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Recycling in radiology: a new economy provides opportunities for developing countries

Mark Nicholls
HHE reporter
Hospital Healthcare Europe

In recent years a market for refurbished radiology equipment has evolved across the European and global health communities. With an increase in medical procedures, the demand for newer and faster diagnostic imaging equipment has arisen. Coupled with advances in technology with more accurate and more effective equipment available, modern hospitals are naturally seeking to upgrade their facilities. Yet the older pieces of equipment being replaced by the newer installations are still effective as diagnostic tools, with many years of useful life left in them. As a consequence, a secondhand market for radiology equipment has developed, with a new pool of customers eager to take advantage of the high-quality refurbished radiology equipment that is becoming available.

Markets for refurbished equipment
There are a number of markets for refurbished equipment. Health market analyst Frost & Sullivan has identified a strong Eastern European market, as well as a demand from the private sector. Other ­observers point to Africa, South America and Asia as marketplaces for refurbished radiology equipment.

Frost & Sullivan says that countries such as the Czech Republic, Russia and Poland – with their present healthcare scenario – are restricted in their ability to purchase new diagnostic imaging equipment. “But this has fuelled the growth for refurbished systems, especially in the CT and MRI segment,” say the ­analysts. “Also, the constant supply of these systems from technologically advanced countries such as ­Scandinavia, Germany and France has led to many such systems being available in these ­regions, thus leading to positive trends.” Eastern Europe, they add, has been considered an area of growth potential for some time but is on the threshold of further growth for refurbished equipment.

What the developing health systems have identified is that, for the price of new equipment, they can consider buying a second or even a third scanner. As demand for procedures grows, this increase in available diagnostic tools can be effective in helping to reduce waiting lists. Private healthcare institutions are also key players in the market, either as purchasers or, in some cases, as sellers of the equipment since, at the higher end of the market, they seek to replace old with new.

Apostolos H Karantanas, associate professor in the department of radiology at the University of Crete, explained that there is a trend towards refurbished equipment in Greece, particularly in the private ­sector. Meanwhile in Britain, private healthcare provider BUPA has a differing experience.

Replacement programmes
Peter Lock, senior buyer for the BUPA Group Purchasing, speaking prior to the sale of Bupa’s hospitals to a European private equity company, said: “BUPA has a replacement programme in place for its radiology equipment and therefore makes assessments of its equipment when it comes to the end of its recommended clinical life. If the equipment is safe, fit for use and in good working order and it is not cost-prohibitive to move or uninstall, then we can consider redeploying it within our hospital network for noncritical work, like backup systems. If there is no requirement for the equipment within the hospital network then the equipment is typically given to charities in developing nations. There is definitely a market for secondhand equipment, and there are companies out there that will pay for the equipment, remove it free of charge, refurbish and resell it. However, BUPA’s preference is to donate to charity where possible.”

He added that, in some instances, the equipment goes to veterinary practices to be used as a diagnostic tool to treat animals.

What is clear is that this equipment being refurbished and sold on – or donated – to developing health systems brings good-value diagnostic medicine to nations and communities that may not be in a position to buy the newest, latest and most expensive diagnostic equipment.

A growing market
Despite its relative infancy, the market for refurbished radiology equipment is one that is already ­changing. From a market where there were dealers selling used radiology equipment on from one hospital to ­another “as seen”, the nature of the economy has shifted in recent years, with the major manufacturers of such equipment – Philips, Siemens, GE and Toshiba – endeavouring to take the initiative. Observers note that they have now set up their own refurbishment operations, taking their own equipment back inhouse, refurbishing it themselves and then selling it on to new customers, often in Africa, Asia, South America or parts of eastern Europe.

Paul Hunter is managing director of UK-based Lundy Healthcare, a company that project manages installations and de-installations of such equipment and does a degree of refurbishing. Mr Hunter said that a driving factor was that the bigger companies want to retain their installation base and with that the lucrative servicing contracts, which are a profitable arm for the major players in the market.

The most sought-after pieces of equipment are MRI and CT scanners, usually seven to eight years old, and which can often weigh anything from five to 38 tonnes. “They are a major operation to remove,” explains Mr Hunter. “This refurbished equipment comes out of main hospitals and private sector health units in the West, primarily in Europe and America, who are upgrading their equipment for new, and will go to Africa or South America.” Equipment that is seven to eight years old can be cost-effectively refurbished, but anything much older is slowly becoming obsolete. There is not a wide market for equipment that is nearing 15 years from new, for example. “But when it is five to seven years old,” said Mr Hunter, “this equipment has real value in countries where the health systems are still developing.” Health economies in Africa, Asia or South America often cannot afford to buy the latest equipment from new. “The refurbished equipment will be approximately half the price of new equipment. These developing countries are buying good manageable and well-serviced equipment. The market is also evolving as the healthcare strategies in each country evolve. There is a shift away from the ‘dealer’ mentality as quality becomes so much more important, and there is a shift towards the original equipment manufacturers. The middle man is being squeezed out.” He says the original equipment manufacturers (OEMs) are widening the accessibility to the market.

Radiology equipment is refurbished at different levels, but a typical first level of refurbishment could mean updating the software and changing the monitors. During refurbishment the equipment is given a full overhaul mechanically, a safety and software upgrade, with checks on whether monitors are ­performing correctly. There may also be an upgrade of the computer system in terms of speed.

Mr Hunter said: “As technology moves on you get more and more complex equipment, but with that the cost does increase.” Not every hospital carries out major research, and so they do not need big magnets for their equipment. Hospitals the size of a district general hospital may not need that level of research-­capable equipment, but they often need more equipment to cope with patient demand and expectation. “As people are living longer and the population is growing, hospitals may find they need two pieces of equipment, whereas five to 10 years ago they may have only needed one. An option may be to have a new piece of equipment alongside a ‘workhorse’ piece that is not brand new. It still does an adequate job. But because new diagnostic facilities become available, they find they do need the new piece of equipment as well.” What African, Asian and South American purchasers of ­refurbished radiology equipment are getting is effectively a true bargain. Mr Hunter said: “This equipment is as reliable as new equipment, and it is fantastic value for money. With a piece of refurbished equipment that is 60–70% of the price of what it would cost at new, it is probably suitable for 95–98% of what is needed by patients.” Safeguards are built in, there are guarantees and warranties with refurbished radiology equipment in the same way as with new items.

There are all-round benefits of recovering, recycling and refurbishing radiology equipment. Mr Hunter explained: “There are obvious benefits for the environment. At Lundy we never underestimate the importance and impact of recycling and recovering equipment. There are sound economic and sound environmental reasons for continuing to refurbish such equipment.” And by its very nature, disposing of radiology equipment is a major task. “Everyone benefits. For health services that are upgrading equipment this is an outlet for exchanging equipment; while at the other end of the scale, countries that cannot afford to buy new equipment have access to recovered and refurbished equipment that does the job they want it to. Everybody benefits because this equipment is still dose-efficient. It is a ‘win, win, win’ all round, and at the end of the day sees better healthcare for us all.”

Future trends
The market for refurbished radiology equipment is one that is set to flourish and grow, though there will be occasions when it will naturally slow. Experts believe that at times, with the wider availability of new technology, the decision-making process of potential buyers will be somewhat slowed as they will almost be “baffled” as to whether to buy a new piece of equipment or a refurbished item. This will change again as developing health economies become wealthier and are less restricted by cost. But the market for refurbished radiology equipment is continuing to show an upward trend. ­Analysis from Frost & ­Sullivan showed that revenue in the European markets for refurbished medical ­imaging equipment totalled $139.5 million in 2004. By 2009, that is projected to reach $213.1m.