Medical Equipment Resources & Consulting would like to wish everyone a Happy Thanksgiving!
It is a great time to spend with friends and family and reflect on the things we are thankful for. At MERC, we are thankful for the customers we have had the opportunity to serve, the future ones, and are looking forward to the remainder of the year’s opportunities to bring value to the healthcare marketplace.
Have a wonderful and safe holiday!
Often times liquidating medical equipment and other assets can be a complex and confusing process. Much of the value that is received for the item depends on what kind of transaction is taking place. There are definite differences between these variables and must be understood to fully get a grasp on what it means to liquidate assets. Hopefully the brief explanation below can help your organization better understand the liquidation marketplace.
Fair Market Value (FMV) is the market value of an asset based on a transaction between two willing and unpressured parties. This doesn’t factor in needing to sell an item on a deadline or the factors that often include a medical equipment sale like de-installation and re-installation. This value is best utilized on a peer-to-peer sale when the seller is selling the item(s) to a buyer who will keep them in their current location. This would most likely be the case when a hospital system or healthcare management firm purchases the assets of a particular doctor or center that will keep them in use at their current location. A value based upon this type of transactions will reflect higher values because the items are bought where they are being used and taken care of.
On the other hand, Orderly Liquidation Value (OLV) is when assets are being sold outside of the peer-to-peer relationship and instead sold in a specific time period. This is most common when an asset is sold to a refurbisher or medical equipment buyer on the secondary market. OLV then factors the costs involved in the possible de-installation of the items (if necessary), certifying, refurbishing, warehousing, and marketing costs for re-sale. When all of these potential costs are factored in, the seller has to realize the value will be a reflection of these costs and likely be less than an FMV. These sales are typical when a facility has no more use of the asset (due to new technology purchase, etc.) and when items come back from leases or are repossessed due to default in payment. These items then have to be put through several cost inducing steps that are then factored into the OLV.
As you can see, FMV and OLV are two separate valuations, but both essential in understanding expectations. We hope that the brief summation of the differences in valuations above can help your organization better understand what is realistic in the type of sale/purchase that they are embarking upon. MERC can help your organization with these types of transactions and help provide both Fair Market Valuations and Orderly Liquidation Values. Contact us with any questions or inquiries, we’d enjoy helping you in any way possible!
Liquidating a piece or group of medical equipment can be a complex task. That is why it is best to work with someone who understands the complexities and has the experience to put the pieces together to make it happen. Each liquidation is dynamic in the sense that it depends on the purpose and speed of which the medical equipment or other assets need to be sold and moved. Understanding these circumstances and bringing about the best possible solution is what MERC brings to the table.
There are basically two extremes in liquidating an asset. On one side, you have the seller that is still using the item, but is nonchalantly seeking offers for the device(s) to see what the market might bring. On the other hand, you have the seller who needs to move their device(s) in a hurry for financial reasons. Both are trying to sell, but as you can imagine, bot have very different needs. Because of the different needs they have, desired outcomes must be adjusted. The seller who is actively using the piece of equipment and taking their time to test the market is probably looking for top dollar. The other seller on the contrary is looking to sell the equipment quickly to meet a financial objective. In either case, working with the seller to bring about the best solution is what is needed and why MERC prides itself in a custom-fit approach to our customers. In either case, a consultant has to be flexible to understand the dynamics of the issue and help bring the seller qualified buyers that fit their desired results. We not only understand these situations, but know how to bring the right solutions to them.
MERC also prides itself on being an advocate to the sale, not just trying to maximize our own revenues. For example, within the past year, MERC worked to help a surgery center close out its current location and move to its newer, larger facility. In this process, there was a desire to sell surplus items that were going to be replaced by newer items in the new location. MERC brought bona fide offers to the table to help liquidate the items giving the selling surgery center a baseline number for their assets. The selling surgery center had previous relationships with a used equipment buyer who also provided an offer. When it was found that both offers were fair and similar in price, the selling facility chose to go with their previous relationship to buy the equipment. Because MERC worked as an advocate for the facility to provide buyers to the project, it helped bring about the sale of the equipment even though it was not a buyer MERC brought to the table.
