As Hospitals Seek to Control Costs, Soma Tech’s Refurbished Medical Equipment Business Booms

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As hospitals, doctors’ offices and other healthcare providers continue to come under pressure to control or even reduce costs, many are increasingly turning to the refurbished medical equipment market to save on some of their purchases. the most expensive.

It’s been a boon for Bloomfield-based Soma Tech International, which sells refurbished medical equipment to healthcare facilities around the world, including Connecticut’s largest healthcare systems like Yale New Haven Health, Hartford HealthCare and Trinity Health of New England.

The demand has been so intense in recent years – amid the pandemic and cries in Connecticut and nationwide for the healthcare system to better control costs, including through purchases of medical equipment that can carry multimillion-dollar price tags – that Soma Tech’s revenue has grown nearly 2,000% over the past three years, placing the company at No. 283 on Inc. magazine’s recently published list of 5,000 America’s fastest growing private companies.

The $40 million company with around 100 employees across four locations (Bloomfield, New Britain, East Hartford and Cheshire) has also increased its workforce and constructed a new 60,000 square foot building next to its headquarters which will will debut next year and be used for engineering, sales, operations and warehouse storage.

Peter Leonidas, who founded the company in 1992 and still leads it as president and CEO, said he has seen an increase in business from recent partnerships with major hospital chains and growth in the International market.

By purchasing refurbished medical equipment (that meets strict safety and quality standards), individual hospitals can save millions of dollars a year on items ranging from defibrillators to anesthesia machines, incubators and even surgical tables, Leonidas said.

And it’s tapped into a market that’s expected to grow at an annual rate of 12% to reach $18 billion by 2026, according to Medi-Tech Insights, a business research firm.

“The demand for this equipment is at a very high level,” Leonidas said. “We have and continue to expand beyond physicians’ offices and outpatient surgery centers and expand into hospital chains because we offer something of value at an affordable price that is in high demand.”

Pandemic outbreak

Leonidas, who grew up in Greece and lives in West Hartford, earned an electrical engineering degree from UConn and an MBA from Rensselaer Polytechnic Institute.

He started Soma in the early 1990s and his first client was New York City Emergency Medical Services (EMS). He sold refurbished defibrillators to the agency for $4,900 each that he bought wholesale on the open market for $2,000 each.

Today, Soma Tech’s business model involves buying (from hospitals, leasing companies, banks, equipment manufacturers, and through its own buying office), discounting new and then the resale of medical equipment to various healthcare providers.

“We also offer long-term service contracts and guarantee five-year parts support for everything we sell,” Leonidas said.

The equipment Soma receives comes in a variety of conditions – from worn and heavily used to nearly new.

Each item is thoroughly tested before it can be certified patient-ready, he said, including by Soma’s in-house biomedical engineering team. Hospitals and other healthcare providers have their own testing protocols before the equipment is used on patients, he said.

The global health pandemic has been a tailwind for Soma.

At the height of the pandemic, there was demand for ventilators, infusion pumps, patient monitors and oxygen therapy devices, Leonidas said, as the US healthcare system faced significant shortages. supply.

“The pandemic has accelerated the acceptance of refurbished equipment in large healthcare systems,” he said. “It opened new doors for our business.”

Key to Soma’s recent growth has been forging partnerships beyond physician offices to work with some of the largest hospital chains in the state, nation and world. The practice’s thousands of clients include the renowned Cleveland Clinic and Johns Hopkins University in Baltimore.

“We’ve partnered with the bluest of blue chip companies,” Leonidas said, noting that the volume of transactions with these outfits has increased every year, increasing the company’s revenue.

Leonidas said his long-term goals include opening regional offices in the southwest of the country.

Soma also has a sister company in Seattle called STSurg that specializes in sterile processing units.

Budget savings

One of Soma’s key value propositions for customers is cost reduction, Leonidas said.

For example, Soma Tech offers refurbished surgical microscopes — which can sell new for $280,000 — for $150,000. A new C-Arm medical imaging device may cost $180,000; Soma sells a used one for $75,000, he said.

Medical supplies make up about 20% of hospital spending, according to the American Hospital Association. And, according to a 2018 study published in the National Center for Biotechnology Information, the United States spends about $200 billion a year on medical devices.

As hospitals seek to better control these costs, they are being forced to take a closer look at their supply chains and budgets for medical equipment, experts said.

Hartford HealthCare is a long-time customer of Soma Tech.

Amato DeRosa has been HHC’s point person in Soma’s treatment for more than two decades. DeRosa, system manager of informatics and biomedical engineering, said HHC purchases between 10 and 100 devices a year from Bloomfield, ranging from vital signs monitors to electrosurgical units.

The equipment goes through HHC’s rigorous training and inspection process for safety issues, DeRosa said.

“They continue to be one of our go-to vendors when looking for refurbished medical equipment,” said DeRosa, who declined to comment on how much the health care system has saved from its refurbished medical equipment purchases. new.

Paul Monckton, a clinical engineering technician with Yale New Haven Health, said Yale will often purchase products from Soma with savings of at least 50%. He said the hospital chain easily saves “hundreds of thousands of dollars a year, if not more” by working with Soma.

Leonidas said he expects demand for his company’s products to continue to grow as he expands his customer base and more healthcare providers look for ways to control costs.

“We formed the company to make health care more affordable,” he said.

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