Decade-old Topline Medical, Fargo, ND, furnishes hospitals, ambulatory surgery centers, and clinics with preowned, reconditioned critical care equipment that performs the lion's share of delivering daily patient care. The company stocks more than $2 million in parts and equipment inventory, including patient monitors, defibrillators, ECG machines, ultrasound units, probes, and parts from most major manufacturers. It also maintains more than four quality-assurance bays and employs five dedicated technical engineers. 24x7 recently asked Neil Little, the company's sales manager, for a snapshot of the marketplace and a bead on what lies ahead.

24x7: What is your history with the company?

Neil Little

Little: Dan Bye, Owen LaRue, and I started Topline Medical in late 1998. As I look back, it is very satisfying to know that we have developed a reputation for reliability and excellent customer service.

24x7: Have your customers' needs changed much over the past 10 years?

Little: Over time, hospital administration has become more open to the idea of purchasing quality, refurbished equipment. This really has become an asset-management tool by bridging to the next budget and providing equipment add-ons at good value with the availability of parts to help prolong equipment life cycles. Ten years ago, most of our customers were smaller institutions. Now, times have changed—our customer base includes some of the largest hospitals in the United States.

24x7: What is your company's niche?

Little: Patient monitoring, including anesthesia and fetal monitors, defibrillators, EKG, ultrasound, and parts for most of these products.

24x7: What can a hospital do when an OEM halts production on an existing line?

Little: There are various stages in the equipment life cycle, and sometimes this doesn't match up with a facility's clinical needs and budget cycles. As a certain model approaches end of manufacture and afterward, it makes sense to consider purchasing reconditioned, used equipment. The item can be placed on the facility depreciation schedule at a lower-acquisition cost, allowing a category of equipment to approach zero-net-book values simultaneously. In addition to the value provided by lower costs, there is an asset-management issue. Often, new equipment and systems are budgeted for a year or 2 down the road, but clinicians have current needs. A purchase of good, reconditioned equipment may be used as a bridge to make it to the next budget cycle when the purchase of new equipment will occur.

24x7: As facilities tighten their belts, are they relying on you more for parts and/or refurbished devices?

Little: Not only are hospitals relying on us for parts and devices, hospitals are now asking for entire monitoring systems that match their install base. This will allow them to stretch their monitoring investment until such a time that they can do a whole-house update. As the option of quality, refurbished equipment has become more accepted, biomedical departments, over time, have had good experiences sourcing parts from us. These customers continue to contact us for ongoing parts support. Any individual part might keep a piece of older equipment operating versus, literally, disposing of it. This creates great value for the facility.

24x7: Can you describe your inventory?

Little: We have an extensive inventory of units and parts for the major manufacturers, including Philips, Hewlett Packard, GE, Marquette, Spacelabs, Datascope, and others.

24x7: Are you noticing any trends among customers, or with large facilities versus small ones?

Little: Regardless of the size of the institution, they all have equipment budgets to maintain. The size of the hospital does not change the need for low-cost, quality equipment.

24x7: Are you a preferred trading partner for any lines?

Little: We are a trade-in partner with Philips Medical Systems for both monitoring and ultrasound equipment. We also work closely with other manufacturers. It says a lot about our company. Manufacturers have little time for irresponsible partners or a company that does not represent them well.

24x7: Is there anything else you would like to add?

Little: There are many very good providers of used equipment, but anyone reading 24x7 magazine knows that purchasing used equipment can be a "buyer beware" world. We are committed to customer service that is safe to deal with.

24x7: Tell us about any operational improvements you have made.

Little: Responding to parts requests for generations of equipment from various manufacturers is daunting, to say the least. Communication is critical—we now have very experienced biomeds handling our parts request lines. Our customers appreciate talking ear to ear with someone that can help identify their problem and/or define the part they need.

24x7: You are known as a gold mine for hard-to-find parts. What percentage of your business is in parts sales?

Little: Parts sales are about a fourth of our revenue.

24x7: Do you plan to expand that side of the business?

Little: Yes, but very carefully. We want to ensure we maintain our current level of customer service.

24x7: What is the background of your customer service staff members?

Little: Our people that have direct contact with customers average over 20 years of experience with the type of products that we provide.

24x7: How has your company grown?

Little: We have more than tripled our business in the last 5 years.

24x7: How have you accomplished that?

Little: We have built our business on a solid reputation of quality products and excellent customer service.

24x7: How is the industry changing?

Little: We see the health care IT infrastructure changing and growing. Patient monitoring systems are being integrated into health care IT systems, and biomeds are working more closely with IT. For lower- to mid-acuity products, we see equipment from foreign countries with improved patient information and reliability at very low price points.

24x7: How does that affect your business?

Little: Our business will follow the industry trends. We will need to continually update our knowledge base to allow us to serve the biomedical community. A good portion of our growth has been into the hospital market versus the subacute or alternative care sector, which may not be what you might expect to hear. Our knowledge and experience just seems to steer us in that direction.

24x7: What is the biggest challenge for your company right now?

Little: As remarketers, we are followers, not leaders, as far as technology is concerned. We need to have a mountain of product knowledge to be competent in what we do on a daily basis now. To stay current with new OEM technology and markets is challenging, although strategically critical to our future success. We want to identify services that we can provide that will present solutions for our customers, at good values—and that we do very well.

24x7: What distinguishes you from the competition?

Little: We are very fortunate to have dedicated employees with extensive experience who care about the customer. We do what we say, and this translates into satisfied customers. In 2003, Topline was acquired by DMS Health Group, an operating company of Otter Tail Corp, where stock trades are on the NASDAQ Global Select Market under the symbol OTTR. We are financially stable and comply with the Otter Tail code-of-conduct principles and all regulations required for a health care company that completes Medicare billings.

Judy O'Rourke is associate editor of 24x7. Contact her at .