Here is groundbreaking data, direct from the manufacturers. It is a compilation of ACTUAL COSR (Cost of Service Ratio) of X-Ray. Laser and other medical Equipment, as reported by the medical device manufacturers themselves. And it covers the years 2003 through 2016.
It should a steady decline in the annual COSR. COSR is the actual cost, as a percentage of sales revenue that a company has to pay to service the warranty claims made for products that it has sold. Assuming that new products fail as much or more in the first year of life than in subsequent years, the WARRANTY COSR should be an adequate reflection of the POST-WARRANTY COSR.
In the case presented above, of 196 companies, spanning 14 years, the WARRANTY COSR has decreased from an average of 2.4 for Lasers and X-Ray (0.9% for other medical equipment) in 2003, to 1.2% for Lasers and X-Ray (0.6% for other medical equipment) in 2016.
This is while manufacturers are charging hospitals 10%, 15%, 20%, 25% and even more for an annual contract. Profit for them is surely in the range of 90% to 99%!
No wonder they aren’t selling contracts on the basis of merit, customer service, or value. There are none of these things. They have to resort to the lowest of intimidation tactics. They withhold training. They will not sell parts without a contract. They will not provide even the most minimal technical phone support.
They will, with a smile on their face, tell the hospital, that nobody is qualified to service their equipment, and so for the safety of the patient and the reputation of the hospital, the manufacturer, the ultimate authority on this equipment, in good conscience cannot either train the hospital’s personnel, sell parts, disclose the passwords which keeps the device locked from prying eyes, or otherwise offer any assistance which assists anyone but their own people from entering the innermost, secret, delicate workings of the magical box. Woe be to him who tries, because all sorts of unpredictable things might happen, none of which the manufacturer will be assume any responsibility for.
Of course, this is all hocus pocus, an elaborate scheme to protect the huge profits to be made when the hospital is scared into signing an unneeded agreement. Imagine, if the hospital signs a $250,000 service contract the company expects to keep as pure profit $225,000 of that money! No wonder they pressure you so hard for a signature. And they are willing to give seemingly large discounts for quick action, before the knowledgeable HTM (Healthcare Technology Management) professionals can become involved.
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