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Good Housekeeping of Healthcare Equipment Costs

Posted by Chris Richie on May 19, 2015 3:09:00 PM

In Hospital Operations Management, Equipment Hoarding, Equipment Availability, Cost Savings, Healthcare Technology Management


When it comes to capital planning, hospitals have three big pie wedges in their budgets: land, buildings, and equipment. John and Jane Homeowner have similar budgetary items, but instead of ultrasounds, defibrillators and MRI machines, they’ve got washers, dryers, hot water heaters, and a couple mid-size sedans or SUVs in the garage.

Let’s take our car example as primarily a utilitarian expenditure. Jane and John buy their new (or certified pre-owned) vehicle at a local dealership. They drive it often and treat it well giving it regularly scheduled maintenance. They know the longer they own it and take good care of it, the more value they’re getting from their purchase. In a few years, perhaps they’ll want a new car, or perhaps John Jr. is getting his license, so they keep it in the family and get a few more good years out of it. 

Smart, Effective Planning

If only there was a loving family to look after every piece of hospital equipment out there from getting lost, hoarded, going unrepaired, or replaced, even when it still has value within the health system. Perhaps biomedical equipment technicians (BMETs), clinical engineers, and the healthcare technology management (HTM) field as a whole are just those people. They’re facing a complex system with complex problems for sure, but there are solutions.         

“Reducing costs is not just about blindly buying less—it's about buying smart, planning effectively, and making the best use of equipment and staff,” writes Robert Reilly, Chief Marketing Officer at GE Healthcare. “The simple reality is that many hospitals have yet to achieve these optimal levels of efficiency."

Two leading health systems exemplify the most successful of these efforts according to Reilly, and Aurora Health Care is one of them. Based in Milwaukee, Wisconsin, Aurora is the state’s largest, fully integrated, not-for-profit healthcare delivery system; compromised of 15 hospitals, 120 community pharmacies and 185 clinics. There are 30,000 employees, 3,400 affiliated physicians and 50,000 pieces of equipment across Aurora’s health network.

Asset Management

Aurora centralized all this equipment into a single asset management solution platform provided by Mainspring Healthcare Solutions. Through this enterprise-wide asset management system, Aurora’s capital equipment team were able to deploy, track and maintain equipment while consolidation and evaluating vendor contracts and parts purchasing. It gave them the ability to review asset performance, calculate total cost of ownership and useful life, and plan for and budget capital for new and replacement equipment.

“We were able to leverage data provided through our enterprise asset management system to determine where specific expertise was needed,” said Patrick Trim, the corporate director of Capital Equipment at Aurora during the time of the project. Trim and his team were also able to see where dependencies on third-party service agreements could be reduced or terminated. Almost like John and Jane realizing they didn’t need that deluxe extended warranty on the new washer and dryer.    

Aurora Health Care took the complexities of managing a lot of assets, across a large healthcare network, and streamline those operations; with a centralized service center tracking and managing requests, a single database of equipment lifecycle information, and comprehensive reporting and tracking of assets. Aurora reengineered its capital equipment department, centralized service and dispatch, added 19 employees and contributed $1.5 million to the bottom line—all funded by $3.5 million in contract savings. That’s good housekeeping in our book.


Centralizing Service Management at Aurora Health Care