Diamond Select
By Michiel Bloemendaal
Barbara Streisand sang about it in Second Hand Rose:
‘Father had a business, strictly second hand’. We cannot know how good that business was, and there’s nothing in the song about ‘father’ getting an award. However, in medical equipment, second hand is good business. A couple of years ago Philips opened a new branch of in the Dutch village of Veldhoven, and recently the firm received a surprise: Frost and Sullivan, the market consultancy, presented it with the Customer Service Leadership Award for achievements in the category Refurbished medical imaging systems. ‘Philips understands the need of the customer for economical imaging solutions without having to compromise on quality and has been able to fulfil these needs by offering refurbished medical imaging systems,’ the jury wrote. Reason enough for me to visit Veldhoven and Philips Medical Refurbished Systems (PMRS), where used medical equipment, such as cardiovascular X-ray, CT and MR systems are patched up.
Philips established its Diamond Select programme to renovate systems that are generally only one ‘product generation’ older than the newest models produced by Philips Medical Systems. Not all used systems are suitable for refurbishment; only carefully selected hospital systems, demonstration and training models qualify.
Describing the process as ‘patching up’ does it a disservice. When old equipment arrives in Veldhoven, it is inspected and dismantled. Then the mechanical parts are inspected, and if necessary repaired or replaced. Vital parts, e.g. an X-ray tube, are replaced by new as a matter of course. The system is then re-assembled and tested for technical and safety aspects, and up-to-date documentation is created. The imaging quality assessment must match the original company criteria. When all these steps have been made, the system is given the name Diamond Select.
The market
Rising annually be 10-15%, currently almost US$1.1 million is spent on refurbished systems in one year. Diamond Select has taken a top share of that market, selling to hospitals and private clinics worldwide. But it is incorrect to assume that refurbished systems are for developing nations. Diamond Select sells in almost the same markets as the new Philips systems. So, just as the USA is the biggest market for the firm’s new products, so it is for its refurbished equipment. The programme is also very successful in Germany and southern Europe. In addition, considerable effort goes in to gaining the market in South-America and Eastern Europe. Generally, in developing areas people are not waiting for sophisticated systems; they prefer a good X-ray system over a sophisticated cardiovascular device.
Sales of refurbished systems are not only linked to budgetary considerations, but also to environmental issues. But above all, the quality has to be beyond all doubt and the service optimal. In that case, one wonders whether Philips is not self-harming by following this line. That is: Who would buy new if used is just as good, has the same service and is completely upgraded? Philips would not be Philips if they had not considered this development long and hard, and the answer is not difficult to understand. Many hospitals need more than one MRI or CT scanner, for example. But such requests from medical teams mostly cannot be filled on budgetary grounds. In this case, a cheaper, refurbished system could prove to be the solution, because a high-quality refurbished system that is only a bit older than the new model could cost about 50-70% less than it.
23.05.2006
