Corporations often rely on consultants to tell them how to squeeze every last drop of efficiency out of their systems, methodologies and employees. They pay these consultants large fees because an improvement of a percent or two can result in cost savings that more than make up for the expense.
Hospitals and health care systems have a similar motivation; to seek out opportunities for efficiency, save money, follow best practices and seek methods that improve the bottom line while maintaining patient safety. It’s basic economics, compounded by the demands of a changing health care environment, that takes a pay for performance approach. Efficiency isn’t an option; it’s a necessity and the metrics are everywhere to measure it.
If you are an HTM professional and find yourself shaking your head and muttering something along the lines of “no kidding dude,” as you read these words, then you have learned this reality firsthand. Health care systems have to work so efficiently that sometimes you can hear them squeak; the tolerances have been set that tight.
We take a look at how the HTM department can reduce costs while improving service in the management of imaging equipment. There are ideas and concepts that can be derived from the management of imaging equipment and employed in the management of all other equipment; we highlight each.
“It can’t be over-emphasized, the importance of securing the HTM department’s seat at the table when diagnostic imaging technology is purchased,” says Perry Kirwan, MSE, CCE, senior director of Clinical Technology Assessment and Planning at Banner Health. “The ability to influence a few variables at the front end of the life cycle can pay tremendous dividends over the total life cycle.”
“Technology standardization enables an organization to leverage the full extent of its purchasing power while at the same time reducing clinical variation on the patient care delivery side. Clear purchasing requirements prevent the opportunity for under-utilized technology to be procured. Extended warranties, more favorable service terms, service training and enhanced clinical training are all things that are better negotiated before the purchase is made,” Kirwan says.
Ownership of the budget is a key area of leverage for strengthening the negotiation and leadership position of the HTM department.
“One important event that allowed for us to better manage and negotiate improved strategies for service was when we took over the organization’s maintenance and service budget,” says Steven Bowers, CET, manager of Biomedical Engineering at Rex Healthcare in Raleigh, North Carolina. “Previously, each clinical and imaging area had their own maintenance account to manage and utilize. Having the full budget line for service meant that vendors developed stronger working relationships with our team, felt that they knew what was expected from them, and were more inclined to adjust to our specific needs and requirements.”
“As we made it known that all service reports were to be scrutinized and matched specifically to invoicing, accountability improved as well as responsiveness to delivery of field reports,” Bowers says.
Using Available Resources
“Set the bar high,” suggests Steve Letourneau, senior director of diagnostic imaging services for Banner Health.
“It all comes down to changing the culture within a facility,” adds Anthony Coronado, biomedical engineering manager at Methodist Hospital of Southern California and account manager for Renovo Solutions LLC.
Each suggest that the work culture and expectations are important. Also, the expectations for bringing imaging services in-house requires a goal of service quality that aims to exceed the OEM service.
“In addition to utilizing the same industry standard service metrics, productivity and efficiency is a major factor. Many in-house organizations that have 10 or more facilities still use the same formation as their in-house BMET counterparts do where they are assigned to one facility,” Letourneau says, from the perspective of a large health care system.
“Banner uses field deployable imaging engineers who are not assigned to one facility. Our BMET department does the same thing with specialty trades within the BMET area,” he explains. “The service personnel are commonly dispatched from home and have over 10 different facility responsibilities within a given territory.”
Letourneau says that the most common issue with having engineers deployed or allocated to one facility is that they tend to only be trained on equipment at that one particular facility. He says that with imaging service, this especially becomes a problem when the goal is to provide on-call 24/7 service, where the imaging engineer can receive a call from any facility and may have to service a variety of makes and models of multiple OEM manufacturers.
F. Mike Busdicker, MBA, system director, Clinical Engineering Intermountain Support Services/Supply Chain at Intermountain Healthcare remembers that his health care system faced the issue of reducing costs and improving service in the management of imaging equipment when they started their imaging equipment service program in 2012.
“At the start, organizational leadership created an Imaging Services Guidance Council, and one of their tasks was to oversee implementation of the service program and to track program performance,” he says.
