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Beware of Buying Used Medical Lasers From Brokers

June 14, 2011 10 comments

Here are some things you need to know about the used laser market. First of all, some of the people in it are very shady. Second, it is not standardized like the used car industry. There is not a “blue-book” value for used laser equipment. Prices and quality vary widely across the board. You usually don’t get a chance to check out (or test drive) the equipment you are purchasing. There is no lemon law with used lasers. When you buy it, it’s yours. It may be difficult getting your money back if it doesn’t perform. Most of these used dealers are not real companies. They are some guy who probably doesn’t even have the laser, but is instead brokering it. There are no real warranties with the equipment. The following are things you should look for in a laser broker and ask:

  • Does the laser broker actually have the laser in his/her possession or is it a consignment sale? If it is a consignment sale, you need to do your own due diligence on what condition the laser is in because you can’t always rely on the broker giving you accurate information. Since the broker may have never actually physically seen the device, he/she may not know if there are any flaws with the device. He or she is relying solely on the doctor who owns the device to give him accurate information.
  • Has this broker been certified by third parties and received a seal of reliability and ethics? Below are a few of the certifications that can be helpful in your assessment:
  • Dotmed. An online website that certifies laser brokers is Dotmed (found on the internet http://www.Dotmed.com). Find out if your laser broker is Dotmed Certified.
  • Ebay.  Every Ebay seller should have a seller’s rating. Find out if your broker has sold on the internet and what his satisfaction rating is. You want to see as close to 100% satisfaction as possible.

These certifications mean a lot to laser dealers and brokers because it validates their good reputation. Brokers and dealers who plan on selling medical lasers for many years to come do not want anything to happen to these ratings because they realize how important they are in selling equipment.

  • Has the broker had the equipment inspected by someone qualified to repair the laser prior to shipping? Even used lasers cost a lot of money, so it behooves you to make sure the laser that you’re buying has been properly inspected prior to purchasing. This should be done by a technician who knows the laser and should be done before you put any money down. Would you buy a used car from a fly by night dealer without having your mechanic look at it? Once it’s been purchased, all bets are off. Apply leverage to the broker when you have leverage, and that is prior to purchasing.

Many brokers tout that their laser equipment has been “refurbished.” This statement means absolutely nothing if the laser broker cannot provide documentation of the laser’s refurbishment. If they claim it has been refurbished, they should be able to send you a checklist of items that have been done to the laser in a matter of minutes via email or fax. If they cannot provide this to you in relatively short order, then nothing has been truly done to this unit.

If you have any doubt as to the laser’s condition, you can also ask the broker to shoot a video of the laser in operation, showing the following:

1. The laser being fired
2. The pulse count on the screen
3. The user adjusting the treatment parameters on the screen
4. The serial number of the unit.
5. Any material defects the laser may have that need to be disclosed

The bottom line is this: You want to make sure the laser is in good, operating condition. You need to make sure it is actually functioning. Shooting video these days is extremely easy. You can buy a Flip HD video camcorder for less than $200 and shoot high resolution video that can be uploaded directly to YouTube in a matter of minutes. Don’t let this process intimidate you. You are about to make a very large investment. Asking these items of your broker shouldn’t be seen as excessive.

4.   The Importance of a Laser Inspection Checklist

How do you know if a laser has been inspected or “refurbished”? Ask for a laser inspection checklist that has been completed by someone qualified to perform the inspection. Below is a basic laser checklist THAT SHOULD BE PERFORMED ON ANY LASER PRIOR TO BEING SOLD TO ANOTHER PARTY:

Laser Inspection and Maintenance Checklist

Inspection / Maintenance Item Date Completed Tech Initials
1. Check coolant level and add deionized water.
2. Inspect electrical connections.
3. Perform power meter calibration check.
4. If more than 250,000 shots replace deionizer cartridge and DI water.
5. Inspect and clean internal optics (if applicable)
6. Replace Xenon flash lamp if power is low and more 250,000 shots.
7. Inspect footswitch for proper operation.
8. Verify laser has no leaks after replacing any filters or connections.
9. Check High Voltage Power Supply.
10. Verify operation at all power settings.
Signed:_____________________________________Date:_________________________
Laser Repair Company:____________________________ Phone:___________________

In most cases, the inspection checklist will not have been performed prior to the broker listing the item, however you should make it a condition of the sale that the laser be properly inspected. If you do not require this, you will be buying at your own risk.

