Q: What are some areas you have seen often overlooked for savings/expense reduction opportunities?
Dale Hockel: One of the primary areas often overlooked for savings opportunities or potential expense reduction is service contracts. During the capital purchasing process the original equipment manufacturer (OEM) may convince the purchaser and/or department head (key decisionmaker) that he or she needs an extended service contract for maintenance and repair after the warranty period. Typically these are expensive contracts and many times the maintenance and repairs can be done for less by on-site technicians or through a local service partner. In fact, one major way TriMedx reduces expenses is through an in-source model. Rather than rely on manufacturer service contracts, instead we invest in in-house technicians who are trained and qualified to perform these duties at a fraction of the cost of an OEM. Plus, technicians on-site or nearby can respond immediately to the service call, which greatly reduces downtime and helps increase patient throughput.
It is also important during the procurement process to beware of point-of-sale service contracts from the OEM, which can sometimes result in lost leverage after the PO has been issued. Alternatively, look for opportunities to extend warranties that ensure training, include software updates and service keys (built into the purchase contract). This puts the hospital or healthcare provider in the driver seat when it comes to equipment management — not the OEM.
Additional opportunities for savings and expense reduction relative to medical devices involve equipment that historically has not been part of the biomed program, such as sterilizers and beds. Many times these medical devices are under an external service contract that is unnecessary. By relying on talent and experience of in-sourced clinical engineering staff or first-response, on-call service technicians you can save significant costs. Going forward, as hospital beds become more sophisticated, they are no longer just a piece of furniture. Certain “smart” beds are now considered therapeutic and diagnostic medical devices. Thus, it is imperative to have them under the guise of equipment experts. This not only helps protect an investment that can cost up to $50,000 per bed, but also keeps healthcare providers compliant with regulatory agencies who require therapeutic and diagnostic medical equipment to be inspected and maintained according to stringent standards.
Another area that can help reduce expenses is balancing “preference” driven by department heads and doctors. A sensitive subject, capital equipment planning committees must harmonize the end user’s desires to optimize medical equipment with the organizational goal to control expenses. Standardizing medical equipment across the organization is one way to curtail expenses that also offers several fringe benefits. Not only can you garner greater economies of scale when purchasing in larger volume across multiple departments or sites, end-user training is expedited due to the existing familiarity with specific product lines. Plus, there is increased potential for interoperability with existing networks and devices, which not only reduces expenses, but gets new equipment up and running faster and lowers the risk of loss of patient data and workflow disruption.
Therefore, standardization of medical equipment reduces cost for everyone. For example, the end user (nurse) of the equipment doesn’t have to know how to operate three different types of pumps for example. The technician maintaining the equipment is able to focus on one type of pump. When parts are needed and purchased the variability in vendors and parts is reduced with one model and manufacture. And IT doesn’t have to worry about integrating the new device into the system. Everyone benefits!
Q: What is an area in which you have seen organizations overspend that does not justify such an investment?
DH: Everyone likes the latest and greatest features and functionalities. Typically we’ve experienced a situation where the hospital has purchased a medical device that has extensive bells and whistles, but the healthcare provider doesn’t necessarily need the “extras.” While in some cases it is advantageous to purchase medical equipment that will support the needs of tomorrow today, sometimes less is more. Make sure the medical equipment has the features and functions to do the job, but don’t get caught up with the need to have the next big thing. The basic model may have all of the features and functions necessary to do the work and cost significantly less. Just like when buying a new car, be especially careful and cautious of emotional buys. Do your homework in advance to know exactly what you need to achieve your business goals and that will help you avoid getting caught up in the hype.
As vice president of clinical engineering services and supply chain for TriMedx, Mr. Hockel ensures operations for 500 customers across the country. Prior to joining TriMedx in 2007, Mr. Hockel served in various senior-level roles for respected organizations including Sunflower Group, Diebold, Rockwell and Sony. Learn more about TriMedx.