“Of course, the first thing we needed to do was understand the current state of the program in relation to things like customer service expectations, equipment uptime, service level agreements, response times, service cost, total cost of ownership, and strategic planning,” he adds. “Once we had concrete data in these areas, we could start building a business plan to focus on implementing and delivering an internal service program at levels equal to, or better, than those being delivered in the current model.”
Busdicker says that they were sure to include all areas of service and not focus strictly on reducing the cost of service.
“It is important to deliver a high-quality product to the stakeholders at a financially responsible level for the organization,” he says. “As we remained focused in these areas, it helped build trust in our service program. We gained the trust of personnel across the organization from the front-line staff to system level leadership and included most of our service providers.”
“We continuously evaluate the specific needs and requirements of each system, look at vendor options for economic, effective service plans and our own in-house team capabilities in order to make customized choices for each imaging platform,” Bowers says.
Bowers says that often, his biomeds are able to “train up” via a vendor provided or other service training option to take maintenance requirements in-house and reduce costs while still providing quality service and uptimes.
“Over time we have developed first look, shared, PM only and parts only agreements to keep costs down, yet still maintain vendor assistance and support,”
he says. “We lobby hard with our finance and executive staff during fiscal budget planning for training and technical education budget dollars as we have found and promote that investing in ourselves not only improves on-site response times but also provides cost savings year after year.”
Making the Transition
“Transitioning from full service contracts to an in-house support model involves trust at all levels. This includes open dialogue with internal customers, organizational leadership, and with current service providers. In order to build a successful in-house program it will require buy-in at all levels of the organization and a collaborative effort with service suppliers,” Busdicker says.
Busdicker points out that perspective is important in cultivating a relationship with outside service providers. Outside providers are still necessary in some cases. He says that the relationship with those providers begins with viewing them as suppliers and not vendors.
“A vendor is someone that sells hot dogs and popcorn at ball games and exists mainly on a transactional basis. In our business, a supplier is someone who works with you to deliver a product that provides a win for health care as a whole,” Busdicker says. “It is imperative everyone be involved with the process and the focus is on the end result of providing the best service possible to our patients. It is not about cutting out the supplier and strictly reducing costs, it is about providing the best possible solution that will enhance patient care without driving up the overall cost of health care. This means we must work in a collaborative relationship with our suppliers to ensure we achieve our overall goal.”
“It is all about creating internal standards and metrics that allow for successful growth and implementation of programs,” says Tim Riehm, vice president of Technology Management at Banner Health.
Riehm says that the transition to in-house service doesn’t mean completely excluding all OEM service. He says that you have to look at the value your team brings to the equation and which functions can be improved by doing them internally.
“A great example would be high-end proprietary glassware,” he says. “Chances are that your team can’t produce glassware and the current after-market costs for the proprietary glassware are far too costly,” Riehm points out.
The likelihood of a better cost model through the OEM in this area requires sharpening your pencil, according to Riehm.
“It is highly likely that you could negotiate a much better cost model working with the OEM to cover this area as opposed to being exposed to huge one-time costs,” he adds. “In order to effectively do this, you will need to understand the costs of doing this function by each option using historical data to support your decision. Utilizing this data will enable you to more effectively negotiate the glassware with the OEM or third-party based on factual data and the need to further reduce those expenses using volume.”
“Having a solution in place for glassware will also improve uptime for the systems since you won’t be searching for tubes and will likely have some on-site or close by your hospital,” Riehm points out. “We have managed to reduce costs and downtime by more than 50 percent since negotiating the glassware options of our partnership agreements.”
“It all depends on the relationship that is established with the HTM department and the radiology department,” Coronado says. “Trust is the key for transition for the change of service to in-house and with the HTM personnel you are going to train.”
When transitioning to in-house support, the oversight to measure those metrics is the key to making it work.
“Early in the process, we established a sub-committee to focus on program implementation, identifying milestones, and maintaining program oversight,” Busdicker says. “Part of their tasks included identifying key metrics used to measure the success of program implementation and ongoing management. This group developed a five-year plan outlining manpower projections, equipment transitions, and metrics to track successful service delivery. This plan has been a key to the successful implementation of the program and ongoing monitoring of performance.”
