Are Medical Equipment Warrantees Worth the Investment?

December 8, 2011

We looked at equipment warranties as fair game for cost savings. I think this might be a place others might look too.

With Medicare cuts looming next month, I’m looking for where we can cut costs in our practice. I’m not much of a gambler - I even consider myself risk averse - but I’m willing to bet my equipment won’t break. Earlier this year we looked at equipment warranties as fair game for cost savings. I think this might be a place others might look too. 

An interesting question came up on the Practice Managers’ Network for the American Urological Association about purchasing extended warranties for expensive equipment, specifically ultrasound. Our practice uses ultrasound on a daily basis. Ultrasound probes are fragile and can cost $5,000 to $10,000 to replace and/or repair. Warranties/replacement plans/maintenance agreements average about $4,000 to 5,000 per year per device for this particular machine. Ours is currently 4 ½ years old and we have not had any problems (fingers crossed).

We have a smaller bladder scanner that costs about $10,000 to replace. It’s used a lot (almost 20 times a day). The warranty runs about $2,000 on it but this includes a calibration.

I very rarely buy extended warranties, replacement plans, or maintenance agreements on any piece of equipment. I feel like you’re gambling either way but the odds are in your favor if you don’t buy. The math is simple: If I bought the ultrasound warranty every year for the past year (first year “included”), I would have spent well over $15,000 without having to ever replace anything.

This has also been my policy on the personal side as well (TV’s, wireless routers, cell phones, etc). Cell phones call it insurance and it adds up to about $75 per year. I’ve only ever lost one cell phone in almost 15 years. My guess is that these are probably huge profit centers for these companies, medical or otherwise.

There is an exception, however. Last year I bought a printer for our front office to use. The printer was on sale for $450 from $550 at one of the larger office supply chains. When I went to check-out the clerk offered a replacement plan for three years for $39.95. That’s less than 10 percent of the purchase price and spread over three years. It also covered accidental spills, breakage, and or lightning strikes. I couldn’t say no. If ultrasound manufacturers and/or other larger expensive manufacturers provided a warranty/maintenance agreement with terms like this, I would gladly do it. My ultrasound probe that costs $7,000 new could have a $700 replacement plan over three years. I understand why they don’t do it since they know most people probably purchase their expensive warranty programs. I hope they understand as well when I kindly refuse year after year.

I can’t cut these costs but others might look to when renewing. I do have funds available should we need to purchase a probe, etc. There are plenty of companies in the U.S. that will do the repair for less than the manufacturer and which will provide a loaner.

The physicians and staff are all very well aware of how much these items cost. We roll the dice but I’d like to believe the dice are weighted in our favor.

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