Brian Tracy, the motivational speaker and author, once said that “Managers today have to do more with less, and get better results from limited resources, more than ever before.
It would seem that Tracy was evaluating modern-day health care and peering into the biomed department. The theme there often seems to be “doing more with less,” and helping the facility or system’s budget by being resourceful and knowledgeable. This “cost-containment” atmosphere, in large part an offshoot of the Affordable Care Act, is leaving hospitals operating on a shoestring.
An analysis of parts spend is one of the approaches that can help temper the budget in the HTM department. When there is a critical need for a part, sourcing time has to be kept to a minimum. Also, bringing more service in-house can help the health care facility’s budget.
Managing the supply chain is a skill that often requires a specialist. Many health care systems employ a parts procurement specialist for this purpose. Knowing where to source from can manage service costs effectively. It is a competitive market and OEMs know that there are other suppliers with quality parts.
Supply chain is a cost, second only to labor costs, for hospitals. Finding quality parts that don’t break the bank is a challenge for the HTM department with a solution offered through many third-party providers.
A good relationship with these vendors is a key element in assuring a smooth workflow.
“Once you establish a relationship with those vendors, future part requests go smoother,” says Deb Parkhurst, a biomed procurement specialist in the biomed department/WMH at ProHealth Care in Wisconsin. Along with her colleague Chuck Overeem, biomedical equipment lifecycle planner, they put a fine point on this process.
Parkhurst and Overeem say that accurate part numbers, versions and descriptions are required before vendors are contacted. Also, for the person procuring the part, communication from the biomed tech on when the part is needed is important. Requests that come in after a specific time, may be told delivery cannot be made in their timeframe.
“Sometimes, we may have to order direct from a service engineer if we can’t get the part in time from a third party,” Parkhurst says.
“Discuss with the biomed tech whether the part can be refurbished/used versus new, which can be at considerable savings,” she adds.
She says that “If the part price agreed upon includes an exchange, we require the part be brought to us so that we can document accordingly and ship it out from our location. Verify with the vendor if they will accept the cost of the freight charge – sometimes those charges can be very high depending on when the delivery date/time is agreed upon.”
She prefers to keep the biomed informed as to the progress of the order so they can communicate to the department, especially if the equipment is scheduled for patients.
“For end of life equipment, some OEM vendors will give me the name of vendors who may have those parts,” Parkhurst says.
She says that sometimes they are willing to harvest parts from their own end of life equipment to keep other units working until they can be replaced.
“Let the vendor/supplier compete for your business. You set the rules. Tell them you want their best price and warranty up front and you will call them back. When they call you back for status and tell you that you should have called them back instead of buying from someone else, they would have worked with you on the price remind them that you need their best price up front, no time for haggling,” Parkhurst says.
“It will take some time, but they will comply. Also, track all issues, late shipments, DOA, warranty repairs. If a chosen vendor’s quality slips, be ready to use someone else but do present your issues to the slipping company so they can make corrections assuming they are inclined to do so. You may need them in the future,” she says.
Parkhurst says that all part purchases should be tracked so you can see what parts are used most often. Since you are contacting multiple vendors when you are sourcing, record pricing and warranty from any vendor who gives you a quote, even one that you did not use. It gives you a leg up the next time you need that part.
“I like to explore all of my options when I am looking for parts. I have googled the part to see which vendors have it. I have called/emailed to see if they have them and the availability. I will go on their website to see if they carry what I am looking for,” says Deb Testa, supply chain management coordinator, Entech/Tech Management at Banner Health, based out of Phoenix, Arizona.
Testa says that as far as shipping, a majority of the vendors offer FedEx/UPS/USPS as options. She will see who has the best rate and choose that one. She also will question her tech to see if he is asking for overnight shipping.
“If they say no, that can save us sometimes a large amount of money to send it second-day. I also prefer to give the vendor our account code for our shipping accounts and that also saves us money instead of them adding freight to our invoices,” Testa says.
Jennah Judd, purchasing agent at Baycare Health System in Clearwater, Florida, says that they improved their strategic sourcing by utilizing “category management.”
“We analyzed our spend data and defined discrete groups of products/services such as; batteries, bulbs, IT, beds, etcetera. Once segmented into categories, we were able to look at our top vendors and conduct supplier capability, performance and cost analysis, which aided us in selecting a preferred/standardized vendor,” Judd says.
“By standardizing our vendors within these segments, we have seen significant savings, typically 10-30 percent. We also have seen improvements in service levels, quality, value and availability. Consolidating spend data also has its benefits as it’s easier to track and report on warranty issues, RMA and out of the box failures,” Judd adds.
