How asset tracking can potentially save money

As professional medical equipment appraisers, we see it on every assignment. Every surgery center or hospital we have been in seems to have one or more rooms that can be likened to the "Land of misfit / forgotten toys." You know the room…it is often filled to capacity with equipment that is only occasionally, sparingly or never used. In some circumstances even opening the door to get into the room may be difficult.

The room is usually “organized” (using the word very loosely) with equipment that is occasionally used nearest the door and, as you move further back in the room, the equipment tends to be used less and less. By the time you get to the back of the room (if that is even physically possible) you find equipment that may not have been physically moved for years.

In some cases this equipment is idled because it needs repair or may be obsolete. However, in many cases we have found that this equipment is idled because it was purchased for a specific surgeon who is no longer on staff or for a procedure that is no longer performed. In many instances this equipment is new or almost new and is still useful. The cost new can be very high.

If you operate multiple locations, the number of pieces of equipment can be very significant and the dollars tied up in unused equipment can be very high.

We have found, in most cases, staff at the particular site knows what is in the room but often staff at other affiliated locations are unaware of it. This can be an issue if they need a particular piece of equipment.

When a new surgeon comes on board, a center starts a new procedure or if a piece of equipment fails and cannot be repaired, the first reaction is purchase new (or used) equipment.

Having been in hundreds of centers over the years and in some cases being in multiple related locations we have heard stories of a given location purchasing very expensive equipment when we just saw the same (or comparable) equipment sitting idle at another related facility. This makes a sales person happy but can be a waste of money if comparable equipment is not being used at another facility.

Having a well-maintained database of idled or unused equipment can save healthcare providers significant dollars each year.

Ideally, the database would have a system-wide administrator who would be responsible for making sure it is updated and accurate. This position could be filled by one of the existing biomedical personnel or could be outsourced.

The first stage is to take a comprehensive inventory of the medical equipment at each facility and identify those assets which are idled (either temporarily or permanently) and whether they are "available" for a specified time frame or on a permanent basis.

This inventory should include data such as manufacture, model number, serial number, date of manufacture (if available), center location and other pertinent information such as what may be wrong with the equipment if it needs repair and the last biomedical inspection date. Pictures may also be helpful.

There should be an easy way to track each asset as they move from center to center. In order to easily accomplish this, each piece of equipment should have a unique identifying number physically on the equipment. As such, as part of the inventory process, it is recommended that a unique identifier tag be affixed to each piece of equipment inventoried.

The biomedical numbers are not always a good option to track items since they can be duplicated if different biomedical companies are used at different locations.

The initial inventory can be handled internally but we would recommend hiring an outside firm that specializes in this process for a variety of reasons including:

• Center personnel are very busy and such a project would add stress and work to already full workloads
• Projects like this lose priority quickly and take a long time to complete if done internally
• An outside consultant would be consistent in their descriptions and data gathering between locations
• Outside consultants can accomplish the process in a compressed time frame
• The initial tagging and sequencing can be better controlled and managed

The second stage is to set up procedures and train center personnel on how to identify idled equipment, report it to the administrator for inclusion in the database and how to request equipment that they might need that is listed in the database.

The second stage may be the most difficult part of the process. Past history indicates that center personnel are very protective of their equipment and never want to get rid of it. They feel that, someday, they may need it. The problem occurs if and when this “someday” never comes. Changing this attitude and perception may be a bit of an uphill battle but once that is overcome, significant dollar savings may be realized.

The database would have to be accessible by the appropriate personnel at each facility. A process would have to be put into place where the database has to be reviewed prior to any purchase or leasing of equipment.

Once an asset is found in the database, a request would be made to the administrator who would work with the sending and receiving centers to arrange shipping, biomedical checks (if required) and any details regarding transferring any service plans etc.

If the item is only to be loaned for a specific period of time, the administrator would also be responsible for “reminding” the center to return the equipment to its owner. If the item is a permanent relocation, arrangements would have to be made for proper accounting (asset records) transfers as well.

In addition, periodic in-person audits should be undertaken to assure that the database is accurate, up-to-date and that centers are really providing a listing of all of their idled assets.

An added benefit of performing the initial inventory would be to identify equipment that may be listed on the fixed asset records or in biomedical listings which no longer exist. This can save money in several ways including personal property taxes (if applicable in your state), biomedical costs, and other costs.

Along with the idle equipment database, centers may consider performing periodic "lifecycle" analysis of the equipment on hand and integrate a "lifing" plan into the equipment database.

Surgeons typically always want the "latest and greatest" technology but is it really "needed"? On the other hand, at times, equipment is utilized way beyond its intended life and needs to be updated.
A periodic and thorough review helps in many ways. It can:

• Lessen repair and maintenance costs
• Assist in planning short and long term Capital expenditures
• Lessen “surprises” when equipment breaks down or becomes obsolete
• Assure that the facility is up to date

Obviously, this type of analysis needs to be performed by someone who understands the entire medical equipment marketplace. Sales reps often offer this service but they have an agenda. They want to move you to new equipment, make their commission and move on to the next buyer. In addition, they often offer only equipment from one or limited manufacturers. We are NOT saying sales reps cannot provide good support and recommendations, but they often have bias.

Having an independent person perform the analysis opens up brands and products that may not have even been on the radar of surgeons or center personnel.

A well detailed life cycle plan should include the following:

• A listing of the major items at the location
• An estimate of remaining life
• A brief analysis of upcoming technology and manufacturer support plans that may adversely affect the lives of the assets
• Cost to buy the equipment new and/or used
• Information on lease versus purchase options
• Comparison of options for major equipment

Due to changing technology, this type of analysis should be undertaken every few years.

In conclusion, taking some time to develop a comprehensive database and extending the efforts to upkeep that database can save money and time which will provide a better return to your investors and patients alike.

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