Navigating the world of B2B literature, one is constantly bombarded with a seemingly never-ending barrage of eBooks, infographics and white papers, positioning themselves as a cure to solve business woes big and small. Let’s face it though, it isn't easy finding that sweet spot of being brief, cogent, informative and understandable. That’s why when we came across this white paper from Oncology Services International (OSI), we knew we’d found a winner. The title, “3 Strategies for Reducing Oncology Costs While Maintaining Quality” not only effectively sums up the content therein, but also speaks to the core mission of OSI.
Reduce Cost, Maintain Quality
OSI is an independent service organization for radiation oncology devices. Since 1985, OSI has grown to serve more than 200 sites across the United States. In the field of radiation oncology, the cost of a linear particle accelerator (LINAC) can run between $4M and $6M. A LINAC is the device most commonly used for external beam radiation treatments for patients with cancer, delivering high-energy x-rays to the region of the patient's tumor. The OEM warranty for LINAC’s runs about three years. Hospitals willing to go the independent service organization (ISO) route can see a 15% to 20% reduction in service and maintenance costs.
“Obviously the cost differential is a big part of our value proposition, but the quality component is as well,” said President and CEO Richard Hall. “For years they’ve [hospitals] been told by the equipment manufacturers that no one can provide quality service but the OEM.”
The OEM’s have their own propositions, which Hall notes aren’t unlike those of certified automotive dealerships. You might have heard the pitch before. Something along the lines of: no one is qualified to work on these machines but us. Hall and OSI are looking to challenge that thought process. Most of the engineers at the company have previously been with the OEMs and they’re kept up to speed on new equipment with internal training programs.
“If the customer has multiple manufacturers represented in their equipment portfolio they can deal with one company for service and maintenance,” said Hall. OSI provides a single source for support and billing, and there are instances (though Hall admits they aren’t common) where a model will reach an end-of-life status and the OEM will discontinue its support. In those situations OSI can continue to provide service and maintenance for it.
The big challenge for an ISO like Oncology Services International is the overall LINAC market. Vairan Medical Systems has over 70% market share, and second-place Elekta Oncology has another 15%. LINAC’s are capital expenditures, approved at the board and C-level. From a sales perspective, ISO’s are coming up through the departments, with their annual service contracts in the ballpark of 100K-250K. Money talks in terms of capital expenditures with OEMs, but it sings another tune as well with regards to cost-effective solutions through ISOs. The proof is a company like Oncology Services International, servicing over 350 machines in the United States, continued expansion into computed tomography (CT), and growing internationally with partnerships in China and business in South America, Mexico and Eastern Europe.