Faced with mounting pressure from governmental health policies and health care insurance companies to reduce spending, service providers are scrambling to strengthen finances and to develop profitability potential. Traditionally, in an industry inextricably linked to the installations of medical imaging equipment itself, the original equipment manufacturer (OEM) would service its own equipment.
However, a new study by Frost & Sullivan stresses that the advent of a new generation of service solutions, including multi-vendor, shared and managed equipment services, has heightened the appeal of outsourcing the service and maintenance elements of radiology to a third party. The change in service delivery with new value-added services, including ongoing training, consultancy and out-of-hours services, may boost areas currently outside of the medical imaging equipment services spectrum.
Frost & Sullivan expects the arrival of value-added services to be instrumental in redefining services and expanding portfolios to effectively meet customer needs and to sustain momentum in the $1,19 billion European medical imaging equipment services market. "With the uptake of these flexible services still in its infancy, it is difficult to define the potential in terms of numbers. We will have to wait and see if the popularity of managed equipment services and multi-vendor services in some regions can spread Europe-wide", reported Dr. Sohail Sheikh, Programme Manager at Frost & Sullivan.
Persuading end-users that the benefits are worth the outlay is a major hurdle which OEM service centres and departments must overcome, not an easy task with budgets already squeezed. Health care institutions are naturally suspicious of extra services and value-for-money has to be proven in order for the product or service to be adopted.
In line with the cost containment policies, health care institutions are now implementing business practices in order to assess and manage risk effectively. These methods are intended to aid cost minimisation and streamlining processes for both core and non-core areas of health care. "By assessing the costs involved in service and maintenance of medical imaging equipment, many radiology departments and hospital administrations seek to drive down the prices of the individual service contracts. The trend of business practice in health care environments will continue to deliver a restraining effect on the price of service contracts over the forecast period", Dr. Sheikh explained.
The past few years have seen a rapid increase in the number of modalities which can be networked due to their digital capabilities and connectivity. Service centres have been quick to respond by boosting their own remote diagnostics centres and developing greater expertise for planned, preventative, and reactive maintenance in a remote setting.
Frost & Sullivan urges service providers to address the challenge of providing an efficient, cost-effective service through remote access and connectivity, while also satisfying customers' needs for a more hands-on personal approach.
Predicted to reach a revenue level of $1,27 billion by 2009, the European medical imaging equipment services market is dominated by the large OEMs, namely GE Medical Systems, Philips Medical Systems and Siemens Medical Systems. Jointly capturing a 90 percent slice of this highly concentrated market, these three heavyweights have the latest technology in their service centres and large numbers of field engineers at their disposal.
Frost & Sullivan's study adds that these companies preside over the largest installed base of medical imaging equipment throughout Europe and command a high degree of customer loyalty when it comes to the service and maintenance of the majority of their equipment. The study also points to the large number of small local players, often confined to a region only, who offer services for particular imaging modalities and are able to compete on price and location of their service engineers in the field.
The provision of multi-vendor services, including the entire breadth of modalities, plays an important role as a key competitive differentiator for the top three companies. The market is furthermore populated by single-vendors who service their own equipment only, such as Toshiba Medical Systems. Other vendors may be limited to single modality only, which encompasses many of the ultrasound vendors in the field.
Many areas of radiology are nearing saturation in terms of the installed base for imaging modalities, inhibiting growth in the European medical imaging equipment services market. Only relatively new technologies such as PET scanners, now being adopted in the clinical environment, are displaying bright growth prospects. This is reflected in the distribution of service centre revenues.
In regions such as Germany and Scandinavia, for example, the market is a replacement one due to the high levels of installed equipment, a severe limiting factor for the growth of services in this arena. The study on medical imaging equipment service delivery is available at the price of 4950 euro and can be ordered by contacting Mrs. Katja Feick of Frost & Sullivan.