Medical Equipment Continues to Age in the United States

Anyone trying to buy or sell a car knows that they’re entering a market unlike any other. According to a recent article in the Wall Street Journal, the average age of vehicles on U.S. roadways has hit an all-time record of 12.2 years, for reasons that many car owners are familiar with:

1. Quality has improved and cars are lasting longer.
2. Car prices are up due to chip shortages, lack of inventory, and other global supply chain disruptions.

As a medical equipment provider, we asked ourselves whether the same was true for large capital medical equipment systems in the United States. We looked at our proprietary databases of hundreds of systems for sale at any given time across four modalities:  CT Scanners, MRI Systems, Linear Accelerators and PET/CT Systems. We found the following trends:

CT Scanners

Contrary to what we expected, the average age of CT scanners being sold in the U.S. is nearly unchanged over the past four years, bucking the trend of the other modalities (MRI, linac, and PET/CT) that we reviewed. It has remained fairly constant at 12 years. In other words, if a CT scanner is being removed and re-sold in 2022, it’s likely around 12 years old (manufactured in 2010). CT Scanners were heavily used during the pandemic, unlike the other modalities surveyed, which often were used less as patients fearing covid postponed regular imaging and therapy treatments.

MRI

MRI systems have aged slightly. The average age of a used MRI system being removed or sold in the U.S. today (in 2022) is 14 years (manufactured in 2008), as opposed to 13 years in 2020.  This is consistent with the pattern for used automobiles and other equipment systems.  Hospital budgets shifted to Covid-fighting tools, and many MRI replacements were likely postponed during the pandemic.

Linear Accelerators

Linear accelerators took quite a leap from 2021 to 2022, with an average age of 12 years in 2021 and 14 years in 2022. Perhaps delays in manufacturing are contributing to this, or perhaps it is that newer technologies have not been developed to displace existing products. But the likely contributor may have been hospital budgets being diverted to fighting covid, and patients staying home during covid and postponing their cancer treatments.

PET/CT Scanners

PET/CT scanners have shown the biggest increase in age in the U.S. since 2019, spiking from 11 years in 2020 to 14 years in 2022. However, there are fewer PET/CTs on the market than the other modalities surveyed, so the sample size is smaller.

Parallels to the Car Market

The Wall Street Journal explained that for used vehicles, “you can’t find a replacement for a reasonable cost.” We see this same trend in the capital medical equipment market. With the cost of new cars rising, combined with the lack of availability and personal choice, individuals are deciding to keep their cars longer and longer. The medical equipment space is no different. Hospitals and clinics are choosing to keep their current equipment longer. And when they do replace their systems, they often choose used equipment over new.

A recent Dotmed article explains how CT Scanner prices are up as much as 40% vs. pre-pandemic levels, with delays in sourcing new equipment, much like the automobile market.

However, older machines do not last forever, and these machines eventually will need to be replaced. We expect that with the resolution of global supply chain problems, many facilities will be eager to replace their aging systems. With nearly 14,000 CT scanners, 12,000 MRI , 4,500 linear accelerators, and 2,500 PET/CT scanners currently active in the U.S. market, this could spell good news for medical equipment sales in the coming years and for third-party service companies that tend to maintain older/aging equipment.

Looking Ahead

It’s hard to say, given the current economic climate, if the equipment replacement cycle will revert back to pre-covid levels anytime soon.  With rising interest rates, equipment will become more expensive to lease and finance.  With inflation, equipment will become more expensive to service, as labor costs and parts costs increase.  Higher costs will likely shrink demand and may impede the more frequent replacement of used systems.  We may see the 2022 average age figures stick around a little longer.

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