Warranties and Service Plans

Most new equipment purchases come with a 1 to 2 year warranty, and used equipment usually come with 0 to 1 year. Unless you were delivered a lemon, you will most likely never need that warranty. In my case, as discussed in Zeiss-Hole, my Humphrey visual field was the only unit that broke down early on. After your initial warranty expires, most companies will push you hard to purchase an extended warranty and/or service plan. Almost always, you should pass. This is another one of those marketing tactics that exploit fear and what if’s. There’s a reason why companies aggressively try to sell you these products: because they are cash cows!

I’m not saying that you should blindly reject all offers though. You should still look at the proposal, and evaluate if it makes sense. Most of the time, it does not. The typical extended warranty generally covers all wear and tear servicing issues, including parts and labor. If your machine is unsalvageable, the vendor will replace it with a brand new unit. They also provide you with an immediate loaner while your machine gets repaired. I’m not 100% certain, but I would also imagine that you might get priority scheduling as well. Finally, you usually get a free annual tune up.

Having said all that, you should expect to pay about 5% of the equipment’s sales price per year. So, for my Cirrus 4000 OCT, I remotely recall that Zeiss wanted $4,000 a year (purchased for $70,000 new). I just couldn’t mathematically justify paying that much money when the possibility of nothing happening was so high. If I had purchased a service plan for all my equipment, I would have had to wave goodbye to $15,000 a year. I had hoped that any solid equipment manufacturer would not sell an item that tends to breakdown easily within 3 to 4 years. That would definitely tarnish their brand and reputation. Hence the main reason to get an extended warranty would be for that unlikely “just in case something unlucky and bad happens” scenario.

To justify spending $4,000 a year for a $70,000 item, there has to be a 5.7% chance ($4,000/$70,000) that the my OCT is going to die, and need complete replacement. At year 2 or 3, I HIGHLY doubt that any machine will explode or drop dead. At year 8 or 9, the possibility is obviously higher, and just might be worth purchasing the service plan. Other than the off chance that the unit completely dies, I just couldn’t see too many scenarios where the cost of repair would be more than $4,000 for any given malfunction. So, I chose to go completely bare on all my equipment.

Fast forward 7 years: aside from my initial visual field issue, I only had to call for service twice, of which both were in the past 2 years. First, my Cirrus OCT software stopped running. On startup, I would just get an error message saying that there was a problem initializing the program. It turned out that there was an issue with the hard drive and the anterior segment OCT spring. It took about a week for a technician to come to my office. He replaced my hard drive and the spring for $2,500. Thankfully, while I was waiting for my service appointment, I was still able to  run the OCT by reinstalling the Cirrus program every single time at startup. Eventually, I just stopped shutting it down at the end of the day, and kept the thing running 24/7. Although a few kinks still remain, it gets the job done. I just have to manually center the image marker around the macula or optic nerve, and the signal strength isn’t as good as it used to be. Given that it’s been 7 years, I’m just hoping that I can get another 2 years out of this machine.

My IOL master also broke down last year. Once again, it just stopped starting up one day. I had to restart the unit maybe 10 times before I was finally able to get it to run properly. So, I just stopped shutting down this machine as well. Unfortunately, there was a power outage in my building one day, and it never rebooted properly afterwards. While I was waiting for my IOL master to get fixed, I just took my patients to a neighboring practice or just had them wait. It was another hard drive issue, and it cost me $900 to get it replaced.

I also had a few other minor issues with my B-scan, A-scan, and pachymeter probes. All the transistors needed to be replaced after 4 or 5 years. It cost me about $800 or so in total. I mailed the probes in, and it took about 2 to 4 weeks to get them back.

As you can see, I’ve been fortunate enough to have had no major break downs. In total, I spent under $5,000 in 7 years in repairs. If I had purchased every service plan during this time period, I would be out over an extra $100,000 today. Of course, I didn’t have the peace of mind, but I also really didn’t think the chance of any devastating malfunction happening was very high. It’s a gamble, but I just couldn’t justify shelling out a third of my entire purchase price, over the average expected lifespan of any piece of equipment, just to feel safe. Even if you take into consideration the lost revenue from not having a loaner while your equipment gets repaired, I still don’t think it’s worth paying the exorbitant costs of a service plan. And if you absolutely need some sort of diagnostic test done ASAP, you can either send them to a neighboring practice, refer them out, or take them to an ASC or hospital (for lasers).

5 thoughts on “Warranties and Service Plans

  1. Maybe it’s the cost of the device but in a LASIK practice I think going without a service plan on an Excimer/Femto and Corneal scanner/Wave scan unit is a false economy. With a service plan you get responsive priority service over someone without a plan and the retail labor rate is approximately $300+/hr + retail parts cost, the laser head or optics can run $70,000-$100,000 just in parts. So It’s possible to spend $1,500-$2,000 just to troubleshoot and then if an expensive repair is needed then they may require 50% payment just to order parts. Also not being able to perform surgery at a scheduled time(when many people have planned their time off in order to have the surgery is a non-starter and the inability to accurately tell patients when they will be rescheduled is problematic) and also the loss of revenue and when they can service your non-covered unit puts your operation at a disadvantage at a minimum and open you up to mid 5-6 figure loss in revenue. The cost to cover the excimer and Femto is $36,000/each per year after the 1 year warranty on a new unit and the VARIO scan is $3,000/yr after 1 year warranty.
    I think the only way go without coverage is if you have a multi-location practice where they can send patients to the other office while waiting an indeterminate amount of time for service and you have deep enough pockets (setting aside revenue each month) to self insure for the inevitable breakdown in the excimer bed, excimer, Femto or Vsrio scanner,

    • Good point Jonathan. Any critical equipment that could completely paralyze your practice for an indeterminate amount of time if it breaks down would be the exception to the rule. If you’re a LASIK practice, without a doubt, you should bite the bullet and purchase a service plan. Hopefully you can negotiate for lower rates or extra perks. I guess a few other options that might let you get away with no service plan is to get credentialed with a LASIK center or ASC that has the machines you want, or perhaps create some agreement with a neighboring practice to allow temporary use of each other’s machine in the situation one’s own unit breaks down. Same goes with exam lanes. I suggest having eventually at least 2 lanes, even if you need only one. If your slit lamp breaks down in your only exam lane, you will have to cancel clinic completely until you get it fixed. So, I agree with Jonathan. This post should apply mainly to auxiliary equipment that are not absolutely crucial to your day to day operations.

      Ho Sun

  2. Sorry the Excimer and Femto maintainence is $29,000/yr each unit, not $36,000.
    Interestingly the warranty cost is approximately:
    10% excimer (29,000/280,000)
    13% Femto ( 29,000/180,000)
    10% VARIO unit (3,000/29,000)

  3. Good blog, I was especially interested in the OCT as I am evaluating which one to purchase now. The cirrus def has outstanding OCT resolution, but the topcon maestro I’m trialing now is maybe 80% as good w the OCT resolution (harder to see faint ERMs for example), and for about 20k less I’m leaning that way. I’ll have to ask around whether the topcon units stay maintenance free so I can forego the extended warranty. I’ve always deferred those and if I look back over the years, paying out of pocket for repairs has been cheaper than paying the warranties.
    Jonathan, that’s a good point. our ASC does do the warranties for our catalys femto and AMO excimer. Maybe the more expensive the machine, the more the warranty should at least be evaluated?

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