Dealer Services

WHAT SERVICES SHOULD I EXPECT FROM A HEALTH CARE DEALER? 
This article was written at the request of one of our clients.  The e-mail inquiry, which was sent to “The Boren Report”, pointed out that there is a lot of confusion as to who is and who is not a dealer.  Also, in the e-mail message the client asked about what they were paying for when they purchased from a dealer instead of purchasing factory direct. 
   
Nobody said writing my “blog” would be easy, and this is indeed a challenging question to answer.  Given that there are entire books written about how “distribution channels” function, I am going to try and answer the question in a concise and somewhat generic manner.  My goal is to provide the buyer with enough information to help determine whether or not they are getting their money’s worth when they employ a dealer. 

A BASIC DEFINITION: 
A DEALER:  A dealer is an individual or a company who purchases product from a manufacturer and then re-sells it to the end user.  The dealer’s selling price to the end user includes a “mark up” on his cost to pay for any additional “value added” services that the dealer could provide to an end user.  Some dealers will unbundle their services and allow the buyer to “shop” for only those services they need.  Other dealers will only offer a fixed package of services.  And then, there are those dealers that charge a mark up and offer the end user very little in return.  Hopefully this article will help protect you from the latter. 

You may ask me, what is confusing about this definition of a dealer?  I think people are finding the dealer relationship confusing because, in practice, some companies who operate in the health care “distribution channel” WANT it to be confusing.  On opposite ends of the distribution scale, we see well known manufacturers who are acting as dealers and well known dealers who like to appear as though they are a “factory direct” source.   No wonder there is confusion. 

To get closer to a working definition of a dealer, let’s examine and define a list of “value added” dealer services that the buyer might get with the products they buy. 

PRODUCT SPECIFICATION: 
Product specification, especially in health care equipment is CRITICAL.  Health Care is one of the most highly regulated industries in the world and answers to a matrix of Federal, State, regional and private regulators.  Errors and omissions in product specifications can lead to a host of problems.  A knowledgeable dealer should have a good grasp of these issues and help you make the right selections.  We recently worked with a facility which was making a purchase of new furniture.  The dealer (a national supplier) that they were planning to use was not aware of the California Air Resources Board standards for toxic emissions from furniture (this is a VERY real health issue) and had specified non-compliant products for this facility.  The CARB regulation went into effect in California on January 1, 2009, eight months ago.  The dealer in question was clearly out of touch with State and regional requirements.  Had the facility made the planned purchase, they would have had significant liability exposure in case of resident illness. 

Some dealers will also help the buyer with color recommendations and fabric selection or they will refer the buyer to a qualified health care designer to assist in this process.  When you think about the fact that you want your capital equipment purchases to last for seven to fifteen years, and that you will be looking at them for that long, GOOD design is a GOOD investment. 

FINANCING: 
Out of the specification frying pan and into the financing fire!  Financing is one of the benchmark services of dealers.  Manufacturers do not finance … dealers finance!  If you think you are getting financing from a factory, then one or more of three things is probably happening:  1. The factory is using a third party financier 2. The factory is actually a dealer and passing themselves off as a manufacturer 3.  You are paying a financing fee which is pocketed by the manufacturer.  When you finance through a dealer, especially a local dealer, the terms are generally more transparent and negotiable.  Always consider obtaining your financing independent of ANY third party. 

ORDERING: 
There is lots of paperwork and legal mumbo jumbo involved in placing an order, especially for capital equipment.  A knowledgeable dealer should handle this process for you and make sure you get the product you intended to buy. 

EXPEDITING: 
Expediting is the “are we there yet?” of dealer services.  Keeping track of when product is shipping, if it is shipping on schedule, checking with the factory regularly regarding the order status, and alerting the end user ahead of time that their shipment will be arriving on a given day is the expeditors’ job.  This is another valuable dealer service. 

RECEIVING: 
What do you mean you are in the “middle of survey” and you have no place to park a 75’ long truck, much less receive the shipment?  A full service dealer will receive the merchandise for you at his dock until YOU are ready to take delivery.  Also, when you take “direct shipment” you are technically responsible for freight damage once product leaves the factory (that what FOB means).  When you purchase through a dealer, the dealer assumes that responsibility for you.  Look closely at this issue anytime a dealer wants to “drop ship” product into your facility. 

INVENTORY: 
A full service dealer will immediately un-package and inspect your shipment.  The buyer has a VERY limited window to report errors, omissions and damage.  Too often the staff at a facility do not have the time to “get around to doing this inspection”, and by the time they do, it is too late.  Plus, if there is a problem with the product, that “problem” is not sitting in the middle of your facility, waiting to be resolved. 

STORAGE: 
Is your re-modeling project running behind schedule and you are not ready to take delivery?  A full service dealer will store and protect you product until you are ready to take delivery. 

ASSEMBLY: 
Does that product that arrived in the box look like an “erector set” when you opened it?  A full service dealer will have qualified staff toassemble your product for you. 

DELIVERY: 
A full service dealer will deliver your purchase to your door with trained staff and an appropriately sized vehicle. 

INSTALLATION: 
A full service dealer will install the products you have purchased using “bonded” employees who may safely enter your facility. 

REMOVAL: 
A full service dealer will have an empty truck when the installation is complete.  Most will haul away cartons and packing materials and often any old product you want to dispose of. 

CONCLUSION: 
So, how about it?  Using this article and the inclusive list of dealer services as your scale:  1. Was your most recent purchase transaction made with a manufacturer or with a manufacturer acting as a dealer or with a dealer 2. If it was a dealer, were they a full service dealer, and 3. If you are paying for dealer services, are you getting the dealer services you are paying for?????? 

And for our client who asked this question, please let me know if I have answered to your satisfaction.