Learn what to expect when opening your own ISO from those who know from experience.

Of all those who actually think of starting a biomedical service business, only a small portion actually take the risk, knowing that the odds are against them for the first few years, at least. Many are realistic, and many are optimistic. Whatever the reasons for beginning their business, most are happy for the experience and the independence business ownership brings.

C. Wayne Hibbs, CCE, a health care technical consultant and owner of Hibbs & Associates (Dallas), explains that there are three types of people who start independent service organizations (ISOs): vendor-educated service people; those who got a biomedical or electronics degree from a technical school and have worked in hospital biomed departments; and those who were trained on biomedical repair in the military and then opened a business after they were discharged.

In the early 1990s, larger companies bought out many of the smallest ISOs in order to eliminate any potential competition. Hibbs says that he is now waiting for the next crop of small ISOs to grow and be bought out.

Reasons for Start-Ups Vary
“I decided early on that what the business of health care technology really needed was a company that put the client and the patient first. From my experience of more than 15 years in the field of biomedical services, it just wasn’t happening out there in the field on a consistent basis,” explains Sue Finney, CBET, owner of Advanced Clinical Technology (ACT) Services LLC (Oakdale, Minn).

Keith L. Kimble, director of Biomed Technologies, Lake Hopatcong, NJ.

In 1988, Keith L. Kimble, director of Biomed Technologies (Lake Hopatcong, NJ), also started his company when he saw a lack of customer service.

“The driving force behind the decision, aside from the fact that I have always wanted to do this, was that I had seen the level of customer service deteriorate over the years,” he says. “There was a need for a proactive approach to providing biomedical services to non–hospital-based medical equipment.”

BioMedical Solutions Inc (Belgium, Wis), was begun 3 years ago in response to a need for timely and competent medical equipment service for rural facilities as well as doctors’ offices and the growing number of outpatient facilities, according to owner and founder Chris Becks, CBET.

Dennis Maiocchi, co-owner of 5 Star Imaging (Odessa, Fla) says, “A lot of different companies offer services similar to ours—reloading image intensifier tubes and x-ray/CT tubes and customization of tubes—but we offer engineering services that others don’t. We have the expertise to help the biomedical service engineer install tubes if they have problems with the tubes we sell.”

Business Is Booming
“We have developed an excellent reputation in the northern New Jersey and New York City metropolitan area,” says Kimble. “Today I have three full-time biomeds—one is exclusively anesthesia service—and one full-time office manager. By the end of 2004, I will be hiring two more biomeds, one exclusively for anesthesia.”

According to Maiocchi, 5 Star Imaging, which started up on January 1, is enjoying a $1.4 million run sales rate.

“If we continue our run sales rate, we will have a very healthy first year, and I think that’s a great success,” he says.

Midwest Biomedical Services (Madison, Wis) has grown about 10% per year, says company director Gary Haefer, CBET, who admits that he didn’t have any specific growth expectations or goals for his company.

“We are pretty diversified. We do biomed work for smaller hospitals without a biomed staff, and we lend a tech to help out bigger hospitals with special projects or temporary assignments,” he says. “The Medical Equipment Repair Association (MERA) represents us to manufacturers for installation and repair. A lot of companies can’t get [biomed] service unless they use a service like MERA. A lot of manufacturers contract out warranty repair work through MERA.”

BioMedical Solutions provides services to more than 60 health care facilities in the Midwest and a growing segment in Florida and Georgia, says Becks.

“We specialize in providing custom solutions to our customers ranging from staffing, temp or long term, to service on audiometers, lasers, sterilizers, surgical instruments, and general biomedical equipment repairs,” he explains. “Additionally, we distribute a variety of medical products. We will find a service solution, even if we are unable to provide the service ourselves. Currently, we have fewer than 10 employees.”

Finney’s ACT has six employees. She credits the 3-year-old company’s success to employee training and education.

