Remanufactured allure takes hold

Demand for remanufactured equipment is growing as customers seeka reliable alternative to used scanners in their quest for low-costmedical imaging systems, according to Matt Baroli, president ofRefurbco of Sylvan Lake, MI.

"Remanufacturing bridges a gap between preowned and new(imaging equipment)," Baroli said. "A lot of hospitalsmade the wrong decision in buying a preowned piece of equipmentthat didn't turn out to be reliable. This created a need for remanufacturing.We take a used piece of equipment and comprehensively rebuildit in such a way that we can offer it with a warranty."

Hospitals and imaging centers are more inclined to purchasea remanufactured system when the degree of technological changelevels off in a particular modality. Budget pressures make administratorsmore inclined to consider remanufactured alternatives when theproduct differential between new and used is not great.

For instance, a typical new R&F system costs $250,000 to$350,000, while remanufactured systems can be had for half thatprice, he said.

"The technology is basically the same, and the warrantiesare often the same if not better on the remanufactured side,"Baroli said.

Refurbco was formed in 1986 by a group of former GE engineers.The firm originally specialized in basic GE x-ray and R&Fequipment. Its hottest product has been the GE AMX mobile x-raysystem. Refurbco sales of remanufactured AMX units grew from sixin the company's first year to an expected 100 units this fiscalyear, which ends in June. The company expects to sell about 175units overall this year, Baroli said.

Refurbco works closely with GE both in purchasing parts fromthe vendor and also in supplying remanufactured systems to someGE users. Regional GE sales representatives sometimes turn toRefurbco to provide a remanufactured system rather than lose theaccount to another supplier.

"I think GE would like to see a remanufactured systemgo in before a Japanese (competitor's) unit. This way, they havepotential for service contract dollars and also replacement parts,"Baroli said.

Refurbco doesn't intend to compete with the major vendors asan independent service provider. The company has a technical supportteam to maintain its remanufactured equipment during warranty,but it refers the customer to either the original vendor or anindependent service organization for continuing service contracts,he said.

THE REMANUFACTURER IS EXPANDING its business beyond GE equipmentand into more advanced imaging modalities. Refurbco will displaya remanufactured Liebel-Flarsheim urology x-ray table at the RadiologicalSociety of North America meeting this week, Baroli said.

With the recent hiring of George Miller as operations manager,Refurbco is preparing an effort to remanufacture both Philipsand GE cardiac cath lab systems, he said. Miller is a former Philipsnational preinstallation manager.

"When we first started, we concentrated on GE. We feltit was too much to handle to diversify into the other manufacturers,"Baroli said. "The reason we are going into Philips (equipment)is that the Philips cath lab has been a flagship product for thatmanufacturer for a number of years. It is the most desirable cathlab on the secondary market."

Refurbco is also considering a move into remanufacture ofSenographe mammography systems originally manufactured by Thomson-CGRand taken over by GE when it purchased CGR five years ago. Thetime and price are not yet ripe, however, he said.

"We are waiting for the older (Senographe) systems tocome down in price. It is not yet cost-effective because the facilitiesselling the older ones want a lot of money. We can't get themback into the marketplace at this time and compete with new,"he said.

Refurbco may also move into remanufacturing CT at a later time,Baroli said. Even MRI and ultrasound--modalities in which technologycontinues to change rapidly--could be prospects for remanufacturingin the future.

BRIEFLY NOTED:

• Sun Microsystems remains the leading supplier of workstationsworldwide, according to the Workstation Quarterly Shipments Reportresearched by Dataquest of San Jose, CA. Dataquest estimates Sunwill ship 36% of the approximately 500,000 workstations expectedto be sold this year. Hewlett-Packard will have the second largestmarket share (16%), followed by Digital Equipment (13%) (see graph).

The workstation market was sluggish in the third quarter (end-September).Overall shipments declined 8% for the period. Low-priced equipmentnow dominates the workstation market. Over half of the systemssold are priced below $15,000, according to Dataquest. Medicalimaging is one segment of the technical workstation market. Separatefigures for market segments were not broken out in the report.