Understanding how to bring a solution to the desire to sell medical equipment is critical to our customers. As explained, MERC not only can develop offers to help facilitate a sale, but also in that can drive sales by creating competition from the bona fide offers we obtain from buyers. This is another way we bring value and service to our customers in a tailored approach. Feel free to contact us if you have any questions or would like any more information on how we can help your organization or facility with it’s liquidation needs.
At MERC we define “liquidation” of assets as when they are sold, disposed of, or donated. There are many ways and avenues to liquidate medical equipment and assets, but getting a trusted resource is crucial to help your organization maximize value, time, and a need based solution. The following are considerations for selecting a medical equipment consultant to support your liquidation to fit needs:
Look for a consultant that is willing to build a solution to fit your needs. Sometimes companies are so “cookie cutter” in their approach that they forget they are providing a service to their customer. Look for a reasonable approach that fits into your budget, timing, and organizational needs and objectives. A consultant is willing to customize a solution for your organization rather than force a one-size-fits-all approach.
Integrated – Getting your medical equipment consultant integrated into the timing of your liquidation enables greater success. The knowledge of when devices become available is as important as what devices are becoming available for liquidation. A consultant tuned into timing and availability will be better able to meet your goals of selling or donating medical equipment.
Methodology – Your consultant’s approach to selling or donating equipment is going to be developed after they are fully informed of your needs and then can develop a sales strategy by leveraging selling tactics and industry connections to get your equipment sold for the best price consistent with your timelines.
It is natural to expect or hope for a windfall when selling your equipment; however, your equipment is subject to market influences similar to selling any other used asset. Sometimes you get more than expected – sometimes you don’t. Work with an equipment consultant that will help you set realistic expectations considering the equipment to be sold and the timeline for selling.
Find a medical equipment consultant to handle your liquidation that is straightforward and honest. Insist on tracking and documentation. Work with a consultant who is there to provide you a solution that will create value and is mutually beneficial to both parties.
We at MERC perform a condition assessment, “assessment” for short. A medical equipment or asset assessment is when the subject item is given a visual evaluation based upon its wear and tear, condition, state of technology, and vintage. The assessment gives an indication of the ongoing usability and contributes to establishing value of the subject equipment. Below are some points to help better understand the assessment process and their importance:
Judge the Book by its Cover
Many times we are discouraged to evaluate something by its outward appearance, but much can be learned about an asset by looking closely. If a piece of equipment looks new and lightly used, there is a good likelihood it hasn’t received much use. This is fairly obvious with a newer piece of equipment, but tells a different story with an older piece of equipment, a story that may warrant further investigation to fully comprehend. The flipside is also true, with a caveat. If the item has received a great deal of use it is typical to see significant wear and tear. The caveat is that the item is may be very reliable and provides excellent utility to care givers, and has “earned” the observed wear and tear.
Technology Moves Fast
Just like other technologies such as computers and personal entertainment devices, medical equipment changes quickly. Sometimes an item may look new or seem to be in very good condition, but it is rapidly becoming obsolete or behind the times in terms of patient care. Assessing medical equipment with consideration of technology requires a current understanding of technological advancements in the specific modality, placed within the context of the venue of care and the industry.
Rate it with Meaning
Without a defined rating system, the assessment is just guessing and inconsistent. When assessing assets, developing a standard scale and rating definition is highly recommended. This helps a facility or organization place the asset within the population of assets in the proper perspective of ongoing value and usability.
Assessing assets based upon a singular perspective (financial, technical or clinical) is not recommended. Understanding ongoing industry acceptance, usability, state of technology, plus overall condition is vitally important to a useful assessment.