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Understanding total cost of ownership Making sense of costs less tangible than a sticker price

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Beyond service: Life cycle management

By James Laskaris

This year’s AAMI Conference drew record attendance to Long Beach, California.

From the August 2018 issue of DOTmed HealthCare Business News magazine It could have been the location, but more likely it was the desire of thousands of dedicated professionals to discuss the rapid advancements in healthcare and to keep current in a dynamic market.

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Safety has always been a major focus at the AAMI Conference, but with new evolving forms of reimbursement strategies this conference also generated a lot of excitement on healthcare technology management, IT, and legislative issues – all key elements that impact the field. Cost control and patient safety were at the forefront of the discussions. It is clear that the profession has expanded beyond merely servicing technology to managing its whole life cycle.

The discussion of Healthcare Technology Management (HTM) has now expanded to encompass “life cycle management”. This takes HTM well past the preventive maintenance and repair of equipment. It includes basic topics such as the nomenclature to use when identifying a device (a common challenge today), tracking expenses, and forecasting service and replacement costs – all key factors in keeping budgets under control, especially when hospitals are facing the financial challenges of emerging value-based purchasing reimbursement structures.

In the realm of tracking costs, multiple companies, both old and new, presented Computerized Maintenance Systems (CMS). Vendors listened to their customers’ needs by offering packages focused on reducing costs and downtime with data mining intelligence that can generate a variety of reports. These reports offer leadership the ability to track costs and failure rates, giving the manager a clear picture of when to shift resources or even retire a technology.

Each year the U.S. healthcare industry spends more than $15 billion to provide service on medical technology. This makes service a major target in cost reduction. George Mills, previously of the Joint Commission and a well-known name in the industry, discussed Alternative Maintenance Programs. These are designed to allow in-house staff to modify maintenance requirements relative to the level of risk to the patient and to the historical service record. The goal is to reduce costs while meeting Joint Commission requirements.

An ongoing challenge facing both in-house and third-party service organizations is the requirement by original equipment manufacturers (OEMs) that servicing of medical technology be performed only by the OEM. Over the past year, the FDA has reviewed its Reauthorization Act of 2017 to determine whether third-party servicing of medical devices is good practice. Earlier this year the FDA ruled that there is insufficient evidence to “justify imposing additional/different burdensome regulatory requirements” on third-party servicers of medical devices. Though new legislation has been proposed in the House, this ruling should present a good argument that, with proper training, in-house and third-party service organizations should be able to repair medical technology. This would be key to cost reduction for most providers
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