What People Will Do for Money – Aligning Interests on Your AED Program

Posted: November 5, 2015    |   Gretchen Kirkwood

AEDs are remarkable lifesaving tools. Given the power of the AED itself, it can be easy to overlook the other components that go into a successful program. Those in the know recognize that program management and training are ultimately the most important factors for a successful AED deployment.

Some businesses take care of these aspects on their own and do so very well. Most companies however choose to outsource some or all of their program components. If you do decide to outsource, you want to be sure that you understand what you are buying and that your interests are aligned with the partner you select.

Given the lifesaving purpose of AEDs, it can also be easy to presume that the AED marketplace is an altruistic one. The reality is that it is a commercial business with revenue and profit pressures similar to other businesses. Like all businesses, there are some great providers as well as other not so great providers. Business models and approaches also vary.

Understandably, this array can make for a confusing landscape for buyers, and the following provides a few suggestions to help you make more informed decisions.

Understand how your vendor makes their money.

Do they profit from selling the AED itself? If so, how much is their mark-up?   Does this change as order quantities increase?

What services does the vendor provide? How do they charge for them? Will you be charged per AED or per site?

Obviously, if your vendor is compensated for selling AEDs, there is an incentive for them to sell you more AEDs. Similarly, if you are charged for services based upon the number of AEDs that you have, your vendor is financially motivated to maximize the number of AEDs that you have. As services fees continue over time, this second incentive can be even more powerful than the income from the original (one-time) AED sale. Certainly AED coverage should never be anything less than adequate, but a vendor paid per AED will have very different motivations than another vendor that charges a flat price per site.

Everybody’s Happy On Their Wedding Day

Particularly if you are looking at a multi-year agreement, it is vital to understand what recourse you will have if you are unhappy with the level of service that you receive. Will you be stuck with the contract, having to either absorb a painful buy-out or suffer through until its natural expiration? The best providers will be able to articulate their service levels, base their compensation on performance, and provide you with practical recourse if you are dissatisfied.

Understand “Package” Deals

Some vendors look to bundle services together with the AED acquisition, often in combination with leasing or similar purchase financing tools. While the convenience of monthly payments can be appealing, this structure can also make it harder to understand component costs and create incentives for the vendor to sell you more AEDs / services than you actually need.

Requiring the vendor to provide transparent, un-coupled pricing for AEDs, training, and program management will enable you to make apples-to-apples comparisons with other offerings as well as drive better economic, service level, and cancellation terms.

Also, think critically about bells and whistles that are offered. For example, most AEDs have battery lives of four years or more. So, how much value is there in “free battery replacement” in a three year contract for a new AED?

To put this in context, let’s look at a simple example. XYZ company may offer you a three-year deal where you pay $80 per month “all in” for an AED and supporting services. Over three years, this equates to $2,880. For simplicity, let’s say the vendor quotes $1,000 for the AED and related financing costs (which may or may not compare favorably with other options you have). This then means that you are paying $1,880 ($627 per year) for the services component. It is important to understand that this is effectively a per AED price and costs can quickly add up if you have multiple AEDs at a site – taking the same deal for 10 devices at a site, costs you more than $6,000 per year for the services, which would seem a bit inequitable in comparison to the vendor’s actual change in workload.

Another point to focus on with blended arrangements is what happens at the end of the contract term. Your annual price should drop after the initial contract ends because you will have substantially paid for the AED component of the equation. Ensure that this is recognized in any “renewal” quotations. Also, it is important to understand what happens with the AED at the end of the term. Will you own your AED or will an additional residual charge apply?

Who Should I Trust

At the end of the day, shop around and compare. Understand what is being sold to you and be skeptical of those unwilling to be transparent. If you get the sense that someone is trying to push too many AEDs at you, ask them to provide details for their rationale. Unwillingness or inability to do so is a big red flag. Make sure that your vendor is incentivized to perform over time. Good vendors will welcome this and often will make a portion of their compensation contingent upon performance.

Last, speak with references. AED programs are experiential products, and you will not really know what you are getting until your vendor is in place. The best advertisement for any service provider should be their existing clients. Ask to speak with a few and see what their experience has been.

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