Vendor executives disclose detailson fledgling multivendor programs

May 10, 1995

Imaging's most profitable business is up for grabsChief executives John Trani of GE Medical Systems and Cary Nolanof Picker International used last month's Diagnostic Imaging industryconference to disclose more details on the structure and the

Imaging's most profitable business is up for grabs

Chief executives John Trani of GE Medical Systems and Cary Nolanof Picker International used last month's Diagnostic Imaging industryconference to disclose more details on the structure and the strategybehind their new multivendor service programs.

In March, GE HealthCare Services gained exclusive control ofservice and considerable influence over future imaging equipmentpurchases made by the Columbia/HCA hospital chain when it snaggeda five-year, multibillion-dollar service and asset managementcontract with the $15 billion company (SCAN 3/15/95).

Picker announced a new multivendor program in April (SCAN 4/26/95).The program takes a life-cycle approach to customer services includingasset management, sales, service, finance and equipment refurbishing.Cleveland-based Picker acquired the service and refurbishing operationsof Linc Equipment Services in Lincolnshire, IL, to jump-startthe program.

At the DI conference, Nolan described Picker's multivendorprogram in terms of overlapping interests between equipment makersand users.

"You don't sell machines in the U.S. today without developinga partnership relationship," he said.

That partnership may be formed around equipment financing ora total-cost-of-ownership arrangement, he said.

The motivation to enter multivendor service stems from basicsurvival instincts. Desperate selling conditions are forcing manufacturersto capitalize on every possible revenue source, according to Nolan.

"You will see all of the companies in this market go afterwhat has been historically the most profitable segment of thebusiness, and that's the service segment," Nolan said.

Trani said GE's thrust into multivendor service is motivatedby a desire to capture maximum market share.

"When there is less money than before, you have to figureout new ways of doing things," Trani said.

GE HealthCare Services is not limited to cutting mammoth dealswith hospital chains like Columbia/HCA, Trani noted. Offeringsare being designed for every type of customer, he said.

And what contributions are valuable enough to persuade health-careproviders to turn over asset management and equipment selectionto their equipment vendor? "We bring opportunities for tremendousproductivity improvement," Trani said. "In very manycases we reconfigure what they thought their capital budget shouldbe to something else, and in that way reduce their capital spendingand perhaps even reduce their operating costs."

Included in the package are provisions for decisions management.This service involves needs assessment, capital budgeting, productpricing and placement. GE will draw on a database of informationdeveloped over time by its financial services group for theseevaluations.

Trani believes that companies that do not develop multivendorprograms or do not align with a company that has one will seetheir influence in the market decline.

"I think that they will have a niche in the marketplace,"Trani said. "You either have to align with somebody or youare going to be a niche player."