Buying radiographic supplies and services has a lot in common with buying a car. Both product lines have an electrical and a mechanical component, and require critical fluids and services in order to do the job for which they are intended. It is a pretty safe bet that no one signs a contract to buy gas at the corner station, and gets a free car in return. In fact, we know of no one who signs any kind of contract committing them to purchase gas or service or oil, etc., from any one supplier.

The reason is simple. There would be no financial benefit to the buyer. If someone really did offer a "free car" in return for gas purchases, the astute buyer knows there would be catch somewhere, and in the end someone would pay dearly. There are many types of contracts available to the radiology market. Some offer legitimate value, others are designed to benefit only the vendor. Lets take a look at a few variations.

Processor Service and Supply Contracts:

Often these contracts are not really contracts in the traditional sense. Many are simply quotations reflecting pricing over time, and leave the buyer free to shop at will. Processor service contracts that bind the parties to a set cost of service, have value only if the is an element of shared risk. For example, "all parts" or "emergency service included" in the base service cost would be a great benefit to your company.

Free Lunch Contracts:

Many enticements are offered up in return for "contracts." The most common items offered as enticements are "free" cassettes and film processors. While common sense tells us that nothing is really free, these offers can be intriguing on the surface. The key is to really understand the offering, and exactly what it entails. X-ray cassettes are, on a pound for pound basis, one the most expensive items required by the user. They are also marked up more than almost anything else the user buys. "Free" cassettes are calculated at list price for purposes of valuing the contractual arrangement. In fact, similar products can often be purchased on the open market for less than half that amount. Additionally, these contracts normally obligate the customer to buy a full range of products from the contracted vendor. It almost a certainty that the customer will buy those products and services above typical market prices and that the vendor will be reimbursed for his "free gift" in very short order. We have actually seen such a situation where one single $90.00 processor part was sold to a "contracted" customer for $600.00! Sadly, there really is no free lunch.

"National" Contracts:

National Contracts are agreements negotiated by national purchasing organizations, who then provide access to users who pay a fee for the privilege of buying off of the contract at the contracted prices. On the surface, this might seem like a reasonable deal. The problem comes when you realize that the contract prices are truly negotiated at the national level, and that market prices are considerably higher in some areas of the country than they are in Arizona. In every example of national contracting that we have seen to date, the customer actually paid a fee to get a price increase. Hardly a good step along the road to cost effectiveness!

Branded Film Contracts:

In spite of the fact that branded film discounts have reached astronomical levels that serve to underscore the commodity nature of the products, the manufacturers continue to offer their best discounts only to contracted customers. If the user is convinced that he absolutely has to have branded film, his most cost-effective option is to negotiate a contract with the largest discount possible, and to avoid any "extras" like educational funds, equipment credits, etc. In most cases, any equipment bundled into these deals will be at list price. A better deal can be obtained on an individual non-contracted basis.

Pure Service Contracts:

These contracts are offered in several forms and on products ranging from processors to the most complex examples of generating equipment. A well-planned service contract can offer significant value. They enable the buyer to budget his cost with no huge surprises. They reduce the large amount of paperwork that service entails, and they obligate the provider to staff for prompt response times.

Service contracts can be tailored to meet individual needs. PM contracts cover only regularly scheduled PM's. Parts and repairs are generally additional. Full service contracts cover the PM as well as any service and or parts, including glassware that may be required. Full service contracts are also offered without glassware coverage. Since the buyer should be relatively familiar with his cost in these areas, negotiating a reasonable discount is pretty straightforward.