This report originally appeared in the October 2009 issue of DOTmed Business News

The medical industry can be a tough business at times. In the current economy with many outstanding questions about health care reimbursements and payment restructuring, even hospitals are feeling a pinch. Of course, their pain is your pain if you are a medical equipment dealer or manufacturer. Frankly, anyone who depends on the segment in some way - from crating and rigging companies, trucking companies, service companies - the list goes on - can be affected.

Even acknowledging current difficulties, I question the actions of some businesses. I believe my top priority is to provide a needed service to my customers and to make their jobs easier. That philosophy has served me well, first working for Philips, then GE, and ultimately founding my own company in 2000. It also led to me becoming the President of the Association of Medical Service Providers (AMSP). Unfortunately, it seems not everyone shares my view of customer service and it could cost customers big.

Imagine buying a new car. You drive the car for a few years and eventually decide to sell it. When you attempt to sell it, you're told by the manufacturer that you will have to pay an additional $4,000 licensing fee or the new owner will be unable to use the computer that runs the engine - effectively making the car unusable. Seems ridiculous doesn't it? Not for medical equipment - and multiply that $4,000 by 10. Scary . . . and not fiction.

A customer recently decided to purchase a Hitachi MRI on the secondary market. As he discussed service options with the original equipment manufacturer (OEM) he was told it was illegal for him to operate the system without paying a software licensing fee of $40,000, which incidentally, would be waived if he were to purchase a service contract. He was also told upon subsequent resale of the equipment, the next purchaser would have to pay this fee and the OEM had to right to hold him liable for damages from unauthorized transfer of operating software to a third party (selling the system). Lastly, he was told they had the right to come onto his property to "shut down" the recently purchased MRI.

To be fair, it seems to be an issue unique to one OEM. This customer has 10 other MRIs from many different manufacturers purchased on the secondary market and has never run into this problem. Reading the fine print from a recent upgrade purchased from the same OEM, he did find a section regarding operating system software stating Hitachi Medical Systems America, Inc. hold the rights to the software.

He's currently doing research to see if there's a class action suit in process against this manufacturer. And he has adopted a "wait and see" attitude to determine if they will actually attempt to come onto his site.

If the OEM was legally able to move forward with their software licensing enforcement, it would run contrary to the American ideal of free enterprise and endanger tens of thousands of jobs. It could also lead to hospitals and health care organizations being unable to afford necessary equipment and totally degrade any charitable donations of equipment. It would also likely decrease the quality of care in underserved areas of the U.S. and in poorer countries worldwide. It seems to me, this would reduce competition and raise the cost of health care at a time when there is tremendous demand for cost savings.

This is something that the AMSP as a group is very concerned about. Anyone who participates in the secondary market needs to be aware of these potentially harmful developments to a free and unrestricted marketplace so we all can take action to correct problems before they go too far.

Tim Wright has spent 25 years in the health care equipment industry. He is the co-founder and vice president of Virtual Medical Sales and the president of the Association of Medical Service Providers.

If you would like to share your opinion, or a similar story, please email feedback@dotmed.com