ISOs vs. OEMs in Medical Maintenance: Part 1

July 17, 2017

Link to the original article can be found here.

In a recent TechNation article, Richard Douglas introduces us to the FDA's push to increase scrutiny towards Third-Party Service providers, also known as Independent Service Organizations (ISO's), in the US Healthcare Industry.

He explains that "with shrinking hospital budgets, the opportunities for third-party providers to offer services or parts at attractive price points helps health care facilities and promotes a more robust market for competition and choice."

Growth in the Independent Service Organization (ISO) market has prompted the FDA to solicit comments from all "stakeholders" regarding "the service, repair, refurbishment, reconditioning, rebuilding, remarketing, and remanufacturing of medical devices."

The agency has stated that the discussion was sparked because "various stakeholders have expressed concerns about the quality, safety, and continued effectiveness of medical devices that have been subject to one or more of these activities that are performed by both original equipment manufacturers (OEM) and third parties, including health care establishments."

A significant, if underlying, theme of the discussion is whether free market/private organizations should be able to supply maintenance service and parts into a market traditionally seen to be dominated by the OEMs. Without taking sides, I can say that an ISO armed with a Cadex C7-series analyzer (or even better a fleet of analyzers) will be able to significantly increase uptime of critical equipment while saving on battery replacement costs, when compared to an OEM solution that doesn't include Cadex analyzers.

There is a push for all non-OEM service or parts organizations, whether an ISO or an in-house biomed department, all being third parties, to be held up to higher scrutiny. Regardless of the forthcoming FDA decision, Cadex analyzers will help these "third parties" stand up to any such critical examination.

Three such organizations mentioned in the article are Crothall Healthcare (owned by Compass Group), Sodexo S.A., and Aramark.

Why are these three called out? Because they have seen stock increases in the range of 35-56% since 2014. This has garnered them and their sector FDA attention, and perhaps we should follow suit. The bigger the gains, the more the organizations are willing to spend to avoid losing those gains. Calling a bad battery good in a critical piece of equipment, especially when under FDA scrutiny, could certainly put those gains at risk.

The article closes by quoting John Wiemart, Director of the Biomedical Engineering Department, Texas Children's Hospital: "An ISO can be used as an important piece of the HTM's overall strategy for managing costs, repair parts, technical training and service options, more now than ever before."

In the same vein, Cadex can be an important part of the overall strategy for the ISO.

To read part 2, click here.

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