“One of my responsibilities as a good manager is to help the people I hire fully understand that they should constantly [drive] themselves to excel through learning and put into practice what they have learned,” says Finney. “ACT Services has a tuition-paid policy and whether it is manufacturer related, or personal development related, the company pays for the course. I simply ask that the knowledge be applied.”

Geoffrey Smith, CBET, is the sole technician at GTS Equipment Solutions LLC (Oshkosh, Wis), the company he founded.

“I have trained a couple of people on the job to assist me in projects requiring more than one person, but the business is still small enough that I can handle the work load. In the future I am planning on fully training the two people I have working for me so I can market and expand my business contacts. I don’t specialize, and I service dental clinics and small facilities not directly related to my main employer. I deal with a plastic surgeon, too, so I do specialize in the microdermabrasion machines and sterilization equipment,” states Smith, who holds a full-time job as a hospital biomedical engineering tech.

Tales of Success—and Failure
“I have enjoyed many successes and many failures,” says Smith. “I have expanded the scope of my business from simple repairs, preventive maintenance, and calibrations to also acquiring medical equipment and refurbishing it for resale, acquiring equipment for my clients when they decide to expand, and also dealing with the contractors in power requirements, etc. There are many failures, in losing capital on poorly conditioned equipment, clinics deciding not to expand, and having equipment with no buyer. Successes are now being able to use capital at the end of the year to purchase business programs, a handheld computer, a printer, and some necessary office equipment needed for more professional flyers and business cards. Future purchases will include more test equipment and tools. Many times, tools do not last as long as needed and require replacement.”

The early 1990s were a difficult time for Biomed Technologies, says Kimble. His customers, which were mainly small hospitals, merged with larger hospitals, shrinking the company’s potential customer base.

“There were only a few surgery centers in the area. After speaking with some of them, I identified a need,” explains Kimble. “The staff [at the surgery centers], which had just come from a local hospital, was used to having other departments, such as biomedical and maintenance, readily available to provide support services. I felt that if [I were] positioned correctly, this could be a good opportunity. Today, Biomed Technologies provides biomedical services to approximately 60 surgery centers.”

Finney credits ACT’s relationship with customers for its success.

“We mold and flex our service to the needs of our clients,” she explains. “In a profession that is sometimes accused of deceptive practices and overbilling, ACT can be depended upon to always and in every respect be honest in all our dealings. ACT Services’ focus is on building and strengthening client relationships. These professional relationships are built on a foundation of mutual trust, respect, and honesty.”

Returning customers are the key to success for Becks and his company.

“One of our many successes has been retaining all of our customers as repeat or long-term customers. We have not lost a customer to date. We take pride in our ability to ensure that their needs are met with timely and competent service and communication. Our last 10 new customers have all [come to us] through referrals from our existing customers,” he says. “Not having a marketing background, I was overly optimistic at first and thought that by merely getting our name out there customers would start knocking on the door. After a couple of slow months, I turned my focus to marketing and, more important, to finding our customers’ needs and understanding their decision process for buying services. Since then, we have enjoyed steady growth, which allows us to now build strategic growth plans.”

The need to hire more employees is a sure sign of growth and success, according to Haefer. He also credits his success to satisfaction from owning a business, although personal financial success is usually delayed for a business owner who needs to invest his or her earnings back into the business.

“I work a lot of hours,” says Haefer. “There is competition everywhere, from hospitals to national teams to others that start their own company out of their garage, which means they have a lower overhead so they can bid lower than I can.”

Advice From the Trenches
Maiocchi tells new biomedical business owners, “Don’t stray from your company vision. Stick with your business plan.” He cites cash flow as the biggest pitfall for a small business.

“I would work diligently to get funding from banks to expand product lines,” says Maiocchi.

Finney recalls that one big challenge was hiring the right employees.

“One of the challenges every business finds difficult is to find experienced talent and then match that talent with specific responsibilities [thereby creating] a mix of personalities and talents matched to the needs of the organization and the clients/patients it serves,” she explains.

Prepare a realistic business plan and review it regularly, advises Kimble.

