Inherently companies are always trying to grow and improve their bottom line; medical equipment manufacturers are no different. Like negotiating for that new car, most medical equipment manufacturers discount the purchase price of equipment. However when they provide discounts it means their profits are going down. I would like to share with you a new line item that is showing up on my new equipment quotes that caught me completely be surprise. The line item is called “project management” and you better hold on to your wallet because it is an expensive number. So far only a couple of OEMs added this line, but I am seeing it occur more and more every day. Here is my experience with this new line item and the associated “value” it brings.
Because of the new hospitals we are adding to our system, almost weekly I am requesting quotes for new monitoring systems. I meet with the users and the leadership to ensure everyone’s needs are met. The process takes time as we need to make sure we have thought of everything that is needed. I ensure there are site visits, demos and reference calls. I try to ensure we over communicated every aspect of the new purchase to feel good that the quote will accommodate everything we need.
During a recent request for a quote, the sales rep was calling often with new questions about infrastructure items and installation questions even after we felt we covered these questions previously. As I recall the experience, I do remember him using the word project manager. I did not think too much about it, but that would soon change. When I finally received the quote, I noticed that the amount was over the budgeted amount that we had talked about at length. As I reviewed the quote line by line, I noticed a new line item called project management. The number was significant and, as a matter of fact, it pushed the quote over the budgeted amount. I questioned the sales rep and he explained that it was needed to handle the implementation and installation of the system. I asked for a meeting with the sales rep and project manager to discuss this line item face to face.
My meeting with sales rep and project manager went well, I explained to them that I really needed to understand what the project management fee meant and if it could go away because it was pushing us over budget. They proceeded to tell me about why it was necessary to have a project manager and that it was required by the company. They said the project manager would coordinate everything needed to ensure a seamless transition. They would schedule the user training, work with IT, work with maintenance and requirements the monitoring system needed would all be channeled through him. Of course, I suggested that it is expected that you do all these things as part of the purchase? It kind of felt like buying a new car and then being charged to learn how to use it. They explained that we always paid it, the number used to be part of the individual monitor price. I also did not like that the amount was just a percentage of the total quote, not a true representation of actual costs. I wasn’t completely sold, but conceded after our purchasing director checked the discounts and the pricing was good. We cut them the purchase order to do one of the hospitals. It was a small installation, which I felt would be a good test for this project manager line.
The project has been completed, the monitors are installed and the users are happy. How do I feel about the project management line? I was very disappointed to say the least. I felt like all he did was waste people’s time with big meetings, it was like he was trying to justify his position. I felt bad for our nurse managers who were pulled into hour long meetings for two minutes that applied to them. I was going crazy because the project manager didn’t find out anything on his own. He went through me for everything. I might as well have installed the system myself. Maybe it was just this project manager that was the problem or maybe he knew I had been questioning the value of his assistance, but I did more work getting this monitoring system installed than any others before it. At the end, I told the sales rep that he owed me the money for project management because his guy did not do anything that earned him the cash.
As I reflect on the lessons learned, and advice for you the reader, here is what I would suggest to you given that most companies using a paid project manager will not be willing to remove their services from the quote. Meet with the project manager before cutting a purchase order and interview him/her to make sure they have a personality that will “fit” with your facility. Don’t be afraid to ask for a different person. Ask to review any presentation or meeting items ahead of time to ensure only the needed staff attends the meeting. Insist they visit your site before the kick off and two weeks before installation, so they have time to fix anything missed. Be sure they understand that they need to meet with the key people individually to understand their needs and timelines.
Based on my experience, I am not impressed with this project management line. I think it could be a perception issue. If it was hidden in the monitor cost and appeared to be free I probably would like it better – even if it was a wash. When I see companies moving dollars around I get suspicious. Be aware, as I am sure you will see more project management line items in your future.
Jim Fedele, CBET, is the director of clinical engineering for Susquehanna Health Systems in Williamsport, Pa. He can be reached for questions and/or comments via email at firstname.lastname@example.org.
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