Frost: Full-Service Agreements, Remote Service Delivery Grow Euro Medical Imaging Equipment Services Market
April 24, 2006
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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, according to Frost & Sullivan. In particular, such higher-end modalities will boost the adoption of full-service agreements, a trend reinforced by the need to continuously minimize equipment downtime.
Frost & Sullivan found that the European medical imaging equipment services markets earned revenues of $1041.1M in 2004, with estimates to reach $1195.7M by 2011.
"Healthcare administrators are facing increasing pressure to operate along the lines of financial accountability within strict budget allocations," said Frost & Sullivan research analyst Martin Bryant. "As a result, a full-service agreement, with its predetermined fees covering a stipulated level of service, appeals greatly to administrators," he said. "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 prioritized 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 equipment service contracts, they are expected to demand more services at lower prices, thereby squeezing service providers' profit margins. Analysts said to achieve vital cost savings and convince end-users to make large budgetary allocations, service providers will need to ensure high performance standards and continual innovations.
Service contracts will continue to grow as remote diagnostics meet the maintenance needs of radiology departments. By automatically monitoring the radiology-installed base, and then warning vendor service centers if any equipment shows 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 by eliminating the need to dispatch engineers for site repairs. 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 capitalize 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," said Bryant. "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."
Source: Frost & Sullivan.