Move to Full Service Agreements and Remote Delivery of Services Support Growth Potential of European Medical Imaging Equipment Services Market

Frost: An expanding installed base of higher-end medical imaging equipment modalities, such as computed tomography (CT) and magnetic resonance imaging (MRI), is pushing the uptake of related vendor-based services. In particular, such higher-end modalities will boost the adoption of full service agreements, a trend reinforced by the need to continuously minimise equipment downtime.

Tthe Medical Imaging Equipment Services Markets in Europe earned revenues of $1041.1 million in 2004 and estimates to reach $1195.7 million in 2011.

Healthcare administrators are facing increasing pressure to operate along the lines of financial accountability within strict budget allocations,. As a result, a full service agreement, with its predetermined fees covering a stipulated level of service, appeals greatly to administrators.

It allows them not only to mitigate the risk of equipment downtime, but also to manage financial resources more effectively. In addition, full service contracts offer enhanced security in terms of prioritised repair and faster response time.

In particular, the escalating cost of maintaining high-end medical imaging equipment on a time and materials basis is driving healthcare administrators to streamline service costs by making quantifiable annual payments in the form of full service agreements. Service contract fees for such sophisticated modalities are appreciably higher than for lower-end ones, with installation and training costs also presenting a steady revenue stream.

However, as hospital administrators try to cuts costs in ‘non-core’ areas such as service contracts for equipment, they are expected to demand more services at lower prices, thereby squeezing service providers’ profit margins. To achieve vital cost savings and convince end users to make large budgetary allocations, service providers will, therefore, need to ensure high performance standards and continual innovations.

Service contracts will continue growing due to the ability of remote diagnostics to meet radiology departments’ maintenance needs. By automatically monitoring the radiology installed base and warning vendor service centres if any equipment is showing signs of faltering, remote diagnostic services are vital to accelerating response times for hospitals based in distant locations.

Also, notwithstanding substantial initial outlays, remote diagnostics offers long-term cost savings to vendors that no longer need incur heavy expenditures on dispatching engineers to repair sites. As these savings eventually trickle down to end users, service contracts will become increasingly attractive to hospitals in non-rural settings as well.

Companies that fully capitalise on their resources, as well as leverage enabling technologies such as remote services, will be able to offer superior full service agreements that will support the forging of long-term, mutually profitable relationships with end users. Companies that build the value proposition of their service agreements through persistent monitoring as well as regular consultation with end users will also make strong gains.

Medical Imaging Equipment Markets in Europe

Publ 20060313