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Expect the Unexpected: How to Minimize Risks With Capital Purchases in Healthcare

December 5, 2015

If you’ve ever done a trail walk with a good guide, you’re never surprised to see just resourceful that individual can be whenever something unexpected comes along the way. Good training certainly helps, yet the trail guide is good because he applies his know how and his ability and willingness to communicate in order to not only keep you away from the poison ivy, but also leave you better prepared to expect the unexpected the next time you’re ready to embark on another wilderness adventure.

 

Healthcare organizations often face what can appear to be a weed whacking journey through the asset management forest, particularly in the area of service agreements and what is covered vs. what is not. The purpose of this article is to give you a look at what can be done to make your equipment purchases less of an exploration in randomity and dispersion and more in line with what you actually need and want for your clinical departments and your bottom line.

 

In many healthcare organizations, equipment purchases are made “as needed” or in an emergency situation when a unit no longer is supported by the OEM and replacement parts are difficult to obtain. This creates unnecessary stress on staff in the form of what’s referred to as “developed traffic.” In other words, instead of applying attention and time to patient care and routine departmental tasks, you now have key people reacting to the sudden demand to do even more with less as they try to cope with equipment downtime, patient backlog and the overall accordion effect that all has on workflow, delivery and operating costs.

 

In a busy healthcare services environment, there are many forces that can justify a lack of time for proper capital planning. Nevertheless, if you streamline this process with just a few key actions you can work your way back into a state of optimal planning and budgeting.

 

Start by creating a cross-departmental team that includes clinical staff, purchasing/materials management and your in-house or outsourced medical equipment service provider.  Get this group in a meeting no less than four times per year; more often if your hospital has major expansion plans on the table. Here is what should be on the agenda for each session:        

  • Review recent asset purchases

  • Evaluate what was negotiated in each deal; what worked for you in that purchase, what didn’t

  • Determine what may be applied as a part of a purchase process moving forward

  • Find out if there were unnecessary costs/delays because training in-house wasn’t leveraged

  • Identify the elements of the process that worked well enough to make you want include them in future negotiations (design, placement, installation, etc.)

  • Always consider the impact your purchases will have on workflow. How can the clinical staff and the service provider collaborate to determine how to maximize workflow?

  • Create the committee approach without the paralysis. There are many instances in which clinical staffs have gained tremendous consultative benefit while working with a resource that has detailed, practical knowledge of numerous capital equipment service agreements. Just recently, DESCO Medical helped an ambulatory surgery center save several thousands of dollars in parts cost and out-of-warranty services simply by going over the impending purchase agreement he was about to sign on new sterilizers.  The ASC had done everything right in searching for a vendor including a solid reference check. When we examined the contract, we discovered several vital points on replacement parts that were not included in the agreement as proposed. The point being, not every agreement you see will be standard from one provider to the next, so having that external viewpoint can be invaluable.

Another area often overlooked involves contract add-ons. Though they may appear to have some promissory value at the point of purchase, certain add-ons are not always worth the additional fee. You can avoid this by vetting the data among your clinical staff and service provider before the transaction.

 

When you think you have all the data, check again.

 

Feedback from clinical and the in-house provider about recent service issues or aging equipment can be weighed against existing technical support and work order trends. Your in-house service provider has all the trends and work order history and can provide reports to help you make a more educated decision.

 

Negotiate training for your in-house staff for warranty service.

 

Never underestimate the technical skill sets and practical know-how of your in-house team. There is existing talent within in-house staff on specific technologies that transfer seamlessly to additional modalities. If you outsource, this can be a conversation with your outsourced service provider. There are many instances in which hospitals pay more than they need to in order cover the cost of new equipment warranties or extended warranties.  Quite often the remedy here is a simple one; align existing skill sets within similar technologies or look for opportunities to apply standardization when possible. Some orientation and training will continue to be needed, particularly on new equipment. However the savings can add up if your in-house team is confident and capable in handling equipment issues and minimize reliance on the OEM for support.

 

In many ways, it is a buyers’ market.  You have more negotiating power than ever before, especially in capital equipment warrant inclusions and exclusions. For example, as a part of a new purchase a non-negotiable term can cover the cost of training for your in-house staff or your preferred service provider. You may be able to secure direct OEM training for either one, or three to six months of on-site technical support, and/or negotiate a parts-only warranty at no additional expense. 

 

And finally, as a part of any negotiation, always ask for the service manual, operations manual, as well as any software codes or service keys before you close the deal. Some vendors will actually charge as much as $1,000 to provide a service manual after a purchase is done.  Negotiating up front, allows the OEM to provide these at no cost.

 

If you’d like to go over any of these points, or get some guidance on your asset management, contact us today.

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