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Steer Clear of Faulty Repair Contracts
Follow these tips and you'll never be stuck with a subpar service deal again.
Owen Owens
Publish Date: October 10, 2007

Dealing with fluoroscopes that go blank or sterilizers that stop sterilizing is a matter of when, not if. When the inevitable happens, keep these three tips in mind so you're not stuck on the short end of a faulty repair contract.

1 Repair or buy new?
When equipment fails, compare the costs of a straight repair with purchasing new. One of the centers I manage had outfitted its single procedure room with two sets of arthroscopy scopes, consisting of 30-degree and 70-degree models. One set recently went down, forcing use of the backup equipment and instigating an investigation into ways to replace the impaired scopes.

A straight repair of the broken scope would have cost $900; a new model would have run about $5,300. I also explored the possibility of buying refurbished scopes in addition to repairing the damaged piece. I found this option would add a third instrument set, letting the facility run a second room and therefore increasing the center's case output.

The key to adding new equipment at a discounted price lies in leveraging the purchase with the needed repair. Equipment manufacturers are single-minded in generating revenue. Fulfilling multiple lines of business is an attractive option for profit-hungry reps, and approaching them with this possibility gives you an advantage at the bargaining table.

Ultimately, I repaired the broken scope and received a refurbished set for $2,000. Coupling the purchase with a repair got me the best deal. I don't suggest you buy new equipment whenever a repair is needed, but take stock of your current and future needs when a device goes down; coupling repairs with purchases is a great way to bolster your device inventory at reduced prices.

2 Negotiate the back end
Companies want to make margins on the sales of their equipment. Often, that means over-charging for service contracts on the back end of sales. Be wary of that possibility and be as diligent when negotiating service contracts as you are the equipment's purchase price. The best equipment repair and service contracts are obtained at the front end of sales negotiations. Vendors will also include appealing warranties to sweeten, and hopefully secure, deals for new equipment. With that in mind, always push for the best possible policies before making any purchase.

Target multiple-year warranties; they are a potential win-win for you and the vendor. You'll ensure purchased equipment is managed and maintained, while manufacturers guarantee repair business. Companies will often lower the annual cost of a warranty for a long-term gain, dropping $1,000 off the annual cost to add multiple years.

Multiple-year service contracts are appealing, provided you build exit clauses into the agreements. Numerous possibilities can sour the relationship between a center and a manufacturer. Companies can be sold; repairmen and facility administrators may change, replaced with personalities that don't mesh; or the service could simply not be to the level you expect. Give yourself an out to ensure your facility's needs are constantly met.

I recommend aiming for a clause allowing for termination of a service contract with a 30-day notice. Companies may balk at this term. In this instance, I put the onus back on them with a simple question: If you have that much faith in your company and your customer service is all that you promise, I won't have to use the out clause, will I? It works. Remember, they're responsible to deliver what they promised. If they can't do it, you need to find someone who can.

Don't Make the Same Mistakes I've Made

Get burned a few times and you'll quickly grasp the ins and outs of repair contracts. Here's what I've learned the hard way.

' Pick and choose. Limit service contracts to equipment that is troublesome, and compare the costs of the service contract with the flat rate of a repair. For me, arthroscopy scopes are those troublesome tools. Every time an orthopedic surgeon hits the end of a scope with a shaver blade - and they do it all the time - it costs $1,500 to repair. I can get a one-year service contract on that scope for $1,800. In this case, paying for a service contract makes economic sense and gives me piece of mind when thinking about easily damaged instruments.

' Keep a log. I created a spreadsheet to track equipment that I send to original manufacturers for repair. On it, I note the date the damaged equipment was shipped, a description of the equipment, the company's representative who received the shipment, a record of the work required, and the dates I received and sent back loaner equipment. If a company replaces the instrument instead of repairing the original, be sure to record the serial number of the original device. Companies may refuse to honor valid warranties because the numbers don't match the digits on the equipment originally purchased. As further protection, I file the form letters sent by companies when they ship replacement equipment. These letters document the date I received the equipment and the rep that handled the case.

' Vet third-party providers before signing a contract. Many reputable third-party repair companies exist, but I prefer to stick with service contracts through original manufacturers. Third-party vendors offer outstanding prices, but there's no guarantee they'll use original manufacturers parts. Case in point: I recently contracted with an independent firm when one of our phaco handpieces needed repair. The company didn't use parts from the original manufacturer, and the phaco unit's console didn't recognize the components in the repaired handpiece. I've since sent the handpiece back to the third-party vendor three times, to no avail. In the meantime, a rep from the original manufacturer lent me a new handpiece until I resolve the situation. I recommend purchasing a service contract from the company that produced the equipment, unless you can guarantee that an independent repair company will use original parts. - Christi Rousseau, RN

Ms. Rousseau ("[email protected]")) is the clinical director of Corinth Surgery Center in Corinth, Miss.

3 Give third-party repair companies a shot
Most materials managers steer clear of third-party repair companies, thinking smaller organizations don't have the same expertise or means to maintain equipment to the level of the equipment's original manufacturers. That may be true in some cases, but don't dismiss local reps without cause. I find local companies often have the ability to create customized repair programs that meet my centers' needs. Larger companies lack that flexibility.

Problems with third-party companies occur when fixes involve parts not built by the equipment's original manufacturer. The performance of equipment depends heavily on its internal workings, and components that don't match the quality of new will jeopardize the services you provide.

Some pieces, like electronic circuit boards, function normally when replacement parts are used. Components that directly impact how surgeons provide care, such as lenses on surgical microscopes, should be replaced with parts from the original manufacturer. Another issue to consider: Many original manufacturers will refuse to honor equipment warranties once foreign parts are used.

As with any new service or product you buy - especially when researching third-party firms - perform a diligent check of the company's references to ensure their response is timely and repairs are quality. Be wary of the phrase, "I can cover the repairs of everything in your facility." Very few third-party companies can back-up that boast.

When reps offer to upgrade repair services, make sure the company upgraded its core competencies by hiring a qualified expert or contracting with a reputable partner. You don't want to deal with a company that has added services without adding qualified personnel. To find reputable firms, ask around the ORs. Nurses and surgical techs tend to have worked at many facilities during their careers and have friends in other centers. They often have established relationships with local repair services, or can direct you to colleagues who do.

Take the time to trial recommended companies before committing to their services. I recently tested an instrument sharpening rep by having him work on a couple sets before the sharpened tools rotated back through the OR. The feedback from the surgeons played a large part in my decision to work with the company.

A responsive, reputable service rep can refer you to other services in your area. Some small companies network with other firms to create full-service partnerships. Reps handling the electrical repairs in the OR may collaborate with another rep who can repair your endoscopes. Companies with specific, but limited, expertise align - formally and informally - with other providers to expand their service to the facility.

Savings from working with a third-party repair company shouldn't distract you from the repair quality. The company must guarantee its work, because when equipment is inoperable, your patient care and bottom line take a hit. Make sure your repair reps stand behind their work and will work on your equipment for free if their repairs create additional problems.

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