Glassbeam Utilization Analytics Delivers Business Value for Medical Device Manufacturers

Puneet Pandit

Many of us know that Canon Medical Systems USA (CMSU) has been a long-standing partner with Glassbeam for over 2 years now. Our partnership was launched in November 2020 in this Press Release. Since then, our collaboration has resulted in nation-wide deployment of Glassbeam Service Analytics solution to their field organization empowering them to serve their customers with higher machine uptime and better patient care. CMSU also launched Glassbeam Utilization Analytics solution to their customers in June this year by embedding our analytics in their 360 Connect Customer Portal. Here is the Press Release. 

This blog addresses the strategic value proposition of Glassbeam Utilization Analytics when looked from the lens of multi-billion-dollar service contract business for a large OEM. Note that the context of this blog is not Canon alone as the business case I am about to write below applies to any large medical device OEM company.

First, what is the problem statement? When customers buy new medical equipment, the service contract is embedded in the deal, whether as year 1 warranty or multi-year service contract. However, at service renewal time, “attach rate”, referring to the percentage of systems covered by a service contract often drops significantly depending on type of the modality. It seems more than 60% of customers drop service contracts with the OEMs for mobile units such as DX and US modalities. For big iron machines like CTs, MRs, and Cath labs, the churn in service attach rate is much lesser, about 10-20% max.

Why is there a churn in service attach rates? Most often, the reason is the competitive threat due to increased commoditization of service delivery from ISOs and in-house clinical engineering staff. This is especially true for modalities like DX and US where wear/tear is not that big an issue but tracking and improving fleet wide utilization becomes a bigger problem.

To put in context, if this churn is not managed well, a typical OEM can lose over $15-20M per year on services business to competition. This analysis is based on a few assumptions.

> Installed base of 20,000 machines for mobile modalities such as DX, US etc.

> Installed base of 3,000 machines for MRIs, CTs, and Cath labs.

> About 10% of installed base is being refreshed each year as machines reach EOL.

> Annual service contracts are priced at ~10% of ASP per machine.

Glassbeam has a solution for this problem statement. At Point of Sale each year, OEMs can embed Glassbeam Utilization Analytics into warranty services to differentiate offerings compared to competition. Clinsights™ Utilization Analytics module, based on Logs, DICOM and HL7 data, can provide significant insights into machine/fleet utilization statistics to end users. Besides new product sales, OEMs can also embed the same solution for the entire installed base. The offering allows end users to monitor usage statistics of their fleet to improve their operational efficiency and provide for better patient care. OEMs can also provide benchmarking intelligence to their customers on several metrics, such as exam duration time by CPT codes, operator performance, Turnaround Time (TAT) stats, etc. All this information can help OEMs differentiate their product and service offerings, allowing them to increase attach rates of service contracts at renewal times, and sell more products compared to competition.

Given above strategy, Glassbeam can provide OEMs more than 300% ROI by bundling Utilization Analytics offering with their installed base and for new product sales each year. This ROI is not even counting the strategic value that can be realized by selling more machines compared to competition (a much higher number as capex $$ are huge for big iron machines). Ability to sell more machines each year and displacing other OEMs products is a huge competitive advantage.

Glassbeam continues to enhance its Clinsights™ offerings working closely with its customers and partners each quarter. Stay tuned for more updates. Meanwhile, comments and feedback always welcome. Drop a note to me at puneet@glassbeam.com.