"When we deal with procurement and IT people in healthcare companies, we tend to hear the same message time and time again: 'Every dollar we spend on IT equipment we'd rather spend somewhere else.'"
That's Mike Sheldon, president and CEO of Santa Barbara-based Network Hardware Resale, a leading provider of pre-owned and refurbished networking equipment. Dealing primarily in Cisco equipment, but also selling and servicing hardware from such vendors as Juniper, Extreme, Nortel and Force10, the firm contracts with more than 10,000 organizations worldwide.
Currently, healthcare companies comprise seven or eight percent of its customer base and are, says Sheldon, "one of our fastest growing segments." Why? Because more and more providers are discovering the significant savings that can be realized when purchasing hardware on the secondary market – perhaps as much as 75 percent or more.
"Our discounts will range from somewhere in the 50s, to, if you go back two or three generations, somewhere in the high 90s," says Sheldon. "You'll pay pennies on the dollar depending on the piece of equipment you're interested in."
EMR and PACS technology are demanding greater network performance and reliability, even as hospital budgets are increasingly constrained. Purchasing pre-owned equipment is one way more and more CIOs are stretching their dollars.
"With the economy being the way it is and limits being put on technology why wouldn’t someone consider pre-owned?" asks Donald Cooper Jr., director of information systems at Harton Regional Medical Center in Tullahoma, Tenn.
Cooper concedes that "most people, when considering used equipment, would shy away" or be wary of plunking money on junk. But he says the warranties and customer service being offered by companies such as Network Hardware and Syracuse-based CXtec – through whose "equal2new" program he's purchased equipment like switches at significant savings – makes it a no-brainer. "We're not buying from a flea market or garage sale. We are purchasing from a reputable company with a level of service that I've yet to experience with any other technical company I have ever dealt with in over 20 years in the IT field."
Often, the equipment sold in the secondary market isn't even all that out of date – sometimes just "six to nine months old," says Frank Kobuszewski, vice president of CXtec’s Technology Solutions Group. And just as often, hospitals don't necessarily need brand new or top-of-the-line networking hardware anyway, he says. "We've found that those technologies are moving faster than the needs of our customers, particularly in healthcare."
Instead, purchasing pre-owned equipment allows hospitals to "save money in the core of their network and their data closets, and then invest the money they save in business driving technologies – such as the trend for wireless in patients' rooms, for instance."
Beyond savings and reliability, Sheldon says availability is another key selling point. He cites recent supply constraints at a company like Cisco that have pushed delivery times from one month to three months to five. Network Hardware Resale has "been able to deliver almost anything, as long as the quantities are reasonable, in two or three days," he says. "We have an enormous inventory in stock."
The market for pre-owned hardware is growing, says Sheldon, "and the awareness of the availability of the equipment, particularly given the supply constraints, has gotten much more widespread."
One more benefit of buying on the secondary market? The environmental benefits of reusing and recycling, says Kobuszewski, especially as states start regulating e-waste more heavily, which is "a huge trend you're going to hear more and more about."
