By K. Richard Douglas
“Hey wait, don’t throw that out,” is a refrain that is much more likely to be heard today than in yesteryear. The reason is that so many items can be repurposed, resold in many secondary markets or donated to a good cause.
The options for extending the usable life of a used item are varied and sometimes creative. There is an entire movement based around the premise of maintaining used items, from clothing to cars to medical equipment.
Just as a consumer would be ill-advised to throw out or donate a personal computer with the hard drive included and intact, hospitals must be vigilant to protect non-public protected health information (PHI), and observe HIPPA regulations in the disposition of equipment.
Disposing of medical equipment can be costly and resources are required at a time when resources are in short supply.
There are both a number of considerations when disposing of used medical equipment and a number of choices as to how a particular piece of equipment is taken out of service and out of inventory.
It’s no surprise that in a time of lost revenues and profits, unwanted or unneeded equipment can be turned into a revenue source and this is an attractive option.
The recent pandemic has also changed the landscape for equipment disposition because some out-of-service equipment has been restored and put into emergency use.
The decision process should not be left to the latter parts of the equipment life cycle, but at the time of purchase. It is also important to remember that infected medical devices must be disposed of as medical/biohazard waste.
“All hospitals have some kind of disposition process; the problem is they are poorly defined and even more poorly managed. Typically, department managers make a determination when to replace an item, put it in the budget and pray. If they are successful and their request is approved, they then decide what to do with the old item. It often gets placed in a closet as a backup, but is soon forgotten, only to be found months or years later when the department moves or some other remodel project is undertaken and the piece is discovered and now has little to no value,” says Charles “Chuck” Overeem, biomedical equipment life cycle planner in the HTM and biomedical engineering department at ProHealth Care in Waukesha County, Wisconsin.
Overeem says that some know enough to try to sell the item, but don’t have the time or contacts to get the best value for the hospital. He says that there are companies and programs that will remove equipment from your facility and do the marketing and selling for a percentage of the sale.
“However you decide to disposition your equipment, at least formalize the process, put someone in charge of it and run all equipment through it. A formal disposition process is a revenue stream for the hospital. It also assists in the tracking of your assets and allows you to know what you actually have –which can help with inventory, taxes and planning,” Overeem says.
Overeem says that the how, when and where of disposition should be defined so that options are clearly understood.
“How – redeploy, sell, donate or scrap. ‘How’ describes the process by which an item is removed from service. When – at what point in time is an Item dispositioned? And, where – where does the item go? Is it redeployed within the organization? Is it sold to an entity outside of the organization? Is it donated? Is it scrapped?,” Overeem says.
“I think disposition starts with ‘when.’ When should we, or I as a department manager, replace or remove a piece of equipment? Is the item no longer being used? Is there a better option for the program or treatment that we are currently using the item for? Has the OEM stopped support? I think these are the most obvious reasons,” Overeem says.
He says that how an item is dispositioned will depend on its state/condition.
“Is it functional? I can redeploy, sell or donate depending on the needs of the organization. How old is the item? Can we still get parts and support readily? If the item is not old, and is still supported but we have determined that we do not want it for redeployment, we will put it up for sale. If it cannot be sold, we will look at donation,” Overeem says.
He points out that some items don’t sell well, likely because of the cost to ship them versus value, but local charities can often use them as long as they understand that his facility cannot warranty or support the item.
“If the item is nonfunctional, is it repairable, within reason? If so, we could strip it for parts if we have a need or sell it as a parts machine. Someone may take two or three defective units and make one good unit. If the unit is beyond reasonable repair then it goes to scrap/e-waste where it can be recycled,” Overeem says.
“How and where we dispose of an item are closely tied together. If the item is fully functional, we first look to redeploy it within the organization. This option provides the biggest cost savings for the organization by not having to pay full price for a new piece of equipment. I look at it as free. Another department preserves their budget but still gets a working piece of equipment that they need to care for their patients,” Overeem adds.
He says that since his department does most service in-house and has all of the service history, they know exactly what the status of the item is.
“If an item has a defect, I can look to see if we could redeploy it if it worked and then weigh the cost of the repair against the cost and benefits of a new machine. When that does not pan out it becomes a candidate for sale or scrap,” he says.
If health care facilities don’t have an in-house specialist to guide the disposition process, or the person assigned this task could use some help in utilizing best practices, they can call in a third-party specialist.
“When any surplus equipment is no longer needed, the health care facility has several options for disposal. Depending on the age and condition of the equipment, facilities may either sell, donate, recycle or reutilize excess equipment at another facility within the health care system. Having a constant flow and regularly scheduled dates to address asset disposition helps to remove unneeded clutter in the facility while avoiding high storage costs for equipment that is end-of-life and will not be used again,” says Mimi Lively, CEO at ZRG Medical in Oceanside, California.
ZRG Medical is licensed by the California State Board of Pharmacy to sell medical equipment, allowing them to purchase and sell medical equipment. The company specializes in used medical equipment liquidation services for health care facilities that want their surplus equipment to have a second life.
“When choosing where the equipment will go, it is important to use a trusted vendor specializing in medical equipment so that you can be assured the equipment is being managed responsibly,” Lively says.
In some cases, when other options are not viable, equipment can simply be recycled.
The Role of CMMS
What documentation should be included in CMMS when you decommission or dispose of equipment? Are there considerations that are not so obvious?
“When a piece of equipment is dispositioned, you want to include several pieces of information. How was it disposed of? Did you scrap it? Was it redeployed to another area or department? Was it donated or was it sold? With each of these states comes a need for additional documentation. If it was scrapped, documentation should show that PHI was removed and that it was scrapped/junked/recycled. If it was redeployed, the department and location must be updated in the system so you can find it for its next PM cycle. If it was donated, document removal of PHI and also who received it and what value it has as a donation. Follow the IRS guidelines for valuation of donations. If the item was sold, again, document PHI removal, how much it was sold for, whom it was sold to and when,” Overeem says.
