Discussing the European independent service market for medical imaging equipment
February 18, 2020
by Gus Iversen
, Editor in Chief
The European radiology community is preparing to come together for the annual ECR meeting in Vienna. It’s a time for discussing the state of the industry and how to ensure a better year ahead.
HealthCare Business News got in touch with Borja Ribed, CEO of APR Salud, a 20-year-old independent service company based in Spain, to get some insights on what the European market is like for service companies.
HCB News: The independent service market in Europe has grown significantly in the last several years. What are some of the key factors facilitating that growth?
Borja Ribed: Over the last decades, the world economy has been opening up with few niches closed to competitiveness and efficiency. Historically, the maintenance of diagnostic imaging equipment had been one of them. Although at different speeds, according to regions and countries the market has been opening to new actors in recent years. Europe could not remain aloof to these changes enhanced by the 2007 crisis, which was a trigger and where price and service of OEMs have been deeply questioned.
HCB News: What factors work against the growth of independent service?
BR: There are two main elements that move the market share in one way or another. On one hand, the movement of OEMs to reduce their service contract prices while they try to increase their service levels. On the other hand the ability of independent companies to adapt their capabilities, processes and services to a growing and, in some cases with dizzying speed, customer demand. These factors, an external market´s approach and an internal one of added value are the pros and cons against the growth of independent services
HCB News: APR Salud has been in business for 20 years, how have the needs of your hospital clients changed over that time?
BR: Healthcare institutions used to focus in the results more than in the patients. A better customer approach was needed in the sector and now is definitely here to stay. Patients are now in the middle of the healthcare service and, therefore, how healthcare institutions are designed, built and managed has changed. In terms of servicing the healthcare institutions, they demand a faster response time, 24/7 attendance, and a higher flexibility in order to adapt to their special needs. In addition, the pressure on prices has been increasing year over year, in public healthcare due to the effects of the crisis and in the private sector due to the sharp increase in policies at a lower price. Last but not least, in year 2014 VAT taxes increased in Medical supplies from 10 percent to 21 percent affecting directly the end users.
HCB News: Where does Spain stand in comparison to other European countries in terms of imaging technology and resources?
BR: Spain has deeply suffered the financial crisis of the last decade due to the weight that construction had and still has in Spain´s GDP. As a result, investment in imaging technology and related resources has been stopped for many years. Although healthcare spending has grown until 9 percent of GDP (Source: OCDE, Health Data 2018), these expenses have only been in opex, not in capex. Spain is in the median of the OCDE spending in relation to GDP.
Regarding Spain´s obsolescence in medical devices, COCIR is the European Trade Association representing the medical imaging, radiotherapy, health ICT and electromedical industries. COCIR In 2003 drafted a set of prudent “Golden Rules”, on the basis that an appropriate mix in the age profile of installed systems is essential for efficient and productive healthcare systems.
Unfortunately Spain is at the bottom of the list when compared to all European countries.
HCB News: Are European countries going to adopt the in-house service strategies that have gained popularity in the U.S.?
BR: In-house has some pros as the quick response, and some cons as the higher costs in terms of labor and managing the work force. If independent service companies meet the expectations of a high quality of service in terms of fast response and specific and deep knowledge in all systems that end users may have in their facilities, in-house has not much sense. APR Salud is actually offering this quality of service and flexibility. In addition, regarding systems with ionizing radiation (such as CTs and X-ray systems), in some European countries, as in Spain, any maintenance service professional and the company where he develops his work must have all permissions of the Nuclear Security Council. Obtaining those permissions implies huge administrative work and monitoring and control of the highest quality standards, becoming an entry barrier to internalization.
HCB News: The imaging equipment install base in Europe is getting older. How does that impact your company?
BR: Although we maintain the state of the art in technology systems, we are also used to and feel comfortable maintaining old systems. It is common that OEMs send “out of service/support” or “end of life” letters to the end users when the system has 10-12 years, because they are manufacturers and need to sell. Therefore the end user is forced to change the system if he does not know independent service companies like APR Salud that can maintain the systems much further than the OEMs. We prefer to leave the choice of changing or upgrading the system to our customers, rather than forcing them. In order to do so, we are able to find any kind of spare part of any system all over the world and receive it in our warehouse in a maximum of two days.
HCB News: When it comes to imaging equipment service, what can the U.S. learn from Europe, and vice-versa?
BR: U.S. has a better mix between OEMs and independent companies regarding maintenance services. I strongly believe that the best solution for the clients is to be able to choose between different service providers. Following the trend of the last years commented on before, I believe Europe will soon achieve the U.S. ratio.
On the other hand, in Europe, the coexistence of a bigger portfolio of multiple OEM companies offers a wider range of solutions. This affects directly independent companies when services are needed.
In the U.S., companies tend to be highly specialized and this is directly related to the size of the U.S. market. Europe is made of smaller national markets. Their smaller sizes do not allow such specialization, therefore companies like APR Salud need to offer not just high-quality maintenance services, but also new and refurbished systems, turn-key system removals and installations, and even deploy IT solutions like PACS, post-processing or dose management software, with a partner approach.