Clinical asset management technology can help health systems streamline medical device costs. Here is how.
By Dave Klumpe
Clinical asset management is costing many hospital administrators more money than necessary This isn’t to say that they are intentionally wasting money. They’re not. But when it comes to buying medical devices, a host of factors can make savvy purchasing challenging. Rather than being a cost center, though, clinical assets and how they are managed has the power to save hospitals money.
Sophisticated clinical asset management (CAM) technology can give hospital administrators actionable insights on how not only to best spend money on devices moving forward, but also on how to curb the operational expenses a health system already incurs. Moreover, a CAM solution can unearth value buried under unorganized purchasing processes, workflow shortcomings, and other inefficiencies.
What Leads to Unnecessary Medical Device Spending
A number of factors can cloud what a hospital system’s actual spending is on medical devices, and the problem begins with the lack of an accurate inventory. After all, you don’t know what devices you may need if you don’t know what devices you have. Although obtaining visibility into a health system’s fleet seems clear-cut, it is not.
Getting an accurate inventory can be challenging since many medical devices are on the move. In fact, TRIMEDX data indicates that 85%-90% of a health provider’s clinical assets are mobile. Devices can move from room to room, floor to floor, and hospital to hospital, which makes it difficult to keep abreast of their location. That, in turn, complicates a health system’s ability to maintain visibility into all its assets.
For budget hawks, just following a paper trail can also lead to an incomplete picture of device inventory. Hospital management may not see budget expenses tied to medical devices since different departments make different equipment purchases, thus spreading out the costs.
A third factor that can lead to overspending on clinical assets is making buying decisions based on personal preferences or anecdotal evidence. It’s easy to see how this scenario unfolds. A department head thinks they need more insulin pumps because they can’t find any. An administrator without a broad view of asset outlays concurs and, thus, sanctions the purchase of more insulin pumps.
Far less clear is whether the device is in short supply. One department may need a monitor, but the hospital overall may not. Or one hospital may need a monitor, but the overall hospital system may not. A monitor on another floor or in another hospital may be available, but the lack of visibility suggests a need when one is not present.
Further, TRIMEDX data indicates that hospital and health system medical device inventory can vary up to 40% between what administrators think they have and what they have on hand. What’s more, most organizations use only 40%-50% of the assets in their inventory on a daily basis.
Such pronounced gaps between perception and actual need is why an accurate inventory is so critical to controlling expenses. Even when an actual need exists, purchasing mistakes can be made that add unnecessary costs. Moreover, departments individually making equipment purchases from different vendors lack the financial leverage of buying equipment, parts, and consumables in scale.
Purchasers also may agree to costly service contracts when in-house clinical engineering teams or outside contractors could do the work instead. Service contracts tend to encourage hospital staff to immediately call the original equipment manufacturer for repair and preventative maintenance rather than relying on the team the hospital uses. What follows are mounting unmonitored costs when services outside the contract are rendered. In addition to these bill-aboves, many service contracts also have an auto-renewal clause. And the service contracts can ultimately exceed the cost of the equipment itself.
Clinical equipment represents about 25% of the annual capital expenses of a health provider and up to 2% of the operating expenses. In short, unnecessary spending on clinical assets are expenditures a health system can’t afford.
How Clinical Asset Management Improves Equipment Forecasting
Sophisticated CAM technology can align spending with actual need. After all, full, real-time visibility into your entire fleet provides the necessary baseline to curb unnecessary capital expenditures while reigning in operational costs.
Administrators can move past a reactive, “break-fix” maintenance model into an equipment assessment that includes cost trends, performance, and service history. Armed with this information, healthcare leaders can avoid the blind spots and pitfalls that lead to inefficiencies and the consequences of waiting until a device completely fails to replace it—a practice that can needlessly consume large amounts of capital.
Moreover, an accurate, real-time inventory as part of a robust clinical asset management solution allows a health system to right-size its equipment needs. Plus, health providers can avoid inventory surpluses that are costly and unnecessary without compromising patient care.
True visibility into the fleet inventory and its total capital and operational costs allows administrators to make unbiased purchasing decisions based on data, not personal preferences or anecdotal experience. Fortunately, a clinical asset management solution accurately tracks and forecasts performance, service needs, and costs for every piece of clinical equipment.
The technology also unlocks tremendous return on investment for the assets already on-hand. In addition to providing data on the amount of inventory, algorithms can offer detailed asset replacement and service recommendations by hospital, department, and asset category based on regulatory compliance, historical performance, and total cost of ownership factors such as maintenance, service, parts, failure rate, and downtime. With deep insight into the status of each piece of equipment in the fleet, administrators are far better informed about when a device should be replaced or if other avenues present a more cost-effective option. For instance, maybe an upgrade will suffice.
Moreover, a health system can extend equipment life and performance for years after a manufacturer ends support. Clinical asset managementtechnology continuously evaluates whether recalls, updates, or patches are needed and can assess whether an upgrade is financially viable based on historical performance, parts availability, and other factors associated with individual pieces of equipment.
Another option is to reallocate a device. Right-sizing equipment needs isn’t just about inventory management in a broad sense, but also about allocating the right equipment to the right places to best suit demand at individual locations. Even when the time comes to move on from a given device, a clinical asset management solution can provide savings there, as well.
Plus, unused equipment might have value on the resale market, depending on the total cost of ownership the solution tracks as well as other factors. And the use of a clinical engineering solution allows a health provider to avoid service contracts—which, in addition to being costly, fail to utilize the internal talent and external resources the health system already contains.
One additional aspect in how a clinical asset management solution can help save money involves cybersecurity. A breach can prove costly, whether a device vulnerability provides network access to seize records or a hack attacks the use of the medical devices themselves. A must? A solution that detects and remediates threats.
A solution’s cybersecurity profile can also help with lifecycle management. A risk assessment can evaluate a medical device profile, device behavior, and the potential impact on patient safety to drive recommendations on whether to replace, upgrade, or dispose of a device.
From overbuying assets, such as devices and supplies, to replacing equipment that still has life, many hospital administrators are spending more than necessary on clinical assets. Enter: a clinical asset management solution, which has the power to save hospitals money through continual real-time inventory monitoring, cost-efficient purchasing practices, and lifecycle management that maximizes ROI. Clinical asset management technology helps optimize the use of devices, controls operating expenditures, and allows more strategic capital planning while ensuring devices are safe and effective for patients.
Dave Klumpe is president of clinical asset management at TRIMEDX. Questions and comments can be directed to 24×7 Magazine chief editor Keri Forsythe-Stephens at email@example.com.