Three Models for Surviving Healthcare Reform

By Michael Bassett

Watch presentations by the three HTM department heads featured here in a special on-demand webcast.

As we head into 2014, one thing is clear—the healthcare environment is continuing to change, and in ways that no one predict with clarity. The Affordable Care Act and the adoption of different payment models like accountable care organizations are introducing a high level of uncertainty into healthcare organizations. The resulting question for many biomedical technology managers is what they can do to help their departments survive—and, better yet, thrive—in an era of healthcare reform.

Living with Cost Constraints

Talk to most managers and you will find that they agree on at least one unquestionable fact—whatever they do will have to be achieved in a cost-efficient manner. As Izabella Gieras, MS, MBA, CCE, director of clinical technology at Huntington Memorial Hospital in Pasadena, Calif, points out, “Cost constraints impact everything we do within the hospital and clinical engineering department.”

One tactic her department has employed to increase its efficiency has been to introduce a simple change in departmental design. It’s a simple thing,“ but it is amazing what kinds of wonders it can do for long-term planning,” she says. “Simple things like reorganizing the space, looking at how equipment comes in and goes out, which impacts open orders and turnaround time for completing the work orders, which leads to increased end user satisfaction.”

Another step her department took was to re-evaluate all of its contracts in order to see where it could consolidate. This master contract approach, Gieras says, “has led to tremendous cost savings.” And the clinical technology department has moved from full service contracts to partnership contracts, giving it the ability to do a lot of equipment maintenance and repair in-house, while maintaining the flexibility to go to the vendor in certain cases.

“Accountability,” is a buzzword at Huntington, Gieras says, and subsequently, her department emphasizes documentation and reporting. For example, employee accountability reports help to ensure that her staffers have at least 90% of their productive time accounted for on a weekly basis. And she gets automated open repair and maintenance reports at 5 am each day, which then go to her lead technicians.

And quarterly reports on departmental activities, as well as reports on cost savings from service contracts and cost-avoidance activities make their way to the C-suite, since, “This is really the value that we bring as clinical biomedical engineering departments, and we want to make sure we highlight that appropriately to the right people,” she says.

While patient safety is “embedded” in everything her department does, particularly when it comes to equipment management and evaluation, there are aspects of the process that lend themselves to cost savings and efficiency. For example, her department has instituted a reward system for locating missing equipment. And education on the proper handing of medical equipment, she said, “has increased awareness among staff of how much these repairs cost, and helps minimize them going forward.”

Gieras has also made changes concerning employee management. She has changed her staffing model, dividing her staff of six technicians into two teams of three, with one team working on preventive maintenance one month, while the other works on corrective maintenance.

She also created a new role—shop technician—for the corrective maintenance team, who, on any given week, is responsible for anything going on in the department, ranging from ingoing and outgoing equipment to making sure that packages are properly triaged. “It really helps with the seamless functionality and workflow of the department, which has a positive impact on productivity and turnaround times,” Gieras says.

Her department has also invested “quite a bit of creativity” in coming up with reward programs for things like providing good customer service or taking a leadership role on certain projects. “And what has really worked for us is competition between the teams,” she says, “Which helps get them motivated.”

Cost savings in a cubbyhole

When it comes to cost savings, the biomedical engineering department at ProHealth Care, a community-based healthcare system in Waukesha County, Wis, realized that, like many hospitals and hospital systems, ProHealth had medical equipment—some of significant value—that had been “cubbyholed” away, unlikely to be used again and in need of disposal.

“We found that, in our organization, there were plenty of times where equipment sat there for months—if not years—and had no value left to the organization,” says Rob Bundick, ProHealth’s manager, biomedical engineering. So, his department put into place an enhanced capital equipment plan that included a component whereby it started to retrieve some of that equipment in order to sell it and recapture some of its value. The result? Since 2010, ProHealth has realized more than $500,000 in revenue from this sale of surplus medical equipment.

What ProHealth did was to develop a formal process to dispose of this equipment. Now, a procurement specialist routinely emails a surplus asset list—with the approval of that asset’s owner—to vendors using an auction process that also includes the automatic updating of an equipment database that assures the continued integrity of the organization’s asset inventory list.

ProHealth has also changed the way it disposes of higher-end capital items. The traditional route for disposing of these kinds of assets has been through vendor trade-ins. “We started to leverage the equipment disposition process to weigh whether we should trade-in or sell [the device], or look at our capital needs within the organization to see if we can reuse the device that’s being replaced,” Bundick says.

