EMI: Keep your equipment humming

Key Points

When it comes to major equipment in your practice, you pay big bucks not only to acquire it, but also to keep it up and running.

Solo rheumatologist Jeffrey Wilson in Lynchburg, VA, knows that truism. He has a chemistry analyzer for a full-service lab as well as computers for his practice management and EHR systems. The various service contracts for maintaining and repairing this gear used to run around $13,000 four years ago.

Wilson reduced that cost to about $10,000 by replacing these service contracts with something called equipment maintenance insurance, or EMI. Equipment vendors now perform preventive maintenance and repairs only on a pay-as-you-go, time-and-material basis. Wilson submits the bill to the company administering his insurance policy, which then cuts a check.

We'll review the basics of this coverage so you can decide whether it's right for you.

Determine what equipment really needs this coverage

EMI providers advertise that almost every imaginable piece of equipment in a doctor's office-telephone systems, furnaces, fire alarms, and motorized exam tables-can be switched from service contracts to insurance. But before you sign up, you should decide whether a given item needs to be on a service contract in the first place.

Service contracts-also called extended warranties or service plans-differ from warranties, which are included in a product's price and cover the first 90 days or year of ownership. Service contracts kick in afterward. They have a reputation for being overpriced, a reputation that seems well deserved since EMI providers can heavily discount them and still make money. In fact, service contracts may not even be necessary for stuff that requires little or no maintenance, usually doesn't break down, or costs less to fix than the price of the contract. Practice management consultant Keith Borglum in Santa Rosa, CA, notes that if something is going to malfunction, it probably will do so during the warranty period.

With arguments like that in mind, Consumer Reports magazine took out a full-page ad in USA Today last year warning consumers to stay away from service contracts on computers, appliances, digital cameras, and the like. However, the magazine acknowledges that some people-you may be one of them-need the peace of mind that a service contract promises.

Service contracts make more sense for medical testing and diagnostic equipment that needs regular maintenance such as cleaning, calibration, and scheduled replacement of parts. As a rule of thumb, anything with moving parts-think copiers and printers-warrants coverage, since it's more prone to break down.

EMI can take the headache out of equipment management

Once you decide what really merits a service contract, you can then get serious about switching to EMI and reaping the benefits. Cost savings is the biggest one. The EMI company charges a premium that always undercuts what you'd pay for service contracts. But you come out ahead in other ways.

EMI usually is more generous than a service contract. For example, you can choose anybody you want to make repairs-the equipment manufacturer or a third-party shop. And while a service contract may exclude repairs due to a power outage or an employee goof-up, EMI typically will cover them.