Repairs: In-house or outsource?

Friday, October 31, 2008

I’m writing in response to the “In-house repairs, are we all alone?” letter to the editor in the September issue. Over the last 20 years I have been a repair technician in several industries, including the durable medical equipment and the semiconductor industries. Currently I’m the owner of a medical equipment repair center. I worked as an equipment technician for a DME dealer in the 80s and 90s. I would have to agree with the previous writer that back 15 to 20 years ago it was very cost effective to repair all rental fleet equipment in-house.

This trend started to change in the late 90s. Rental reimbursement rates continued to decline and there seems to be no end to the cuts in sight. This trend forced equipment manufacturers to lower price points and increase warranties on their oxygen equipment. Many oxygen concentrator manufacturers offer pricing on new units that is about half what it was 10 to 15 years ago.

Warranties are incredible with some offering “bumper-to-bumper” coverage for nearly 5 years.

Here are a few concerns with DME dealers providing in-house repairs vs. outsourcing to a repair center: 1) Repair centers that provide warranty coverage are held to strict test equipment calibration standards and repair record tracking that’s accreditation compliant; 2) Manufacturers reimburse authorized repair centers for labor charges that would otherwise have to be absorbed by the dealers own in-house repairs; 3) Repair centers are kept up to date on any equipment modifications or technical issues; and 4) To save shipping cost, repair centers usually provide prompt equipment pickup/delivery at a reasonable fee and quick turnaround of repairs.
When it comes to the bottom dollar for the DME dealer, there are several things to consider. Outsourcing cuts cost in the following areas: no technician(s) employee cost; no part stock inventory; no continued technical training cost; no tooling/calibration cost. Best of all they have the peace and mind of knowing that their warranty/non-warranty equipment is repaired to strict manufacturer standards.

Steve Eaton, MedEquip Service Solutions, Greenbrier, Ariz.