Dunlee, the CT and X-ray components company acquired by Philips in 2001, has told HealthCare Business News it is departing the replacement tube business to concentrate on its OEM product portfolio.

The decision comes roughly six years after the company left its Aurora, Illinois, replacement tube manufacturing facility, citing at the time a “significant decline” in the replacement parts market. That factory was sold to Chronos Imaging LLC, which continued to produce third-party replacement CT tubes for Philips through the Dunlee brand on a contract manufacturing basis.

Now, with Dunlee exiting the replacement market, Chronos president, Pat Fitzgerald, senses an opportunity for growth, and the need to get the word out about what these changes entail for customers. He also has advice for CT stakeholders regarding lower costs, and what it takes to sustain them long term.

HealthCare Business News asked him a few questions over email.

HCB News: For context, how have Chronos and Dunlee partnered on replacement CT tubes since Chronos took over the Aurora manufacturing facility?
Pat Fitzgerald: First, I’d like to say my team and I are immensely grateful to Philips for their support over the last two decades. Beginning in the early 2000’s, when we were a part of Philips and started to develop the line of replacement tubes for GE CT systems that made Dunlee famous, and then again after we formed Chronos Imaging and bought the former Dunlee tube factory in 2018.

As part of that asset purchase agreement, we also agreed to continue producing the Dunlee brand replacement CT tubes for Philips on a contract manufacturing basis. Since 2018, Chronos has developed and introduced new products both in partnership with Philips and on our own.

One of the products we are most proud of is the Dunlee DA200 P40+LMB, which was the industry’s first third-party replacement CT tube to feature a liquid metal bearing. That tube was introduced in 2020, and all the early installations are still running nearly three years later. Fantastic product.

Unfortunately, CT replacement tubes require life cycle investments to keep them relevant, and due to competing priorities within Philips, they have chosen to focus on their line of Dunlee brand OEM products going forward. This is why several years ago Chronos began to develop its own line of Chronos brand CT replacement tubes for GE CT systems. Building on our expertise in this space, we have been able to take the reliability and performance of the Chronos AU series tubes to the next level.

HCB News: Dunlee is exiting the replacement CT tube market. What does their departure mean for Chronos?
PF: Chronos Imaging intends to continue to provide leadership in this space with a continuous stream of new replacement products. We are strong supporters of the Right to Service movement and have played a key role in enabling cost effective third-party CT service from the very beginning.

OEMs deliberately price their own replacement tubes sky high to drive customers toward OEM service contracts. It’s not practical for a third party to service a CT system for $75,000 per year when the OEM replacement tubes cost $250,000 each.

Chronos today has an unprecedented portfolio of new products under development. The next few years are going to be quite exciting. Independent service organizations and healthcare providers under pressure to reduce the cost of healthcare are partnering with Chronos to bring these new products to life, and in some cases are even making investments to help support their development. People in the know understand that new Chronos products are essential to enabling alternative service and keeping the market healthy.

HCB News: What should Dunlee's replacement tube customers know about this?
PF: I spoke to one customer recently here in the U.S. that thought Dunlee’s exit meant they wouldn’t be honoring their warranties. Not true. For the last two years, Dunlee has primarily sold the Chronos AU series replacement CT tubes. Customers began to insist on the Chronos brand tubes because of all the product improvements we were introducing.

ISOs can come directly to Chronos for technical and warranty service on these products. Customers should know that all of our products are fully compatible with OEM CT system requirements, including dose equivalence.

Chronos also has 24/7 technical and customer support. If one of our partners is having a problem installing a tube at 2 a.m., Chronos is right there with them, helping to troubleshoot the issue and get the site back up and running before morning patients begin to arrive.

On our own and through our partners, Chronos has forward-stocking of tubes across the U.S., Europe and Asia. Chronos is one of only 1 or 2% of all medical device manufacturers globally that have made the full transition to MDR in Europe, and we also have full NMPA registration of our products in China. Chronos tubes are made right here in America in Aurora, Illinois by experts who know their business.

HCB News: What should CT stakeholders know about Chronos and how it sees itself impacting the marketplace going forward?
PF: You know, I went away for a few years to help set up CT tube manufacturing at another company before returning to Chronos in 2019. It seems while I was gone some people forgot how essential Dunlee and Chronos tubes are to their own business models.

So, you’ve got private equity-backed companies investing millions of dollars to build out their service delivery networks, and some of them are using cheap alternative brand OEM tubes made in India to service their accounts. You’ve also got some excellent third-party parts companies who’ve lost their way. OEMs say they want to partner with third parties, but when it comes to replacement tubes it seems they only want to offer competitive prices once Chronos has introduced an alternative product.

But don’t be fooled, when the OEM drops their prices by up to 80 or even 90% their intent is to make it unprofitable for Chronos to build these replacement tubes. Their strategy is rather clever. By offering cheap OEM tubes to ISOs and parts distributors, and even getting them to compete for the privilege of distributing these tubes, the OEMs are trying to turn these companies into instruments of their own destruction.

Anytime a third-party sells an OEM tube, there is an OEM marketing person who is rolling on the floor laughing. In the long run, in this dystopian OEM vision of the future only OEM service is possible because Chronos doesn’t develop new products, and the OEM tube prices never drop from $250,000 to $50,000. Chronos is a for-profit enterprise, and we provide good jobs to Americans right here at home, and so I don’t mind saying that to a large degree we are coin-operated.

My main advice to CT stakeholders would be to support the ones who brought you to the dance by insisting on Chronos tubes, and Chronos will continue to support you with new products. Believe me, when informed customers choose to service their CT equipment with high quality Chronos tubes, that OEM marketing person isn’t laughing as much.