By Joe Eichberger

How CMMS’ can help hospitals manage their assets for results

With the cost of hospital medical devices rising rapidly, it’s necessary to know what you have, how it’s being used, and how it’s being maintained. After all, good data enables you to make smart, informed decisions—rather than those based on “hopes” and feelings.

A computerized maintenance management system—aka a CMMS—allows hospitals to manage, track, and report on all aspects of an asset’s lifecycle including: preventative maintenance, corrective maintenance, work orders, availability, recalls, and disposition. A CMMS lets you know where your assets are; what the repair, calibration, and update costs have been; and how long the equipment has been down or unavailable. It can also track the accounting entries for acquisition, depreciation, and real-time book value.

Moreover, the cost of a CMMS package is only a fraction of the value of the inventory you’re responsible for maintaining. Even if you are just the “caretaker” of this inventory, the responsible parties rely—or should rely—on your data to make sound replacement decisions.

The Basics

Hospital equipment assets, while purchased for millions, cost many times their purchase price to maintain. With a good CMMS, the data needed to make smart, cost-effective service, procurement, and retirement decisions is available. And, while collecting cost data, you’ll have the information to comply with and pass all certification inspections.

Installing a CMMS at the hospital also ensures compliance to Joint Commission, DNV GL, and Centers for Medicare & Medicaid Services (CMS) standards. But just using the CMMS for your certification is an opportunity lost. It also can provide the lifecycle financial data needed to perform smart, cost-effective asset management.

Some of the challenges and opportunities a CMMS helps you address include:

  • Maximizing the availability of your assets and only buying more of what you need
  • Retiring equipment that’s no longer in service
  • Reducing theft and scrap by tracking and accounting for all assets
  • Severing vendor service contracts for assets no longer used or needed
  • Retiring or refurbishing equipment that no longer meets the current standards of care or service
  • Replacing end-of-life equipment and their expensive service costs
  • Freeing up staff from hunting for lost and “closeted” equipment

Too Much Data in Too Many Places: Many organizations can’t pull their fragmented and diffused records together. A CMMS centralizes the data—allowing it to be aggregated, sorted, sliced, and diced to look at the assets from many different viewpoints. Decisions on when to buy and retire an asset can be data-driven. Plus, the CMMS works in real time: it’s available for budget reviews or when a new product becomes available for comparison with your current equipment.

No More Silos: For multi-facility institutions, a CMMS can help users share certain equipment, aggregate parts and supplies buying, maximize talents for maintaining and calibrating complex equipment, and identify assets that need to be retired or replaced institution-wide. With proper use of the CMMS, reducing underused assets even 5% to 10% is highly likely and can trim millions from the capital assets. A hospital-focused CMMS can unlock these savings within a couple of years.

Cross Functionality: Although a hospital’s finance team handles financial records, the equipment users and providers should know when their equipment is no longer cost-effective and should be retired and replaced. With a CMMS, the costs of all medical support devices, instruments, and facility capital equipment are available. And while the rules for amortizing and depreciation are needed for book values, they don’t measure effectiveness. With CMMS data, health IT and facility management can provide the real information finance needs to authorize sound replace/retire decisions.

Furthermore, it’s nearly impossible to manage the history and cost records of thousands of assets if the records are scattered across several departments. A CMMS provides a central repository—automatically aggregating costs and showing trends that highlight when retirement is needed, irrespective of the equipment’s expected lifecycle.

Standardization: Greater cost savings are available by standardizing equipment and buying from fewer vendors. A smaller device catalogue will reduce costs by providing purchasing with more procurement leverage as well as cutting training time and decreasing the repair parts inventory. It also increases knowledge about which equipment to keep and which to perhaps buy more of. The CMMS’ service, repair, and calibration records provide valuable standardization insight.

Receipt and Installation: When implementing a new CMMS, proper staff training and installation really pays off. For example, when an asset is added to the database, it must be described in some standardized manner if the database is to be useful. Over time, many hospital asset records become confused and obtuse. This is particularly critical in larger institutions with multiple departments and facilities. If piecemeal decision-making is to be avoided, a common vocabulary will help inspire good decisions.

