Start By Asking These 3 Questions
1. What is our overall annual medical equipment maintenance spend including in-house, outsourced, OEM, T&M, etc?
2. Do we have long-term contracts?
3. Is there a cost reduction goal?
As fiscal uncertainties remain and revenues continue to trend downward, it seems the need to reduce costs gets more important with every passing day. It’s increasingly important for healthcare facilities to find innovative ways to trim as much wasteful spend as possible. Not only is reducing cost imperative in today’s economic climate but a structure needs to be in place that helps identify, quantify, execute and sustain those cost savings over the long term.
At the heart of any cost reduction discussion is knowing the correct questions to ask your team in order to know. Today, we’ll discuss the clinical engineering department’s role and how it can be an area where there may be significant hidden savings. Understanding the total cost of your facility’s current medical equipment maintenance program is paramount to finding savings. And to get a clearer picture of your program you need to look at all the contracts included in your maintenance program whether they are in-house, outsourced, OEM costs, or Time and Material costs to name a few. Cost reduction is never easy.
Assessing the Overall Medical Equipment Repair Spend
Assessing your current clinical engineering program includes taking a complete inventory of the medical equipment on hand. Begin by analyzing all the contracts associated with the biomed maintenance program. You may find that you are still paying for maintenance under a maintenance contract for equipment no longer in use by the facility.
By “Right-sizing” your facility’s inventory, or evaluating and removing any excess equipment, you will gain significant savings and can even create income for the entire system if the inventory is removed and replaced with revenue-generating equipment. This process not only removes excess or unnecessary equipment, it also eliminates excessive labor costs, preventive maintenance, repairs, and parts. Right-sizing inventory maximizes the current spend while helping the hospital prepare for future equipment and technology needs. The best place to start is by conducting an inventory assessment across all departments and modalities to determine where there are gaps and overages.
The assessment should also include interviews with major stakeholders in order to get clear understanding of all the policy/procedures or protocols used to keep the program running.
Multi Year/Multi System Maintenance Contracts
Every hospital ultimately needs to safeguard their investment in high-priced sophisticated medical equipment. But they want to protect that investment without paying high prices that are associated with a service contract. There can be a balance: exceptional maintenance with a price tag that’s not as daunting as an “out of the box” service agreement.
Often times there can be cost efficiencies realized when hospitals agree to multi-year contracts or to multi-system contracts. In both cases the more you buy the greater the discount. Realize even greater savings by using these together.
In order to take advantage of any service contract savings, consider the following:
• Choose an 8 a.m. to 5 p.m., Monday-through-Friday option
• Hospital systems can take advantage of savings by combining all the same OEM equipment under one contract with various service options based on each site’s level of need
• Analyze the labor and parts expense history of each piece of equipment currently covered under contract to determine the parts and any outside labor budget
• Reduce coverage options on equipment maintenance you feel comfortable handling
Is There a Cost Reduction Goal
Hospital leadership needs to clearly understand their cost reduction goals and be able to communicate those goals in a way that makes everyone accountable by translating it to tangible actions for all involved. Taking this approach will facilitate the communication of cost savings goals to front-line staff and provide clarity on what needs to be done to achieve any stated cost reductions.
Often times when the conversation about cost reduction takes place most people automatically think staff reductions, or cost cutting reduces patient satisfaction. Leadership can set the tone early by addressing any fears by communicating how any cost savings will be realized, such – adjusting inefficient operational processes, strengthening soft skills. Clear communication will help to diminish fear among staff who may equate cost savings opportunities with job loss.
A tangible goal may be a 10% reduction in costly OEM contracts. Can these repairs be handled by an ISO? There tends to be a fear associated with moving contracts away from the OEM. To ease this fear simply ask the ISOs engineers where they previously worked. Often times the answer is they worked for the OEM that made the equipment being repaired or they are OEM trained and certified. Not only can they provide outstanding maintenance service but the customer service and attention to your needs on a facility level will regularly surpass the OEM. Even if the OEMs were willing to base their charges more reasonably on the cost of providing service, they would generally be much higher than they should be due to the elevated costs to the OEM. The reasons for this are clear. The design, manufacture and distribution of medical equipment is a global enterprise, and the OEMs are organized along these lines. For them to do otherwise would be impractical.
Significant service cost savings can be realized after reviewing your current medical equipment service strategy. Note that not all facilities have adequate Clinical Engineering (Biomed) or Health System support to help reduce expenses. Rather, they can take advantage of negotiating the proper contract based on their own needs assessment.