Kirwan says that an important piece of the puzzle for a contract conversion is to have a clear and defined mission in the beginning to help set tactical strategies for the HTM department. That strategy should include touchpoints in every aspect of the a given technology’s life cycle. He says there are resources that can be used during the pre-procurement phases when assessing new technology, for developing technology standards that are undefined and for standards enforcement on those that are defined.
There are also resources that work during the procurement process, he suggests, to ensure that technology is “right-sized” relative to the organization’s strategy. The goal is to “bring business intelligence skills to the table to help set thresholds” for what an organization is willing to pay for technology.
“HTM departments possess the data and experience to provide that kind of insight which is extremely valuable to the purchasing process,” he says.
“With the above processes in place, it is also important to have feedback loops from implementation and on-going support perspective back to the pre-procurement and procurement processes. This feedback has the power to influence standards, strengthen programs already in place [and] gap analysis of program elements that need to be addressed moving forward,” Kirwan adds.
In dissecting the three primary service models, Letourneau says that two have some downfalls, while the third offers the right balance for his employer.
According to Letourneau, full OEM contracts provide no opportunity for cost savings, may contain additional hidden costs – OT, CT slice count overages, etcetera, and provide no control over service outcomes. Time and materials has the potential for huge variation in cost and service delivery quality, comes up short because of a lack of vendor support – diagnostics, training, and technical support. It also requires the need for high aggregate volumes to make the risk model work financially.
“This model does not work well when there are very expensive consumables such as X-ray tubes, flat panels, etcetera,” he adds.
Then, there is the hybrid-partnership model. This is the model that Banner employs.
“We have also seen where some companies will use a mix of all three leaving the high-end equipment under a full-term OEM contract. The problem with using all three is the fact that most of your higher cost contracts will come from the high-end devices and the cost reduction is not fully optimized,” Letourneau explains.
“Many of the models we see do not have solid OEM partnerships and this limits their ability to provide fully competent engineers who have all the tools necessary to perform their jobs,” he says. “Many in-house service organizations bill individual departments based on each service event and occurrence, Banner spreads this cost over all of Banner facilities and allocates a fixed cost to each facility. This cost allocation is based on each facility size. Nobody takes a hit for any one-service incident. This greatly improves the sometimes bitterness between in-house service and the end-users.”
Riehm adds that with full service agreements, there is no chance to further collaborate on options, they make it difficult to manage service escalation, difficult to manage response time, and they typically identify every system the same regardless of criticality or importance to the hospital.
“Time and materials — complete lack of support by anyone. Essentially these are no more than an internal insurance model for medical equipment. Requires a significant amount of effort for very little reward,” Riehm says.
He says that first pass contracts are essentially just a larger discount on a contract that allows the local staff to take a first look at the system and then call the vendor in for service. Riehm says that this model delays service and increases downtime while having a minimal impact to the overall cost structure.
“The vendor expects very little from the local staff and prices the model accordingly,” he says.
“Partnerships allow for creative approaches to creating a new model for future service delivery. [They offer a] great ability to reduce costs far below any of the other models,” Riehm says.
Inevitable change demands that the HTM professional take a central role.
“We are going to see continuous changes in health care over the new few years and the HTM department needs to be a proactive part of the change process; not reactive. It is time for our field, in-house programs and service suppliers, to step up and be part of the solution process for health care,” Busdicker says.
“This means working together to find solutions and then implementing these solutions in our organizations and sharing the outcomes with the Healthcare Technology Management field,” he adds.
Finally, going back to our original assertion about incremental cost savings, the true impact of efficiency that can originate in the HTM department is summed up in this example by Letourneau.
“If you think about what the ratio of revenue to margin is today, in the health care business, and how much actual revenue is needed to scratch out a small margin, that ratio might be 20 to 1. So in essence, if we were able to save $20 million dollars in operational costs, this would be equivalent to not having to produce $400 million dollars in more revenue to provide the same impact,” he says. “This is especially important when health care in general is continually subject to many outside influences that negatively impact revenue across the board.”
That is how HTM gets the attention of the C-suite.
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