One-stop service program launched at National MD

February 27, 1991

Two former TRW Medical Electronics executives are seeking to reproducethe success they had at TRW with a single-source hospital equipmentservice program at National Medical Diagnostics of Cleveland.National MD is a venture-capital-backed medical imaging

Two former TRW Medical Electronics executives are seeking to reproducethe success they had at TRW with a single-source hospital equipmentservice program at National Medical Diagnostics of Cleveland.National MD is a venture-capital-backed medical imaging distributorand independent service organization.

Both A. Ray Dalton, former general manager of the TRW equipmentservice business, and Craig Gemmel, vice president of sales andmarketing at TRW, stayed on with American Sterilizer (AMSCO) followingAMSCO's acquisition of TRW Medical Electronics last year (SCAN3/14/90).

Dalton, who initiated TRW's one-stop shopping focus, left AMSCOin July to become president of National MD. Gemmel followed inDecember when he joined National MD as vice president of servicesales. Dalton has placed Gemmel in charge of the firm's new clinicaland radiology engineering services (CARES) program.

National MD's investors have promised the necessary financialsupport to expand this part of the business in 1991. The companysplits its $40 million in annual revenues about evenly betweenequipment sales and service, Gemmel told SCAN.

"We will continue to represent and distribute products.However, our focus for the `90s is on growing the service business.We will do that through the CARES program servicing the wholehospital," he said.

National MD's goal is to provide about 85% of the equipmentservice for its hospital customers directly, contracting out therest to equipment vendors and ISOs, he said. One or more servicerepresentatives are stationed full-time at the hospital.

"We assume the financial risk for services," Gemmelsaid.

National MD believes that it is in a good position to providethis type of comprehensive equipment service because it has expertisein medical imaging equipment, the hospital equipment that is mostdifficult to service. The company will expand from this imagingbase to cover biomedical equipment, either hiring its own biomedicalengineers or forming joint ventures with other service companies.

National MD will contract out for the servicing of magneticresonance imaging scanners. Otherwise, the firm's 120 techniciansare experienced in all imaging equipment, from x-ray to computedtomography, he said.

Despite GE's intention to take its diagnostic software off-site--therebylimiting access for ISOs--there are still growth opportunitiesfor independent maintenance companies, he said.

"Although other (scanner) companies will follow GE (inproviding remote diagnosis), there are growing opportunities inmaintenance, largely because of cost factors. Hospitals absolutelyhave to control their costs," Gemmel said.

Many existing scanners will not be affected by the movementto remote diagnosis, he said. Even when the vendors do keep diagnosticsoftware off-site, service companies can perform the first calland incidental repairs before bringing in a vendor or other servicecompany with their own diagnostics.

BRIEFLY NOTED:

  • NMR of America is showing strong revenue growth underits new board of directors, although net income was pared in theimaging center firm's third quarter (end-December) by costs involvedwith the closure of a San Francisco MRI center (SCAN 2/13/91).NMR of America's board was revamped last summer due to shareholderpressure to boost the company's growth and overall value (SCAN9/12/90).

Net revenue for the third quarter rose 16.4%, from $3.8 millionin 1990 to $4.4 million this year. Operating income rose 18.8%,from $1 million in the third quarter of 1990 to $1.2 million forthe same period of fiscal 1991. Net income, following a $340,000charge for the center closure, sank to $146,000 in the third quarterof 1991, down from $387,000 last year (see graph).