“Be sure that you are fully capitalized. In the beginning there is a lot of money flowing out and not much coming back in,” he says. “Having moved to New Jersey only a year before starting the business, I did not know my market as well as I could have. I could have prepared a better business plan.”

Smith advises people to anticipate the supplies they will need and stock a small variety of them to start with.

“I would have done complete inventories of the equipment I would be servicing and would have purchased the O-ring kits, different tubing sizes, and various nuts and bolts prior to having an emergency repair and paying extraordinary fees for overnight shipping. Sometimes that is not avoidable, but in many cases it is if you do the proper research and maybe keep on hand the high-replace or used items needed,” advises Smith.

Haefer recommends having a lot of capital to get started in business, and having the knowledge and/or experience to anticipate your overhead expenses and costs.

“I would have had more cash when I started my business,” he says. “I didn’t have a lot of money for overhead expenses, which put limits on what I could do. People don’t pay their bills on time, so you need money to meet payroll and keep the business going.”

Smith admits that his business expectations were nonexistent when he began GTS, but he learned quickly.

“When I first started Den-tek Inc [his first company, which serviced only dental clinics] with a coworker—I will be honest—it was so he and I would have enough capital to be able to play golf whenever we wanted. Honestly, we went in with very few expectations. We wanted to be able to provide a service to people in the area and make some money on the side at the same time. The business expanded, mostly by word of mouth, in a [way] only to be described as an explosion. I found my first client, and, within 3 months, I had 10 clients. We went from $300 profit our first year to more than $13,000 our next year. Now, as a caveat, most businesses will not expand that rapidly,” Smith says. “I laugh when I hear people say how they are going to own their own company someday and take vacations whenever they want. Remember, for the first 3 years, you are married to your business. You don’t take vacations, and you work harder than you thought you would have to work.”

Thorns Among the Roses
“I may not be painting a rosy picture of business ownership, but I want people to be prepared,” says Smith. “Owning your own business can also be one of the most inspirational, liberating experiences you’ve had. It will push you to break out of your shell, if you are shy or introverted. It will give you confidence, and you may find a network of people out there you never before knew existed. It will be tiring and stressful. If you have a family, and you are already feeling overworked, do not open your own business until you alleviate some of your stress or responsibilities. Having a business is the greatest thing to have; but if you are opening a business on top of a full plate, it will not be a pleasant experience at all.”

Becks agrees that starting his own business has been both an exciting challenge and a learning process.

“I feel that I have a better understanding of the service industry now that I have experienced all of the aspects of running a company rather that performing PMs and repairs or working for health care facility or ISO. It has been a tremendous learning experience with many ups and downs. I did not anticipate the amount of detail and continual follow-up that needs to be done for every task, such as moving the company, hiring employees, and ensuring customer satisfaction,” he says.

Finney looks at her business venture as “a great and healthy challenge.”

“I am personally, as are the members of the ACT ‘family,’ enjoying the new business and personal relationships we are making and nurturing. As a team, we are working hard to earn the trust placed in us and in the skills we have worked hard to attain, hone, and practice. [It] has been and continues to be most rewarding,” she says.

The Future of Small ISOs
“A lot of medical equipment is becoming disposable,” says Hibbs. “Instead of fixing the equipment, hospitals will just buy the newest version. The ISOs that survive long-term are going to make the evolution from biomed repair to software interface. They will interface the new equipment with the existing equipment and the information systems. I think there’s a tremendous opportunity for biomed techs to learn the software side of their business and the electronics side of it.”

Hibbs is still optimistic about the future of ISOs and biomedical engineering, despite the dramatic changes he sees coming in the next 5 to 10 years. He believes that techs will be flexible enough to take advantage of new opportunities that the changes will bring. “As one door closes, another door opens,” he states.

Despite the ups and downs, the long hours, lack of vacation, cash-flow problems, and all the other “little” problems that are encountered in the course of a new business start-up, most entrepreneurs hang in there as long as the work is there and business is growing.

Laura Gater is a contributing writer for 24x7.