  • Can the broker provide you with a service report on the laser while it was under the manufacturers warranty?  In addition to the laser inspection checklist, you should also request any and all laser service reports that documents any maintenance that has been done on the laser since it was purchased new.  Sometimes the selling doctor may no longer have a record of this, however this should also be available from the laser manufacturer.  Manufacturers have a responsibility to document all repair and maintenance work that has been done to the laser as part of any warranty they have provided for the laser when it was purchased new.

Brokers can be hesitant to provide you with a serial number of the laser because they do not own the laser.  With a serial number you can call the manufacturer and find out where the laser is and sometimes who actually owns the laser.  This makes brokers nervous because it means that you can potentially go around them and buy directly from the owner of the laser unit.  Such behavior is completely unethical, however it does sometimes happen which is why laser brokers are very careful about providing such information to you.

  • Can the broker provide you with at least 5 references within the past 3 months of doctors he has sold to?  Not every transaction will always run smoothly every time with a broker, however does the broker adjust to problems and ensure that things get back on track to keep the buyer happy?  Calling references of recent transactions will allow you to find out from buyer’s their level of satisfaction with the broker and whether they would do business with him or her again.

Vin Wells, MHSA
www.RockBottomLasers.com
800-794-1097

Identifying Third Party Companies Who Can Repair Your Used Medical Laser BEFORE You Buy

June 14, 2011 Leave a comment

Before you buy a used medical laser, it is critical that you identify third party companies who can repair it. You can’t always rely on the manufacturer to support your used laser. As was already mentioned, manufacturers will often turn their back on any doctor who has not purchased a new laser directly from them.

It is important that you find out from your broker who they use to repair the lasers they are selling you. You need to ask them which laser repair companies are “the best” third party repair companies. You want to get names and phone numbers of specific people who have experience repairing the lasers you wish to purchase.

After 90 days of warranty from the broker who sold you the laser, you will be “on your own” and you need to make sure you can continue to get the support you need for your used laser. You need to conduct your own independent research on the internet (I prefer using Google) to find out the following information from third party repair companies:

1. Identify at least 3 or 4 companies who specialize in repairing the used laser you wish to purchase
2. Ask them to provide you with at least 5 or 6 references of people they have recently serviced
3. Find out whether they have laser repair techs who have been Manufacturer-Certified to work on your used laser
4. Find out if they can obtain parts for your laser. Many manufacturers make it very hard for anyone outside their network to obtain parts such as laser fibers and dye kits. Don’t forget that laser and IPL parts are typically unique to one particular device. Some laser companies won’t even warranty the laser for you if it is not purchased directly from them.
5. Find out whether they have the diagnostic software from the manufacturer to trouble shoot problems with the device
6. Ask them to tell you the most common repairs the device needs and a ball park cost to repair the most common problems
7. Whether the company can offer you a third party extended warranty on the laser, how much it costs, and what all it covers.

You need to do this footwork BEFORE you buy. After you buy it can be too late and you may be taking too large of a risk.

Vin Wells, MHSA
www.RockBottomLasers.com
800-794-1097

The Truth About Used Medical Laser Warranties

June 14, 2011 2 comments

Laser brokers typically give you a 90 Day Warranty when you buy a used laser, but they are really just gambling that it won’t break down during those 90 days. If it does, they have to get someone to service the laser, get parts etc. so be ready to be down for awhile if this happens. In addition, the cost of the repair is coming out of their gross profit from the sale, so they may wish to drag their feet to avoid paying these costs. A good broker will deal with the issue head-on and get it taken care of immediately. Every day that your laser is not functioning is a day you are losing money and the broker should and must respond QUICKLY to this emergency.

Paying top dollar for new equipment allows peace of mind with warranty protection, but it comes at a very high cost. While it is true that most used laser equipment is no longer under a manufacturer’s warranty, research has shown that you are almost ALWAYS better off buying used equipment and paying out of pocket for maintenance and repairs versus buying new and having it covered under warranty. You are simply paying too high of a premium for the luxury of buying new. If peace of mind is the issue, then buy a back-up piece of equipment at a 70% discount that you can rely on when your primary equipment goes down. The reality is you will still be paying less than buying the brand new piece of equipment or a manufacturer’s warranty.

