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Smarter spending in the HTM department

October 14, 2020
From the October 2020 issue of HealthCare Business News magazine

For example, a 20-hospital health system with $600 million in clinical equipment assets could spend between $24 million (4% COSR) and $72 million (12% COSR) annually maintaining its clinical equipment.

However, more spend does not equal higher performance. “People think if you have more, you spend more, you have more staff, more contracts, whatever, then that equates to a better run system, and all it equates to is more spend,” Horn said. “I can’t stress that enough.”

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Opportunities for cost savings
• Reduce your reliance on service contracts. The more reliant you are on service contracts, the higher the COSR will be.
• Consolidate and renegotiate service contracts. Identify all agreements you have with the same vendor and same type of equipment. Then analyze and compare vendors. “Identify which coverage levels you really need and negotiate a consolidated master service agreement,” Horn said. “If you have like-devices with the same vendor, renegotiating for a master service agreement can save significant amounts of money.”
• Establish shared service and parts-only agreements. Implement policies that allow the HTM department to troubleshoot the issue before calling in a vendor. Parts-only contracts will also decrease costs if repairs are needed.
• Never pay list price for capital, service, or parts. Everything’s negotiable. “Use your group purchasing organizations,” Horn said. “There’s a starting point, but always negotiate those costs down further.”
• Say no to point-of-sale service contracts. “Vendors will say there’s a big discount if you buy it now versus waiting until later,” Horn said. “If you buy a new car and it has a good rating, you can expect that car to run pretty well for the first few years. Equipment is the same way.”

Tap your department’s computerized maintenance management system (CMMS) to determine need for high-cost service contracts, establish baseline COSR, identify annual maintenance costs and COSR by device, compare vendor costs and trends, and improve negotiations. Data will also help you identify equipment with excessive downtime so that you can replace it instead of spending on routine repairs.

“How many times, — and I guarantee you this happens all the time — where you may have a $50,000 device and somebody buys something [needed to fix] that 10-year-old device, [do you find] it costs $10,000, or $20,000?” Horn said. “Those are the times when you need to start having conversations about replacing this device versus throwing good money at bad equipment. But you need to have the data to know if this is happening.”

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