Significant increases in maintenance labor rates of concern - Data Trends - maintenance labor fees for health care equipment - Brief Article - Statistical Data Included

Healthcare Financial Management, Jan, 2002

The maintenance labor rate in key equipment modalities has shown a significant increase in the past four years. An analysis of the labor rates charged by original equipment manufacturers (OEMs) shows that the average increase in labor rate for the combined modalities from January 1998 through August 2001 was 59.5 percent, which averages out to nearly 15 percent per year. The two modalities that held the most significant increases were MRI, averaging 88.9 percent, and CT, averaging 89.3 percent.

In 1998, the differences among the labor rates of various equipment modalities were minor, spanning only $37 per hour. By 2001, that difference had grown to $131 per hour.

However, these average increases make up only part of the story. Exhibit 2 shows that certain OEMs increased their rates significantly more than the average. One OEM raised its labor rates for MRI and CT scanner maintenance an average of 32.5 percent a year, totaling more than 130.3 percent over the past four years. Additionally, there are significant labor-rate differences among manufacturers.

To help drive down maintenance costs, healthcare providers should analyze and compare manufacturer modality repair costs at the time of acquisition of their equipment and consider using an independent service organization or in-house repair group as an alternative for ongoing repair.

Data for these analyses were drawn from the GENISYS [R] proprietary databank, published by USGS Equipment Technology Solutions [TM]. GENISYS consists of audited maintenance data on more than $5 billion worth of equipment from more than 300 manufacturers and more than 1,000 independent service suppliers.

EXHIBIT 1

AVERAGE OEM MAINTENANCE LABOR RATES BY MODALITY 1998 AND 2001

                                Average Dollar  Average Percentage
Modality            1998  2001     Increase               Increase

MRI                 $174  $327       $153                    88.9%
CT                  $174  $327       $153                    89.3%
General radiology   $141  $196        $55                    39.4%
Ultrasound          $167  $214        $47                    31.0%
Nuclear medicine    $173  $270        $97                    64.9%
Special procedures  $160  $262       $102                    63.6%
Laboratory          $178  $240        $63                    40.5%
EXHIBIT 2

MRI AND CT SCANNER MAINTENANCE RATES BY OEM FOR 1998 AND 2001

                       1998 Labor       2001 Labor       Dollar
Modality      OEM    Charge per Hour  Charge per Hour  Increase

MRI            A          $196             $355            $159
               B          $185             $285            $100
               C          $152             $350            $198
               D          $185             $400            $215
               E          $150             $244             $94
            Average       $174             $327            $153

CT Scanner     A          $172             $355            $183
               8          $185             $285            $100
               C          $152             $350            $198
               D          $185             $400            $215
               E          $175             $244             $69
            Average       $174             $327            $153

            Percentage
Modality      Increase

MRI              81.1%
                 54.1%
                130.3%
                116.2%
                 62.7%
                 88.9%

CT Scanner      106.4%
                 54.1%
                130.3%
                116.2%
                 39.4%
                 89.3%