Unisyn Medical Technologies

Lead with strength. Don't overextend yourself. These are common refrains of the business world. They are also important pieces of advice that diagnostic imaging service company Unisyn Medical Technologies, Golden, Colo, has taken to heart. Since forming in 2009 after a merger of three companies, Unisyn has grown its business by focusing on what it does best: service and repair work on ultrasound, CT, MRI, and mammography. The company is even planning to remove equipment sales from its portfolio in an effort to focus on its core service competencies. They recently sat down with Christopher M. Cone, president of the clinical services group, Unisyn Medical Technologies, to discuss Unisyn's business strategies, the future of the industry, and the new products and services from the company.

Tell me a bit about the history of Unisyn Medical.

Cone: Unisyn Medical was formed in the fall of 2009 through a merger of three diagnostic imaging companies: Sonora Medical Systems, Longmont, Colo; Echoserve, Golden, Colo; and Barrington Medical, Cary, Ill. A health care-focused private equity firm, Galen Partners, funded the acquisition and merger of those three companies and combined them into a single entity to bring it to market as Unisyn Medical Technologies.

What is Unisyn's philosophy?

Cone: The philosophy is really to seek optimal alignment with our customers, configure our service offerings with the customer's objective, and provide sustainable service solutions to our customers. We provide high-value diagnostic imaging maintenance and parts. We position ourselves as a value provider of high-quality service to diagnostic imaging equipment. What services do you offer?

Cone: Unisyn provides field service to hospitals and physician practices for MRI, ultrasound, CT, and mammography equipment. We're also the world's leading provider of replacement transducers for the ultrasound segment of diagnostic imaging.

What is your service area?

Cone: We have about 60 service engineers that are in markets nationwide. We're in about 18 or 20 major metro areas across the US, from Orlando to Seattle to Los Angeles to Boston.

What is the breakdown of revenue between service, sales, and parts/repair?

Cone: It's about two-thirds service and one-third replacement parts and repair, with the replacement part segment primarily dominated by the ultrasound transducers.

Is all of your repair work done in-house, or do you do any on-site work?

Cone: For the maintenance service agreements, we do on-site repair of the imaging equipment. For parts, we have a depot repair operation here in Golden, Colorado. We repair a lot of ultrasound probes and subsystems for the diagnostic imaging modalities that I mentioned: subsystem power supplies, detectors, boards, transmitters; the gamut of component parts used in MRI, CT, ultrasound, and mammography equipment.

What is the turnaround time on repairs?

Cone: Most customers are pursuing a replacement model. The way the model works is a customer sends in a probe for evaluation and we provide them with a loaner. The vast majority of the time the customer's probe is repairable. When it is, we allow them to keep our loaner probe and we repair the transducer they sent us and put it back to [our] inventory. Then the cycle begins again. It's really transparent to a customer what the turnaround time is because they get a replacement probe or part immediately, but our in-house operation operates between 5 and 10 business days to process a repair. But from an end user standpoint or service standpoint, they get replacement parts the next day.

The depot repair operation is constantly producing items to stock. We know what the high-value parts are, and we will provide those to our internal service organization and to external entities the next day and then repair the exchange cores that come in as part of our ongoing depot repair process.

Does this method create any problems?

Cone: There are some proprietary parts that are difficult to get. At times we are challenged to find the form-fit-function, exact part number replacement. Within FDA guidelines, you must repair parts with the same part number or with a validated equivalent. Sometimes, component parts are custom and they can be difficult to find.

What are the benefits of this process?

Cone: It's cost. If you look at the cost to repair a high-value component, whether it's a transducer—which is a large segment of what we do—or a CT generator, the cost for us to repair it and supply replacement components versus sourcing it to the OEM or aftermarket companies is much lower, so we're leveraging our depot repair option. Also, through depot repair, we can control our quality. We are an ISO 9001 and 13485 medical device registered company, so we operate on a very strict, almost manufacturing-type environment through our repair operations, and implement statistical process control, complete sets of documentation, and certified technicians. Therefore, we can be confident in the quality of our components and replacement parts.

Unisyn also has equipment sales, correct?

Cone: We do, but it's a much smaller percent of our revenue than when we originally merged the companies. We've really defocused on the sale of replacement equipment. It's a tougher market, frankly. It's not our core competency. The margins on replacement systems can be challenging, specifically in today's economic environment where you have people willing to take less margin, even the manufacturers, in order to obtain the recurring revenue associated with service maintenance and upgrades.

We weren't very good at it, either. We weren't a stocking dealer. We didn't have control over the inventory, so as part of our evolving strategy, we really want to focus on what we're good at. We're good at providing high-quality field service for the modalities that I've mentioned, and providing high-quality replacement parts and transducers. We want to focus on those core segments.

Are you planning on discontinuing refurbished sales altogether?

Cone: We've already formally exited the sale of CT and MRI, and we are in the process of exiting the sale of ultrasound equipment. So our long-term plan is to phase completely out of that business.

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