With new purchases, warranty, prescribed maintenance (or alternative equipment management, aka: AEM) and calibration routines, license agreements, service contracts, and user documentation (including service manuals) can be entered into the CMMS database. This is key information that helps to avoid unnecessary or inept service.

Having the manufacturer’s recommended service (or AEM), calibration, and supplies replacement schedules in the CMMS database enable work orders and schedules to be automatically generated, as needed.

Stocking and Deploying: When a new device is received, it is stocked or deployed. Once deployed, the CMMS can track its location via a real-time locating system—and, in the case of devices with interoperable test and monitoring features, it records its performance. A recalled item will receive an automatic recall notice from the CMMS having an ECRI service connection. Although this may sound intuitive, it’s important to note that hospitals often lose lawsuits when a piece of equipment remains in service after it was recalled.

Most manufacturers provide recommendations for stocking repair parts. A CMMS can generate parts requisitions when inventory levels fall to the reorder points to keep stocks from being depleted. But—and this is quite significant—a good CMMS will also highlight areas where the manufacturers’ recommendations are not effective or cost-justified. This allows the inventory levels to be adjusted to save on carrying costs or reduce shortage costs.

Maintenance Costs: Given today’s requirements for maintaining medical equipment, most hospitals will find that they need to set up their own maintenance program to keep costs in line. A CMMS will track maintenance costs and classify equipment that must be maintained per the manufacturer’s recommendations. With sufficient maintenance experience documented in the CMMS, most equipment can be shifted to a risk-based AEM program allowed under CMS regulations.

AEM-eligible equipment offers opportunities to reduce service costs and improve availability. With a CMMS, the service practices are documented, the costs are collected, and the regulatory compliance data is available, including your own AEM program.

Service Contracts: Items serviced by contractors can be included in the CMMS if it has a contract-monitoring module to collect costs and record service dates. And, by monitoring contractors’ costs against specific equipment and devices, it’s easy to rate the efficacy of the service contract.

Running Costs: Manufacturers often issue orders to modify, upgrade, or even recall and replace equipment. While the manufacturer incurs costs, the hospital has costs too. A CMMS can contain an ECRI Institute module that tracks alerts, thus providing a more complete and meaningful measure of device costs.

When to Retire: Just because the new technology brings highly valued functionality, it doesn’t mean the old asset is useless; in fact, it may have value in another application. With a CMMS database, the guesswork for ongoing service and support can be eliminated and a data-driven redeploy-versus-scrap decision can be made.

Disposal: When an asset is being scraped or sold, the CMMS database stores information describing these actions. Many devices have proprietary software, hazardous materials, limited licenses, or reusable parts and assemblies that can be used to service equipment still in use. All of these considerations can be documented and an audit trail can be created to show that a proper disposal took place. Note: A disposed asset may still have book value—or perhaps if sold, scrap value. Accounting needs to know this information.

Scrap decisions are compounded when an institution has multiple facilities and multiple units of the device or equipment. With a CMMS, all the necessary data can be aggregated and a detailed history can be kept. As previously noted, even when equipment is discarded, its history is still important—since the possibility of a lawsuit after an adverse event doesn’t always go away with the equipment.

Lifecycle Management: We know that the care and maintenance of many assets over their lifecycle is their dominant cost-driver. A CMMS streamlines efficiency by providing the tools to schedule regular maintenance, keep statistical data to guide decision-making, manage outside support contracts, and issue work orders. It also helps hospitals by automatically preparing alerts and recalls, initiating procurement actions in a timely and efficient manner, providing cost analyses according to various departments’ needs, and detailing the disposal of old equipment.

And, finally, remember that a good CMMS can be structured to match the needs and size of the hospital.

Joe Eichberger is CEO of Charlotte, NC-based EQ2, LLC, which offers a CMMS known as “HEMS.”