The Vendor Perspective
Third-party vendors who make parts available to HTM professionals have refined the process to source or produce quality parts and manage costs. There are many players in this segment and many have culled over extensive data sets to streamline the process. The aim is to provide real world solutions.
How do you find providers with solutions?
“Web search, word of mouth and TechNation magazine are great starting points to locate companies that may carry what you’re looking for,” says Nate Smith, vice president of sales and co-owner of Elite Biomedical Solutions, based in Cincinnati, Ohio.
“From there, you need to familiarize yourself with the company that you may acquire these parts from. I’d start with accreditations – ISO 9001 and 1485 as well as FDA-registered. Pricing should never be the reason to purchase parts; you should be purchasing based off quality of the part. Once you find the vendor that has proven themselves then it makes your part purchasing decisions much easier,” Smith says.
Smith says that Elite manufactures OEM-equivalent replacement parts and OEM-tested parts for infusion pumps and telemetry units.
“We have all ISO accreditations along with passing FDA on site visits. Our standards are to be ‘elite’ in everything that we do. We provide same day-shipping and above industry standard warranties. All parts are listed on our website so if it’s something that a customer is looking for then we promise they won’t be disappointed,” Smith adds.
Some in the parts industry have adopted technology to offer data-driven solutions.
Mike Maguire, senior vice president and chief supply chain officer at PartsSource, says “HTM teams struggle with actionable data, inconsistent or limited knowledge and often outdated supply chain networks. Understanding part quality is a perfect example. Many organizations are forced to shoot in the dark as they don’t have access to rigorously curated quality statistics at the part level. Moreover, HTM teams struggle to get the relevant data into the hands of the frontline technicians or purchasing teams so they can make informed and data-backed decisions with speed,” Maguire says.
He says that acknowledging the deficit of information is often the first step in determining the solution.
“Centralized technology can deliver significant improvements in efficiency, quality, cost and visibility of medical replacement products and services,” Maguire says.
One aspect of parts shopping is finding quality parts. Many parts providers have sought out internationally recognized standards as evidence of quality.
“In terms of dealing with budgetary constraints, there are many aftermarket parts providers that provide excellent, economical solutions to parts sourcing challenges. A good number of these companies have been in business for many years, operated by reputable and stable management, and many are also ISO 9000 or 13485 certified, providing peace of mind that the parts company is serious about providing quality to its customers,” says Ira Lapides, president of Replacement Parts Industries (RPI) Inc. in Simi Valley, California.
“In terms of maintaining older equipment, I would reference many of those same companies to help locate difficult-to-find parts,” Lapides adds.
Lapides says that RPI has been in business for over 47 years, providing quality parts for a wide variety of biomedical equipment.
“We reverse engineer and sell new parts for equipment both old and current at significant cost savings to our customers. We rely on our customers’ feedback to identify equipment and parts for which they need solutions and, again, this can be for older or current equipment. RPI is ISO 9000 certified and is an FDA-registered medical device establishment, so the quality of our parts along with our technical support and customer service is critical to our customers and our success,” he says.
It’s Not Always Smooth Sailing
There are still some challenges in the process that might make budgeting or vendor selection more difficult.
“Challenges arise with high-risk equipment where our policies state we can only use OEM parts such as batteries. This limits our ability to second source to different battery suppliers. Culture is also a challenge. Technicians/managers have vendor preferences and it is sometimes hard to get everyone on board with using the preferred vendor,” says Sue McCabe, purchasing agent, EIS Governance, at Baycare Health System in Clearwater, Florida.
Beyond these challenges are things beyond the control of the parts procurement person.
“The biggest challenge comes when technicians ask for uncommon or obsolete parts. It can be difficult to find quality vendors who can deliver those parts quickly and at a good price. Also, there are times when parts needed urgently for machine repairs are on backorder. In those cases, I try to see how quickly I can escalate that order, and, if needed, contact the sales representative for assistance,” Testa says.
Parkhurst says that if multiple bids are established, it’s the back and forth between those vendors that [can] take up so much time. All attention is devoted to fulfilling these types of orders, leaving other requests at a standstill.
“Luckily for our biomed department, there are two of us so other requests aren’t delayed,” she says.
Soliciting accurate information is often a challenge.
“Obtaining accurate part numbers, firmware and software versions, and part descriptions to ensure that you order the correct part,” Parkhurst adds.
While maintaining costs and addressing the immediacy of broken equipment that requires a rapid repair are high on the parts purchasing priority list, the process has been helped through technology. For every parts procurement dilemma and challenge, there is a solution or temporary compromise. As with every challenge; knowledge is power. When the HTM department has a need, there are providers with a solution.
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