He says that in all cases of disposition, start by documenting who wants the item removed from service and why.
“The ‘why’ aids in determining if an item can be redeployed, sold or donated. When we sell or donate equipment, we do it as-is-where-is. In short, this means the buyer pays and arranges shipping and understands that we sell it without warranty. Anyone who gets equipment from our hospital, either by donation or sale first signs a disclaimer form that essentially states that they understand the no warranty provision. I also include a copy of any payment information including a copy of the check in the records,” Overeem says.
Overeem says that other not so obvious documents they include is an approval form signed by the original owning department manager stating that he/she approves the item be removed from service and his/her department.
“This is the first step before I take possession of an item. There have been instances where a department manager stopped the disposition of an item because it was still required equipment. In most cases, I believe that there was a miscommunication regarding intentions and this step saved the hospital from purchasing an item that it should not have had to,” he says.
“Security risks associated with used medical equipment that’s being removed from service are limited to confidentiality of protected health information (PHI). If the medical equipment in question has the ability to store a patient’s health information, it would constitute a violation of security regulations if the disposed equipment with intact PHI came into anyone’s possession,” says Stephen L. Grimes, FACCE, FHIMSS, FAIMBE, AAMIF, principal consultant with Strategic Healthcare Technology Associates LLC in Swampscott, Massachusetts.
Grimes says that health care providers can eliminate the confidentiality risk by permanently removing all PHI.
“Removing PHI can be done by either completely overwriting media (e.g., filling the entire data space with 0s) or by physically destroying the media on which the PHI is stored. Check with the medical device manufacturer to determine how they recommend any PHI be removed (e.g., does the device have a feature that allows for completely overwriting any internal media),” he says.
Grimes says that as a growing number of medical equipment categories have the ability to store and transmit a patient’s health information, the risk of compromising the confidentiality of protected health information (PHI) in this equipment also grows.
“Unless a conscious effort is made to remove all PHI from this equipment at the time of its disposal, there is a real risk that PHI will fall into unauthorized hands. However, losing control of PHI on disposal is sufficient to result in a violation of security regulations, whether or not the PHI is ultimately used for nefarious purposes,” he says.
“Some of the more common examples of devices containing PHI include imaging systems (e.g., MRI, CT, ultrasound, PACS), EKG and EEG systems, laboratory systems, pacemaker controllers, medication delivery (infusion pump) systems,” Grimes says.
Lively points out that if you utilize a third-party provider, it is important to ascertain that the provider is experienced at locating data that might be stored on a piece of equipment.
“Unfortunately, data may be missed. This leads back to why it is so important to use a trusted vendor that is HIPAA compliant, holds a valid pharmacy license, and specializes in medical equipment for all assets removed from hospitals – ensuring liability is eliminated for the hospital,” she says.
Planning from the Beginning
Is disposition something that should be planned for when you first acquire the equipment? How can this be done?
“If you are going to have disposition program that allows you to do other than trade-in, some thought needs to be given to disposition at the time of purchase. In today’s software-driven world, a piece of equipment can quickly turn into a paperweight if you do not own the software to run it or have the right to transfer ownership. That needs to be negotiated up front if possible. Just like in-house programs and third-party service providers fight for the right to repair equipment, hospitals need to fight for the right to fully own the equipment they paid for including the software so they can transfer ownership/license as needed,” Overeem says.
The World Health Organization (WHO) publishes a handbook that provides further guidance on equipment disposition.
“The information on asset disposition in the WHO handbook outlines all the ways a hospital can responsibly reutilize, liquidate, and dispose of their equipment. What the World Health Organization does not mention is the time and resources it takes for hospital staff to complete the necessary steps to remove assets,” Lively says.
She points out that healthcare facilities reselling the equipment themselves can be one of the most time-consuming options.
“This takes time away from hospital staff to concentrate on more important tasks and requires ample space to store the equipment. Selecting a vendor that can provide a total disposition solution based on the hospitals needs can free up valuable resources,” Lively says.
One of the very best ways to extend the useful life of a medical device is to allow it to continue to lead to better outcomes for patients. In many developing countries, new medical equipment is not an option because of costs and availability. Donated medical equipment can fill a void for health care facilities that face this reality.
“Charitable donation is absolutely a viable option if you have good working equipment. It is great for the environment and can help save lives in underdeveloped countries,” Lively says.
“Because most charitable organizations do not have the resources to repair broken equipment, it’s best to only provide equipment in good working condition, so they are able to utilize it. Also, keep in mind, some charitable organizations will not pick up equipment directly from the facility so you may have to use your own resources to provide for transport of the equipment to be donated or use an asset disposition vendor that works with charitable organizations that can donate on your behalf,” Lively adds.
Overeem agrees that donation should always be an option.
“Donation is an option to dispose of equipment that we do consider. I have had equipment that I could not redeploy and could not sell. For whatever reason there is not a market for it at this time. When that is the case, and it is good equipment, donation may be the way to go. It gets the equipment out of your facility, and puts it where it can do the most good. All equipment is not viable for donation, but that should be an option to consider before disposing in a landfill,” he says.
Disposition can be a function built into the equipment planning and purchasing process. It should be considered from the start and thought through at the end of the device’s life cycle. Done properly, it can provide a rewarding outcome for the health care facility in terms of revenues or the knowledge that the equipment may be helping others through donation. Third-party specialists can also help make the process go easier.
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