontribute in excess of $4 million to InnoServ's corporate bottomline. Over the five-year contract, InnoServ could reap between$25 million and $30 million in revenues.
The company will have no difficulty providing service in thethree states where the Intermountain Health Care hospitals reside,according to Owings.
"We currently do business in 42 states," he said."This contract will make it 43."
The company plans to base a number of its staff at the largerinstitutions and assign others to be shared among some of thesmaller hospitals. To provide coverage for the varied types ofequipment at these institutions, InnoServ plans to enter intosubcontracts with OEMs and local ISOs to provide service in specificareas.
Discussions with these companies have already begun. Owingssaid he encountered no reluctance to cooperate on subcontracts.
The Intermountain deal gives InnoServ added credibility andshould serve as a stepping stone to other large contracts.
"One always hopes that there are more opportunities likethis," Owings said. "Intermountain Health Care is thethird largest delivery network in the country so there aren'ttoo many bigger opportunities. But we think there are quite afew other networks and alliances that will look at this transactionand be positively influenced."