So, for example, if the owner of a piece of equipment wants to replace it, a capital buyer will review a list of assets to see if the piece can be reused within the organization, and get a trade-in quote from manufacturers who are also providing quotes for the new piece of equipment. Ultimately, the purchasing department should decide on the most cost-effective way to proceed.

“We’ve found that that there are significant savings in working with your purchasing [department] and looking at reusing versus selling outright, or trading your capital assets,” Bundick says.

Just because a piece of equipment is no longer being used doesn’t necessarily mean it needs to be disposed of. How is that decision made?

According to Bundick, a piece that is no longer usable could be kept for parts for like assets, or if it’s in good working order, it could be kept as a loaner, or redeployed if necessary. If it has no value within ProHealth and can’t be sold within a year, it will be disposed of for scrap metal.

The second part of his department’s enhanced program involved developing criteria for capital equipment planning—such as radiation dose, life cycle, service history—to come up with (by way of a numerical score) a system to decide what pieces of equipment take priority when it comes to replacement.

In addition, his department instituted modality scenario planning, where modalities like CT are assessed based on where it is used, its age, the technology stage, and its utilization. And finally, the department is working with vendors to obtain market trend data. “A lot of vendors have a lot of resources invested in marketing, so they know where to focus their dollars on building equipment,” Bundick says. “So tapping into that data can help you in capital planning.”

As far as small equipment planning, Bundick says the department has done “basic things” like standardizing to manufacturer model and versions, redeployed assets across the organization when appropriate, and leveraged volume discounting on purchasing as a system, rather than by hospital department.

Creating Value

Like most hospitals in today’s healthcare environment, Boston Medical Center is working toward providing the highest-quality service at the lowest possible cost. This is particularly challenging, says James Piepenbrink, director of the hospital’s department of clinical engineering, as the organization moves into an accountable care environment at the same time it’s trying to maintain its status as the largest safety-net hospital in New England.

With a focus on cost reduction—his department typically averages a minimum of a 5% reduction in expenses annually through budget reductions—it is apparent, he says, that traditional service models aren’t very effective in helping define value when assessing how those reductions impact service levels as opposed to operational requirements.

The availability of good data is critical in this situation, and “Current service models are limited in data density,” Piepenbrink says. How does a focus on cost containment affect a competing concern, such as the maintenance of quality and safety? Making a change to one will impact the other, and “Without good information it’s difficult to make these changes,” he says. “Our job is to be flexible and try to balance [each of these areas of concern] to create synergy. It’s difficult, but manageable.”

That said, clinical engineering departments need to innovate because there is no “one-size-fits-all” service model. A quote from an article in the June 14, 2013, Wall Street Journal—“People are at their most innovative when they work within the constraints of what they already know”— suggests what kind of approach departments can take, Piepenbrink says.

In interacting with internal customers, clinical engineering departments should understand not only issues related to inventory, but their customers’ workflows and expectations, as well. “We place the information into the hands of the owner to ensure inventory accuracy,” he says. “But also to provide them with the information to manage their operations day to day.” In this way, he added, clinical engineering departments should be able to gather information they can use as an internal benchmark that will help them determine minimum service specifications.

Piepenbrink points out that there are also tools available—such as remote service networks, dashboards, and enhanced databases—that can help departments create strategic changes by measuring performance, or enabling internal customers to take part in decisions about utilization and service requirements.

In looking for opportunities to create value, Piepenbrink says, departments should “start with their own portfolio” and identify the operational needs “that we should value versus what would be nice.”

One of the ways to do this is to create service level agreements that maximize operational efficiency, he says. “We should also look at the type of data that will help us identify opportunities for savings as well as effective planning.”

“We should also look to create a sense of cost of ownership so we can measure support costs against age, useful life, and clinical utility,” Piepenbrink says. “In the end, having good data allows us to know when we should invest in the support of devices or when to change the support model or even to change the device.”

Finally, departments should also leverage the resources provided by their service providers, Piepenbrink says. “We own the equipment, but in many ways they own the information, so we need to work together to create a tool set that will help create metrics to manage value and services in the best possible manner.”

Learn more from Izabella Gieras, Rob Bundick, and James Piepenbrink now in an on-demand webcast.