The truth about buying manufacturer warranties is this: They are extremely expensive and are written HEAVILY in the favor of the manufacturer. If nothing goes wrong with your laser device while under warranty, you normally have nothing to show for the money you have expended. We call this “vaporware” because the only thing you bought was a little peace of mind for a short period of time. This money can never be retrieved and is forever lost. Instead of buying “vaporware,” how about buying a back-up piece of hardware? This will give you peace of mind AND something to actually show for your money.

Laser companies do not like customers buying on the used market. They will treat you like a second class citizen and you will get third rate service and response from them. Depending on what laser you are looking to buy and how much training and upkeep it requires should be the main factors. Certain lasers have a good history of maintenance and others have a poor. It will be important to do your research on which lasers and manufacturers have a history of reliability and quality.

You also need to find out which laser manufacturers are user-friendly to pre-owned equipment. Some manufacturers can charge you a laser “RECERTIFICATION FEE.” Recertification fees are sometimes required by the manufacture if the laser device is sold to someone else. The laser manufactures claim it is to ensure the device has not been tampered with, however the real reason is to protect the manufacturer from being undersold by doctors looking to sell their used equipment. Charging a “recertification fee” levels the playing field between the new and used price. These fees can be as high as $25,000.

Vin Wells, MHSA
www.RockBottomLasers.com
800-794-1097

Medical Lasers: Buying New Versus Used

June 14, 2011 Leave a comment

When a new piece of equipment hits the aesthetic market, there is often a race to buy this technology quickly and sell treatments to consumers while there isn’t as much competition. Consumers in the aesthetic industry tend to be early adopters, jumping on the latest and greatest technology, believing that it will finally be the answer they are looking for. This often happens even when there is very little clinic research to support the claims made by the laser manufacturer regarding the equipment.

Those clinics that buy the latest technology typically must buy it from the manufacturer at top dollar. Sadly, most NEW aesthetic equipment becomes obsolete 2 or 3 years after the initial purchase, however most leases on that same equipment last for 5 or 6 years. Any leasing company will require a personal guarantee., which means that when you “lease” you are really “buying”.

In the world of aesthetics, technology is evolving at a rapid pace. This evolution also means that laser equipment does not remain useful for very long. It’s a hard pill to swallow when you continue to make monthly lease payments on equipment that has become a “doorstop” inside your practice. If you’ve paid top dollar for that equipment, it just makes that pill you’re swallowing even the more bitter.

If the technology fails to deliver results, this practice now has a piece of equipment that is only worth a small fraction of what you originally paid for it. A practice that plays this strategy for very long will continue to accumulate additional leases and have equipment that delivers very little ROI two or three years into the lease. It doesn’t take too many years of doing this until the liabilities on your company balance sheet are consuming your net worth and eating up all of your positive cash flow!

Another key issue is keeping your lease costs down so that you remain competitive. If your practice buys a new medical laser and your competitor buys the same laser pre-owned at a 70% discount, your competitor has a large competitive advantage over you. His fixed costs on capital equipment are 70% less than yours which means higher profit margins for him. He also has the ability to offer lower treatment prices and potentially put you out of business. You also have the option to match his lower prices, but you will need to compensate for the higher costs you are paying on that equipment by having a higher treatment volume. If you choose to keep your prices higher, then you will need to somehow differentiate your practice from the competition by offering other “value-added” benefits that justify your higher prices. This could be “Board Certified Dermatologist” or “Onsite Physician” etc.

The Best Strategy for Buying Medical Lasers

The best solution to keep up with advancing technology is to wait 18-24 months after a new device is introduced before you purchase anything. When you do buy, never buy NEW. Always buy used. This will allow the following benefits:

1. You will let someone else take the hit on depreciation (It will allow you to save 70-80%)
2. It allows you to monitor the reception of this technology in the aesthetic industry and go beyond the hype to find out the level of satisfaction of those doctors who have been using the device for the past 18-24 months and review clinical data. A good way to monitor this is to attend meeting such as the ASLMS and discuss items with other physicians who have the technology at trade shows.
3. If the device appears to be living up to expectations, then this could potentially be a technology to invest in and you will be much better off than the practices who jumped in early and have lost significant money by overpaying for aesthetic equipment.
If you’ve decided to buy a used medical laser, you’ve already made a smart decision. You can get a medical laser that’s just as good as a brand-new one without paying for the depreciation that wallops new laser buyers as soon as they fire their first pulse. Even lasers that are less than a year old are 40-50% percent cheaper than brand-new lasers.

Vin Wells, MHSA
www.RockBottomLasers.com
800-791-1097