Medical Equipment Repair & Maintenance: Trends, Challenges, and Opportunities
Welcome to The Founders Report, where we explore key industry insights to help business owners understand their market and make informed decisions about growth, investment, or selling. In this article, we’re diving into the Medical Equipment Repair & Maintenance Services industry in the US, a critical sector that ensures hospitals and healthcare providers can maintain and operate their life-saving equipment.
Based on the latest IBISWorld report, the industry generated $10.8 billion in revenue in 2023 and is expected to grow at a CAGR of 2.2% through 2028. However, the sector faces challenges such as OEM restrictions and the growing complexity of medical technology. Let’s break down what this means for business owners in this space, especially if you're considering a sale or attracting investment.
Industry Overview: Solid Growth Despite Challenges
The Medical Equipment Repair & Maintenance industry primarily services precision electrical medical equipment, excluding manufacturer-funded repairs such as recalls and warranties. The industry saw 0.7% CAGR in revenue from 2018 to 2023 but experienced a 4.0% decline in profit due to cost pressures and market challenges brought on by the COVID-19 pandemic.
Hospitals represent the largest customer base for these services, given their reliance on complex and expensive medical equipment. The largest service category is corrective maintenance, which generated $6.2 billion in revenue in 2023.
Key takeaway for business owners: Despite a challenging environment, the industry’s essential nature within healthcare ensures stable demand. If your business has adapted well post-pandemic and can maintain strong relationships with hospitals, you’re in a good position for growth. Buyers and investors will value companies that can demonstrate resilience and reliability in servicing critical medical devices.
OEM Restrictions and the Right to Repair Debate
One of the key challenges facing the industry is OEM restrictions. Original Equipment Manufacturers (OEMs) often limit access to the parts, tools, software, and knowledge that independent repair companies need to service medical equipment. OEMs cite safety concerns and the need for oversight, but these restrictions also limit the market share for independent repair providers.
However, the ongoing debate around Right to Repair legislation could drastically shift the landscape. If passed, the legislation would allow independent providers the same access to repair tools and parts as OEMs, opening the door for smaller companies to compete more effectively.
Key takeaway for business owners: If your business is an independent repair provider, keep a close eye on Right to Repair legislation. While the current landscape favors larger OEMs, any shift in regulation could open new growth opportunities. For potential buyers or investors, your company’s ability to leverage these legislative changes will be a critical value driver.
Technological Advancements: Keeping Up with Complexity
The medical equipment industry is evolving rapidly, with new technologies such as remote monitoring and predictive maintenance gaining traction. These advancements streamline repair processes, but the increasing complexity of medical devices means that technicians need ongoing training to stay competitive. While automation may assist in diagnostics, skilled technicians remain essential.
Key takeaway for business owners: To stand out in the industry, investing in training and upskilling your workforce is critical. Buyers and investors are likely to value companies that can handle advanced, high-tech equipment. Demonstrating that your team is well-versed in the latest medical technologies will add significant appeal to your business, especially in a sale.
Supply and Demand Dynamics: The Role of OEMs and Buyer Power
OEMs hold substantial supplier power due to their control over the resources needed for repairs, making it difficult for independent companies to negotiate favorable terms. This dynamic is particularly challenging as the medical equipment landscape becomes more complex.
Meanwhile, buyer power is moderate, as healthcare providers—especially large hospital systems—can leverage their volume purchases to secure favorable contracts. Hospitals may choose in-house repair teams or OEM-provided services over independent companies, further intensifying the competition.
Key takeaway for business owners: To counteract these competitive pressures, it’s crucial to build strong relationships with healthcare providers. Establishing a reputation for quality, reliability, and competitive pricing will set you apart from competitors, including OEMs. For those considering a sale, a loyal customer base with long-term contracts will increase the value of your business in the eyes of buyers.
Market Outlook: Recovery and Opportunities
The medical equipment repair industry is projected to grow steadily, reaching $12.06 billion by 2028. This growth is driven by several factors:
Rising healthcare expenditure: As healthcare spending increases, the demand for maintenance and repair services for complex equipment will rise as well.
Rebounding patient volumes: Following the pandemic, patient volumes have bounced back, leading to more frequent use of medical equipment and thus more repairs and maintenance.
Increasing complexity: As medical devices become more advanced, the need for skilled technicians will grow, creating a demand for repair services that specialize in cutting-edge equipment.
Key takeaway for business owners: If you’re considering selling or securing investment, now is a good time to capitalize on the projected growth of the industry. Positioning your company as a forward-thinking, technology-adaptive service provider will make it more attractive to potential buyers and investors.
Challenges to Consider: Labor and Regulatory Barriers
While the outlook is generally positive, there are a few significant hurdles:
Labor Shortages: Skilled technicians are in high demand, and labor costs represent the largest expense for repair companies, accounting for 37.4% of revenue. Attracting and retaining qualified talent will be crucial for long-term success.
Regulatory Barriers: The FDA imposes regulatory oversight on the industry, which can be a barrier to entry for new companies. This oversight adds costs and complexity to operations but also provides a moat for established companies that already comply with these regulations.
Key takeaway for business owners: Addressing labor shortages by offering competitive wages and training programs will be essential to maintaining profitability. For potential buyers, companies with a skilled and stable workforce will be particularly appealing, as they reduce operational risks and ensure service continuity.
Conclusion: Positioning Your Business for Success
The Medical Equipment Repair & Maintenance industry is poised for steady growth, with rising healthcare expenditures and increasing equipment complexity driving demand. However, the industry faces significant challenges, including OEM restrictions, labor shortages, and the evolving technological landscape.
For business owners considering a sale or investment, now is the time to focus on upskilling your workforce, strengthening customer relationships, and monitoring the progress of Right to Repair legislation. If you can position your company as a reliable, forward-thinking service provider, you’ll be well-placed to attract buyers or investors looking to capitalize on the industry’s essential role in healthcare.
At V&R Advisory & Capital, we specialize in helping businesses navigate these opportunities and challenges. Reach out to discuss how we can help you maximize the value of your business and plan for long-term success.
SOURCE: IBISWorld. (2023). Medical equipment repair & maintenance services in the US (OD4964).
