Time to Scrutinize Imaging Equipment Service Agreements

August 14, 2012

AHRA: When was the last time you scrutinized your imaging equipment service agreements? It might be time to take a close look, because you might be paying too much.

ORLANDO, Fla. - When was the last time you scrutinized your imaging equipment service agreements? It might be time to take a close look, because you might be paying too much.

“This is a major opportunity for cost savings,” said Vicki Petersen, MS, RT(R), FAHRA, a consultant with Premier Performance Partners, speaking at this week’s 2012 annual meeting of the AHRA, association for medical imaging management.

Your radiology department or imaging center might be paying close to 14 percent or more of the equipment list price for service agreements with vendors, Petersen said. But 8 percent to 10 percent is more reasonable, she said, and the costs add up. A traditional community hospital might be paying $1.6 million from the annual operating budget for service, assuming the overall list price of the equipment is $16 million or more.

“That’s what you need to be working toward. Give yourself a target,” she said.

So where do you begin? Petersen suggested starting with a spreadsheet to inventory the equipment. Include acquisition cost, contract start and end date, coverage level, annualized contract cost, and the service cost ratio. This will allow the department to really see how much is being paid for service, and where there’s room to cut.

Most negotiations, however, should happen at the time of purchase. That’s when you’ll have the most leverage for getting a good deal, she said.

At the Carolinas Healthcare Systems, the second largest public multi-hospital system in the country, officials developed a five-year capital plan for all the equipment to ensure the replacements get funded, said CHS’s John Krepshaw, MBA, RT(N), speaking at AHRA. The plan will include all imaging modalities, and provides detailed information on service costs, age of the equipment, changes in the technology such as dose reduction in CTs, and even a ranking system to determine which systems should be replaced first.

The plan allows CHS, which has an in-house service department, to deploy some machines to other locations and continue using them while upgrading at another location. “There are creative ways to use your capital,” he said, adding that developing a good inventory was key to determining how much they were spending on the systems - and how much they could save.