Extending Capital Investments

How HealthTrust Helps Hospitals Reduce Equipment Expenses & Increase Value for Capital Purchases

Hospital leaders have a mounting list of priorities—from navigating changing regulatory demands and reimbursement models to managing budgets. With equipment costs rising and tariffs increasing the price of devices imported from China, hospitals can no longer afford a reactionary approach. The sooner they can plan for purchases as well as the repair and replacement of equipment as it reaches the end of its life, the better value they can find.

Jeff Woodyard

“If we encourage hospitals to be more proactive, HealthTrust can help make their investment go a lot further,” says Jeff Woodyard, vice president of capital equipment services at HealthTrust.

Hospitals can benefit from a team of HealthTrust experts who understand the life cycle of equipment and how to maximize their capital investments at each stage. Below are six ways HealthTrust assists hospitals in getting equipment expenses under control.

1. Provide visibility. HealthTrust helps hospitals evaluate their most immediate needs, assess their inventory and determine the best route for financing. For example, one hospital saved thousands of dollars after the capital equipment services team advised buying rather than renting expensive equipment.

Dan Schweinhart

“The facility was spending $300,000 a year to rent a piece of equipment, but they were able to purchase it for $150,000—and it paid for itself in six months,” says Dan Schweinhart, a capital equipment services director at HealthTrust.

The team also works to uncover the total cost of ownership, including additional fees for equipment-related needs such as utilities or preventive maintenance, and to budget accordingly.

Paula Branson

“We want hospitals to spend capital dollars on capital equipment, not on extended warranties or service agreements,” says Paula Branson, a capital equipment services director at HealthTrust. “We can help them put the right items on their capital budget and designate the rest as part of their operations budget.”

2. Strengthen the input of stakeholders. Typically, capital planning falls on one or two people who may have a limited view of needs across the organization or lack the clinical or technical insight to make the best decisions for all stakeholders. HealthTrust works with hospitals to bring clinicians to the table when choosing medical equipment to purchase. “We try to right-size the buy and bring some clinical intelligence into these conversations,” Schweinhart says.

David Heider

The team also helps hospitals gather input from stakeholders across departments, from finance directors and biomedical engineers to IT personnel. “We make sure the right people within the health system are talking to each other,” says David Heider, a capital equipment services director at HealthTrust. “If we can coordinate those conversations on the front end, we can help them feel more confident in their purchasing decisions.”

3. Facilitate group discounts.Hospitals base equipment purchasing decisions not only on cost and clinician preference, but also on their own organizational standards and habits, Branson adds. A facility in California may make capital decisions very differently from a hospital in Florida, for instance. HealthTrust has the advantage of working with health systems across the country, giving its team a unique perspective of what works best where, what suppliers are quoting and how to negotiate the best deals for different types of equipment.

“There are many opportunities to both aggregate spend and discover savings on clinical equipment that hospitals may not be aware of,” Schweinhart explains. Through its Capital Equipment Group Buy Program, HealthTrust helps members maximize these opportunities. “If we know what members are buying or thinking about buying in 2019 (and beyond), we can make adjustments to our annual group buy calendar to accommodate their needs,” Woodyard adds.

4. Prepare for technology challenges.With the growth of connected medical devices and remote patient monitoring systems, hospitals must be vigilant about cybersecurity and take the right steps to protect patient data from hackers. HealthTrust has its own team devoted to discussing these issues with manufacturers and negotiating cybersecurity and data integrity standards on behalf of members. HealthTrust also has IT experts on hand to help hospitals sift through the massive amount of new technologies and devices on the market to find the most interoperable platforms. “We vet this kind of equipment so hospital leaders don’t have to,” Schweinhart says.

5. Find creative alternatives. When equipment breaks, most hospitals rush to draft a budget for new capital. But HealthTrust can help brainstorm options for solving these issues without breaking the bank.

For example, if a hospital has an IV pump with a door that keeps breaking off, “maybe they can provide some training for those using it or put some procedures in place to make it last longer and reduce the cost of the damage,” Schweinhart says.

Training is much cheaper than investing in new equipment, and hospitals can often find workarounds that meet their needs just as effectively. If an OR director requests a new $100,000 sterilizer, for instance, the hospital may instead be able to save $75,000 by investing in a new decontamination sink and extra carts.

“Sometimes a hospital doesn’t need more equipment—they need something to help them improve the process and build in efficiencies,” Branson says.

6. Redeploy capital assets. The majority of hospitals have a closet or a corner of a warehouse where they take equipment when it reaches the end of its life, and it usually sits there for years. “We’re working on getting more suppliers on contract who will come in and write a check for those kinds of items,” Branson says.

According to Woodyard, some third-party suppliers are willing to offer a much higher trade-in value for used equipment than the original manufacturer. “Hospitals don’t realize there’s an aftermarket for this equipment, but a team like ours can bring that expertise to the equipment life cycle conversation,” Woodyard adds.

HealthTrust helps hospitals set a fair price for used inventory and negotiate the best deals. When one manufacturer refused to give a hospital more than $500 for a trade-in on an old microscope, the HealthTrust team found an outside supplier willing to match that. The manufacturer responded by raising its offer to $2,000. The team also connects hospitals throughout the membership that might be interested in swapping assets with one another.

Having a go-to team of subject matter experts in capital planning and budgeting can ease some of the operational burden hospitals face and help them discover new opportunities for savings.

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