Technology, the most significant growth driver for the medical device market, is advancing rapidly thereby driving healthcare providers to keep abreast of the latest happenings in order to provide high quality care to their patients. This, in turn, shortens the intervals at which hospitals and diagnostic centres purchase superior quality systems and a large number of these repairable used medical equipment is being returned to the Original Equipment Manufacturers (OEM) or bought by third parties who refurbish them for resale. This worldwide market activity has given rise to an emerging trend of refurbished medical equipment.
Refurbished medical equipment mainly involves the restoration of used devices to conditions which are consistent with OEMs’ specifications. This means that the used product is repaired, cleaned and updated to relevant patient safety standards similar to those of a new item. The process of refurbishing medical equipment also retains the service lifetime of the product and helps healthcare providers to save considerably on equipment buying costs. Globally, the refurbished medical equipment market is operated by mainly two kinds of players; OEMs and third party manufacturers. Major OEMs include GE Healthcare (UK), Siemens Healthcare (Germany), Philips Healthcare (The Netherlands), Stryker Corporation (US), Johnson & Johnson (US) and Toshiba Medical System (Japan) and third party vendors including Soma Technology (US), Agito Medical (Denmark), DMS Topline Medical (US), First Source (US) and Sanrad Medical Systems (India). Keeping an eye on the growing demand for refurbished medical equipment globally, the International Association of Medical Equipment Remarketers and Servicers (IAMERS) predicts that the sector is slated to be worth $8.45 billion with a CAGR of 7.8 per cent by 2017.
Worldwide impetus
According to industry analysts, the refurbished medical equipment sector picked up momentum in the last 10 years with smaller hospitals and diagnostic imaging centres from various developing countries opting for such products. However, the economic meltdown and tightened healthcare budgets in the US and Europe, along with the increase in trained professionals in the refurbished medical equipment sector, have driven the growth of this segment among the wealthier economies as well. A report published by Transparency, a market research company based in the US, provides an insight into the latest happenings within the global refurbished equipment sector stating that North America, specifically the US, is contributing the maximum share to the refurbished medical device market. The US market is primarily driven by private practitioners. Developing countries such as Latin America, specifically Chile, Ecuador, Caribbean, Bolivia, Mexico, and Peru, are also contributing largely to this growing market. However, there is a lot of latent market opportunities in the Asian market, reveals the report. This market is considered to be the most lucrative place for these refurbished products in the near future. So, how is the sector performing in India?
The Indian market
 “There is a good demand from customers for refurbished equipment, when budget constraints do not allow them to opt for new, high-end medical equipment.”S Karthikeyan Head – Ecoline Systems, Siemens Healthcare |
In the past 5-10 years India’s B-towns and cities have been attracting many healthcare players who have set up small hospitals and diagnostic centres that cater to the healthcare needs of people living in and around these areas. However, these healthcare set-ups which are mainly run by private practitioners have a very tight budget and incorporating brand new X- ray, CT scanners, MRI machines and ultrasound devices will cost them an arm and a leg. Therefore, these hospitals opt for an affordable option – refurbished medical imaging systems which help save capital cost. Speaking about the burgeoning segment in India and also giving OEM’s point of view, S Karthikeyan, Head – Ecoline Systems, Siemens Healthcare, says, “The refurbished equipment market is going to be very important in India. It is fast growing which is complementing the new equipment market. There is a good demand from customers for refurbished equipment, when budget constraints do not allow them to opt for new, high-end medical equipment. Good quality refurbished systems enable healthcare professionals to provide quality treatment to their patients at a lower cost, which also enables affordable diagnosis and treatment.”
Adding to this he goes on to say, “Refurbished equipment market complements the market of new systems, with lower price points. This will help the customers and the OEMs, especially in a difficult economic environment. If more high quality refurbished systems are installed by OEMs, it will help dispel the negative perceptions associated with refurbished units and also help grow the market.”
While OEMs feel that the refurbished medical equipment market compliments the market for new equipment, users of refurbished equipment feel that these systems are blessings in disguise. Talking about how incorporating a refurbished CT scan within their hospital has been light on his pocket, Dr Nitin Kadam, MD, MGM Hospital, Vashi, Navi Mumbai states, “Knowing that all the high-end diagnostic imaging equipment are 100 per cent manufactured abroad, we are fully dependent on import for these systems, thereby spending huge amounts in foreign exchange. By buying good quality refurbished equipment we save almost 40 per cent of the overall cost of equipment and if supported by good after sales service support we can easily sail through successfully with our investments. Moreover, a good quality refurbished system of a desired equipment has the same specification and functionality as that of a new system. The lower capital cost of these equipment enables us to sustain the overheads of maintaining such highly sophisticated units thereby offering patients services at affordable costs.”
