How to Purchase
Pre-Owned Ophthalmic Equipment
Are You Buying A Bargain--or a Problem?
By Jerry Helzner, Associate Editor
With reimbursement levels dropping in recent years, doctors find they're working harder than ever to generate less income than before. As they look for ways to lower expenses, practices are increasingly turning to the used ophthalmic equipment market, where canny buyers can obtain substantial savings on good quality, pre-owned equipment that would cost 20 to 50% more if purchased new.
"There are very few practices that are telling me that money's no object when it comes to buying ophthalmic equipment," says Gordon Siteman, vice president of sales and marketing for Lombart Instruments, the largest distributor of ophthalmic equipment in the United States. "Everyone's looking at the bottom line and taking steps to maximize profitability. Practices are looking to obtain used equipment that has the same utility as if they were buying new."
But the rapid growth of the "used" market has been a mixed blessing. While practices can now choose from a wide variety of available pre-owned examination, diagnostic and, to a lesser extent, surgical equipment, the sellers range from reliable, well-established companies that will warranty and service the equipment to individuals who advertise "as is" pieces on Internet sites.
In this article, we'll offer some expert guidance on successfully navigating the used ophthalmic equipment market.
The important questions
"You've got to use a common sense approach to purchasing used equipment," says John Pinto, president of J. Pinto & Associates, Inc., an ophthalmic practice management consulting firm. "The two key questions you need to ask yourself are: What's best for the patient? and What's most economically appropriate? If the newest equipment is the standard of care, then you should buy the new equipment. But in products where the basic technology hasn't changed much over the years -- such as slit lamps, phoropters, Mayo stands and examination chairs -- you can purchase a perfectly good piece of used equipment and save yourself some money."
Pinto says that when deciding between buying new or used, you must take into account the useful life of any piece of equipment, balancing the lower initial cost of the used piece against the longer expected life of the new product.
"A stainless steel Mayo stand can last 40 years, so why not buy a used one for $75 rather than spending more than $300 on a new one," says Pinto. "But I'm certainly not going to buy a used excimer laser when the state-of-the-art technology is changing so rapidly."
What you need to know
Steve Juenger, vice president of sales and marketing for Reliance Medical Products, agrees that the best buys in used ophthalmic equipment are durable products with extended useful life cycles. However, the very characteristics that make these pre-owned products desirable also enables them to hold a higher percentage of their original value, making them less of a bargain.
"If you do intend to buy any piece of used equipment, there are several precautions you should take," says Juenger. First, make sure that the seller can service the equipment. The seller should have a direct link back to the manufacturer, ensuring access to the parts, service bulletins and schematics that will enable the equipment to be maintained. You also should get a service history of the piece of equipment you're buying. If it's an examination chair, you should know if it's been altered electrically, or if it's been repainted or reupholstered. The more history you have, the easier it is to make an informed decision."
Equipment manufacturers recognize that they'll sell more new equipment if they can improve even such basic products as examination chairs.
"The newer examination chairs have solid-state electronics and features such as a safety switch that will prevent the chair from being operated if the doctor has to leave the room for any reason," says Juenger. "Some doctors will always want a state-of-the-art product despite the difference in cost between new and used. Others will choose the new because it has a better warranty and the manufacturer will stand behind the product if there are problems. Overall, ophthalmologists tend to be intelligent and analytical buyers. They know what they want and they understand mechanics and electronics."
|Here's a 6-Point Checklist for Purchasing Used Equipment|
1. Assess your equipment needs and preferences in relation to the budget you have available for capital expenditures.
2. Balance the lower intial cost of used equipment against the longer useful life, better warranty, parts availability and upgraded features that are often valid reasons for purchasing new equipment.
3. Deal only with reliable sellers who have an established track record and who can maintain any used ophthalmic equipment you buy.
4. Buy "used" only when the product won't quickly be rendered obsolete by changing technology.
5. Obtain a service history of any piece of equipment you're considering.
6. Be careful about buying any pre-owned equipment used in invasive surgical procedures. You could be held liable for problems caused by faulty equipment.
Don't get stuck
But even ophthalmologists who know their equipment and have strong preferences about what they want in their offices can get tripped up by the uncertainties of the pre-owned equipment market.
"Two years ago, a certain brand of retinal camera that doctors loved commanded a good price on the resale market," says Siteman. "But now there are no replacement parts available and some doctors are stuck with a piece of unusable equipment. This isn't an unusual situation. That's why it's so important that you buy used equipment from a company with a good track record that can service it. Unfortunately, there are a number of companies out there that sell used equipment and then can't provide service or parts."
"Be especially careful if you're considering buying a used argon or YAG laser," adds Jim Hamlett, president of Asset Appraisal Service of Knoxville, Tenn., which conducts asset appraisals of eyecare practices and outfits ophthalmic offices and surgery centers. "A laser can burn out at any time and then you're probably stuck. If you're thinking of buying a pre-owned excimer laser, first examine the pros and cons of purchase vs. leasing on a per-case basis. If you still believe purchase is the way to go, get all the facts in writing and require a warranty that ensures the laser is working properly."
Siteman says that doctors who are seeking used equipment to create a new lane or outfit a satellite office may not be able to get all the brands and models on their shopping list.
"Quite often, they'll wind up with a mix of new and used equipment because the good used pieces they want aren't always available," says Siteman. "But the real goal is to satisfy your essential requirements with some degree of cost savings."
Who can you trust?
Jody Myers, owner of Florida Eye Equipment in Lakeland, Fla., started his used ophthalmic equipment business 12 years ago, and has been something of a pioneer in this field.
"There were only three of us in the used market in the whole country then," recalls Myers, a former college quarterback who began his business career selling new ophthalmic equipment for major manufacturers. "Now, there are 26 dealers in Florida alone. It's an industry that's difficult to police. You have to make sure you're buying from someone who's reliable. We offer a 6-month warranty on parts and labor and will accept unconditional returns for 30 days on any piece of equipment we sell. Approximately 90% of our business comes from repeat customers."
Myers was one of the first equipment dealers to grasp the potential of the Internet, setting up a Florida Eye Equipment Web site in 1994.
"There's no doubt that the Internet has facilitated our business and enabled us to generate international sales," he notes. "It also serves as a source of the used equipment that we resell. Doctors will list equipment they have for sale on our site, and many times, we'll buy it."
Used equipment dealers say they obtain their inventory from a variety of sources, including equipment leasing companies, practices that are trading in older equipment, and practices that are closing or merging.
"We sell a lot of used visual fields, fundus cameras and phoropters," says Myers. "Phoropters really haven't changed in 20 years. Doctors are more cautious about buying pre-owned surgical equipment, but we do business in used microkeratomes and phaco equipment. We'll even put a buyer and seller together on an excimer laser, but we first get the manufacturer to recondition it and certify that it's operating properly."
Though the used equipment experts we talked to for this article may differ on some small points, they all agree that pre-owned equipment is a viable option for most ophthalmology practices -- if you know exactly what you want and purchase it from a seller who will stand behind the product.