This article is written for hospital leadership throughout the health care industry, specifically administrators and CFOs. I have been in clinical engineering since 1983, and I have seen a lot of variation with in-house operations throughout this industry.
Ownership of medical equipment is not free. It will need to be repaired, upgraded, and don’t forget the consumables. For example, consider the Genius II thermometer. Last time I looked those little probe covers cost 2.8 cents each in bulk. Once you have applied some basic math you will see that taking one million temperatures will cost you $28,000! In a children’s hospital or large inpatient facility it will not take long to accomplish that very thing.
Many of the services available through your clinical engineering shop include: sourcing collaboration, equipment standardization, preventing the hospital from buying junk, installation planning, pre-purchase clinical evaluation, and maximizing the warranty. In general, these are all excellent ways to cut future expenses.
Things you can miss out on during an initial purchase include installation, service manuals, user manuals, software necessary to make everything work, test apparatus, CE tech training (under a service contract or serviced in house), user application training, and technical support; all of which could be an additional cost if procured separately after the initial purchase. There is also the loss of establishing an economy of scale by treating each department as its own entity and discounting the entire hospital’s medical equipment inventory as a fleet of equipment to be managed as a large unit.
Many times departments are in a hurry to purchase medical equipment and do so without any planning because: “We have money for that in the budget.” In fact, at some facilities the lack of pre-purchase collaboration results in clinical engineering discovering new equipment when it shows up for delivery at the back dock. Do you already have some equipment that does the same function? Having multiple patient wings, all having different brands of monitoring is a great example. The nursing staff has to be trained for all different brands. There will be several types of consumables, and the ability to view all monitored patients from a single nursing station is going to be a challenge. Without pre-purchase planning, interoperability becomes very difficult or impossible. In addition, your hospital’s operation will not be anywhere near as good as it could be; and you will most likely end up spending more money to boot.
New Equipment Comparison by Total Cost of Ownership
Clinical engineering is an integral part of determining what the total cost of ownership will be for proposed new equipment acquisitions. What will be the cost of service (in-house vs. contract)? What will be the cost of consumables? What is the expected life span of your new acquisition? Can this be supported past the planned end of life date through using an alternate source for parts and service? The answers to all of these questions will help determine the correct path to maximize the return on investment (ROI) on these new purchases.
Warranty maximization is a huge opportunity for dollar savings. There are many warranty options available other than “one year, parts and labor.” Some other options will include training, parts, tech support and plastic components. At Intermountain Healthcare we recently changed the entire health system to the Carefusion 8000 series “Brain and Channel” style IV pumps. Rather than the standard one-year warranty, we looked into other options to maximize our benefit. And besides, all you need to do is ask what your options are. The worst thing an OEM can do is to say “No.”
Managing the Equipment from Install to Disposal
Since you probably can’t increase your top line revenue (you have already done that as much as you can), you can increase what’s left over on the bottom line by cutting expenses that you will incur.
To maintain an ongoing reduction of expenses, engage your clinical engineering department to operate as an equipment life cycle management program, rather than just fixing what breaks. No one in the entire facility has the firsthand knowledge of the condition of the equipment and the ability to support it like the CE department does. They will have information on what equipment has an end of life date. Can that equipment be supported past the end of life date due to the availability of alternate sources? What equipment is not going to make it to the end of its recommended service life and will need to be replaced early? If you are a hospital administrator or CFO and you need to replace $25 million dollars worth of equipment and you only have $18 million dollars to work with (does that sound familiar), that type of information is worth its weight in gold.
Clinical engineering can also provide a valuable service by reviewing service contacts to find instances where you are paying more than you need to for service. Does that X-ray unit in your outpatient clinic that operates from 8 a.m. to 5 p.m. really need a premium 24×7 service contract? No, it can be supported nicely by an 8-5, Monday through Friday contract for a much lower price.
Or do you have contracts that could be eliminated all together by training your in-house CE staff? Contact me on LinkedIn, I can tell you all about it.
Your clinical engineering department can assist with equipment sales to maximize your equipment sales revenue. Companies that want to buy used medical equipment bombard us and we can pass that information along. Used equipment that is in operational condition is worth more money upon resale. Your CE department can work with OEMs and other suppliers to make sure hard drives are purged of patient data but still have operating systems in place.
I really see this, not as a trend, but as the future of clinical engineering in health care as a way to gain out-of-the-box savings. In order to provide the highest quality and most affordable health care possible, we must engage internal resources in new ways where they can add value, cut costs and improve service. And that’s just what we have been doing with Intermountain Healthcare’s clinical engineering program. In my career, I have had discussions with more than one hospital administrator or CFO that “a flat top line with an increased bottom line due to cost cutting is not exactly how I had envisioned the year, but I love the result.” The only problem with this is it is almost always immediately followed by “What else you got?” Talk with your clinical engineering department. I guarantee you they will be interested in working with whoever will be buying equipment. After all, it is in their best interest on helping make the best deal: they will be supporting it for the next 8 to 10 years or more. Working with you on pre-purchase planning is how they can make their lives easier.
As administrators, you are looking for ways to do it better for less money and resources. The good news is that these resources are already in the building. Your clinical engineering department would most likely jump at the chance to work with other departments to structure the best purchase deals on new equipment as it will make their life a lot easier when it is time to service that new equipment. Ask them when you are out practicing “management by walking around.” You will be surprised what resources are already available to you.
If you think any of the suggestions in this article will benefit your facility, share it with your leadership.
John Schafer, MBA, A.C.H.E., is Program Manager, Clinical Engineering, Intermountain Support Services/Supply Chain.
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