Dr Santosh Prabhu, MD, Matrix Diagnostix, Kolhapur, Maharashtra feels that in tier-II and III cites where hospital entrepreneurs have a tight budget for setting up their facilities, refurnished equipment is the best option. He goes on to say, “In a place like Kolhapur almost all the CT scan equipment is refurbished! Healthcare industry demands delivery of good quality images at patient-friendly reasonable costs, with uninterrupted service and all these needs are being served by the refurbished equipment we currently use.”
The good, bad and grey…
Agreed that incorporating refurbished medical system within healthcare set-ups can lessen the burden of huge capital investment on medical technology, but what about the safety standards? Is there any government body that scrutinises these products?
Unfortunately, there is no governing body that plays the role of the watchdog for medical devices in India. Nevertheless, all medical devices imported, manufactured or refurbished have to follow guidelines that are laid down by the Atomic Energy Regulatory Board (AERB). Elaborating on the same, Dr Farah Deeba, VP-Medical Quality, Qualimed Heathcare says, “Though Government of India has permitted the use of these machines, there are certain aspects to be considered relating to radiation safety and quality of image, before buying and using these machines.” She lists down few essentials that refurbished companies have to follow:
- Availability of technical specification, in detail, including details of accessories, along with their make, date, etc. (e.g. pressure injector, non-invasive BP apparatus, table movement and gantry tilt, in a refurbished CT machine, to name a few)
- Technical evaluation by a qualified and authorised personnel
- AMC/CMC – Details, specifically with regard to availability of spare parts off the shelf, immediately as and when required.
- Availability of high-end software, medical grade monitors and work stations.
- Ensuring application of AERB and other Certification (FDA/TUV/CE) Guidelines.
- Ensuring regular periodic maintenance, calibration and quality assurance.
 “Every equipment which is undergoing refurbishing in a factory environment has to go through certain defined process for image quality, functional and service tests.”Som Panicker Vice President, Sanrad Medical Systems |
Giving more insight on precautions that users have to take, Som Panicker, VP, Sanrad Medical Systems, informs, “The customer will have to get the necessary operating licenses from concerned authorities like AERB in case of radiation emitting equipment like CT.”
Moreover, experts warn that these products can be seized if hospitals and diagnostic centres using these products do not hold the required licenses and certifications.
Well, although there is an AERB who has laid down certain guidelines, we cannot deny the fact that absence of regulations can be detrimental to both, the sector and the patients. This loophole has given rise to some malpractices in this business. Karthikeyan elaborates on this issue, “In India, the refurbished equipment market is predominantly catered to by third party vendors. These vendors are not authorised by the original manufacturers and are generally not licensed to sell or maintain refurbished systems. They often source old units from abroad, which are then sold at very low prices, since there is no technical refurbishment performed. But it is often difficult to maintain these old units and the customer is saddled with malfunctioning units after a while. Such vendors have created a negative impression in the market for refurbished equipment. It thus becomes an uphill task to convince customers to opt for good quality refurbished systems from OEMs, since these are more expensive than that from dealers, due to the better product and refurbishment process.”
 “Refurbished equipment can save a lot on the cost of new equipment, but is definitely accompanied by large problems related to patient safety and legal liability.”Dr Bhawan Paunipagar Consultant-Radiology & Sonology, Global Hospitals |
Moreover, these malpractices have also raised the eyebrows of many healthcare providers. Dr Bhawan Paunipagar, Consultant-Radiology & Sonology, Global Hospitals, Mumbai is sceptical about refurbished equipment and this growing segment. “Hospital closures and mergers have created a glut of repairable used medical equipment that is being reconditioned and sold back into the healthcare marketplace. Depending upon its condition, this refurbished equipment can save a lot on the cost of new equipment, but is definitely accompanied by large problems related to patient safety and legal liability,” he asserts. Elaborating on his point he explains, “The FDA acknowledges the re-processing industry which is involved with a certain amount of re-marketing of used medical devices that were refurbished, rebuilt, serviced, conditioned, cosmetically enhanced or marketed ‘as is’ for further use. But the concern has been that re-marketing used medical devices may consist of activities that significantly change the finished device’s performance, safety specifications or intended use. As defined as Quality System regulation, these activities constitute ‘remanufacturing’ the original equipment.”
As contentions hem in, how will refurbished equipment vendors clear the air? In reply to this, Panicker justifies, “Every equipment which is undergoing refurbishing in a factory environment has to go through certain defined process for image quality, functional and service tests. We distribute only those refurbished equipment which has successfully passed all the tests and possess the required quality certificate from our overseas principal. These guidelines are prepared by the quality assurance department of our principal factory in accordance with the international guidelines of quality assurance.
In conclusion…
All in all, the refurbished medical equipment market, even with all its contentions, is here to stay due to the increasing demand for these products. It’s also important to note that the users of refurbished medical equipment are also satisfied with cost effectiveness, image quality and the over all durability of these products. The only worry is the malpractices that gives this sector a bad name. Mover and shakers from within the healthcare sector will have to ensure that such culprits are found and blacklisted within the industry to create a healthy business environment.
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