The global market for certified pre-owned medical equipment is expected to expand from 11% annually to $21.2 billion by 2025 (from $12.1 billion in 2020), says industry data source ReportLinker. Forces fueling the growth range from intense cost containment pressure on health systems, especially due to the coronavirus pandemic, to interest across the healthcare industry in reducing consumption as a way of supporting environmental sustainability.
In short, more hospitals, ambulatory surgery centers, diagnostic imaging centers, medical groups and others are incorporating the acquisition of repaired and rebuilt devices and equipment into their broader approach to supply chain management.
Avita Health System, headquartered in Galion, Ohio, knows firsthand the pluses of this strategy. The three-hospital health system partnered with Centurion Service Group for the second phase of a three-phase system expansion in Ontario, Ohio.
The first phase of expansion consisted of the development of a multi-specialty medical clinic with a full range of laboratory, imaging and outpatient services in property located in the city’s Richland Mall.
The centerpiece of the second phase of expansion was the opening of Avita Ontario, an acute care facility in a space in Richland Mall that formerly housed a large department store. The hospital’s opening favorably positioned the health system in north central Ohio’s Richland County, an area with a population of approximately 120,000 and one that had been experiencing a shortage of healthcare providers.
$2 Million in Savings
Avita Ontario includes a 23-bed emergency department; a seven-bed intensive care unit; a 19-bed inpatient wing; four surgical suites; 16-bed preoperative and postoperative areas with a laboratory; radiology, cardiology, and pulmonary departments; a cardiac catheterization laboratory; and cardiac rehabilitation services.
In planning and implementing its entry into this service area, Avita Health System allocated a significant portion of its capital investments in the new facility to the acquisition of refurbished devices and equipment. So far, the collaboration with Centurion in acquiring these assets has yielded a cost savings for the system of more than $2 million for this second phase of expansion, reports Jennifer Miller, supply chain director.
Avita Health System is one of a growing number of healthcare institutions and medical groups realizing the benefits of obtaining major medical items that have been restored and rigorously inspected for return to the market. Industry reports indicate many of these items can be purchased at a savings of 30% to 60%.
Further, the fact that original equipment manufacturers adhere to ISO standards and other robust specifications making these items certified pre-owned means that the equipment is in rank with quality, accuracy, and safety to new products. The benefits of certified pre-owned are passed on to healthcare providers, end users and, ultimately, healthcare consumers.
Centurion worked closely with Avita Health System from the project’s inception, collaborating with and advising the supply chain team and clinical staff on the planning, acquisition, and installation of a wide range of key items for the 150,000-square-foot hospital.
Although furniture was purchased new because custom designs were needed to fit the facility’s specific configurations and space requirements, approximately 85-90% of the other assets purchased for the facility were obtained on a refurbished basis.
Those assets included everything from video monitors, hospital beds and kick buckets to sterilizers, cart washers, anesthesia surgery tables, surgical booms, lights, patient monitors, and imaging equipment.
“We tend to buy life safety items such as defibrillators new,” says Miller, “but we achieved significant cost efficiencies on other items such as instrumentation by buying certified pre-owned. The approach makes sense because these items are like new.”
During the course of a supply chain project that spanned 16 months, “Centurion provided us with almost everything we needed, and if they didn’t have it in stock, they would pursue it for us at auctions,” Miller notes. “It was a great learning experience on the purchase of certified pre-owned assets because fortunately, we were able to give Centurion enough time to source what we were looking for, so we could think through our acquisitions with Centurion’s input.”
As part of the planning and implementation process, Centurion created spreadsheets and binders of items that they could source by department, room and category, as well as items the health system would have to buy new. They met frequently with the supply chain team and clinical department heads to discuss sourcing and purchases.
A Transparent Partnership
A hallmark of the collaboration that enabled the acquisition of needed items to proceed as smoothly and efficiently as it did was the high level of transparency between Avita’s supply chain professionals and care team members and the specialists at Centurion. “When there was an item that they couldn’t provide for us, they were honest and upfront about it so that we could work on sourcing it ourselves,” says Miller.
Centurion’s extensive support with equipment planning, space planning and logistics for the team at Avita Health System did not necessarily guarantee a sale, notes Dave Ganim, president of equipment sales for Centurion. However, “we had faith in ourselves because we knew what we had to offer, and they were excited about working with us. We are a one-stop shop, and because we are equipment planners, we know every piece of equipment. That deep knowledge allows us to bundle our services and give a value-add to the customer for significant cost savings. I believe that’s what separates us from most of our competition.”
So does Centurion’s nimbleness as a problem solver. “As an expert in the field, Centurion goes out and finds the real opportunities in pre-owned equipment,” Ganim says. That expertise paid off several times, including when the company identified a bariatrics bed for $3000 less than a product with the same features that the system had been considering.
In another instance, Centurion had sold Avita Health System a cart washer, but at that time there were no refurbished cart washers on the market. The company flew staff to Vancouver to receive training in a new product. “We became a distributor for a cart washer manufacturer, got the training we needed and installed the product,” Ganim says.
It is that kind of proactivity, industry knowledge and problem-solving ability that Miller most appreciates about the collaboration with Centurion. And it is why Avita Health System will be working with Centurion in the next phase of its expansion, which will include the addition of ICU and other capabilities at Avita Ontario. “As a supply chain director, I don’t want a vendor; I want to build a partnership based on give and take and honesty and loyalty,” she adds. “That’s what we got with Centurion. They used their expertise to identify the best deals for us, in essence, functioning as an extension of our team.”