A major issue facing clinical asset and supply chain managers in healthcare systems is how to approach the repair and replacement of medical equipment. The dilemma? There’s not a one-size-fits-all winning formula. Safety is paramount, but supply chain managers must also consider the age and serviceability of the equipment, and the costs to service, repair and replace it. Other considerations include the evolution of technology, and patient or organizational demand for the newest equipment.
“The process for deciding whether to repair rather than replace equipment is a complex balancing act,” says David Heider, director, Capital Equipment Services for HealthTrust.
In fact, the balancing act requires strategic thinking—knowing your organization’s future direction and plans while also weighing multiple competing interests and costs. As with many supply chain decisions, risks compete with rewards.
“Different organizations will have a different feel for where in the risk-reward spectrum they need to be,” says Bill Barley, director for Catholic Health Initiatives’ Clinical Engineering Operations.
Ed Taft, the corporate director for Clinical Asset Management at Tenet Healthcare, adds that one of the most important matters to keep in mind is how long the equipment can be maintained in a safe and reliable operating condition.
Both preventive and corrective maintenance must be taken into account. Organizations can plan for preventive maintenance—often by combining the manufacturer’s recommendations with their own experience with the equipment. They can sign a contract for a service provider to maintain the equipment, or arrange for their own in-house team to do the servicing. But they will have to also allow for occasional, unexpected repairs.
Sometimes the actual type of equipment—and how often it’s used—can play a major role. Lynne Thomas, vice president of Regulation and Compliance for IMS (Integrated Medical Systems), notes that specialty devices may be used less, and thus incur less wear and tear. But repairs for those devices may be significantly more expensive compared to the “workhorses” that get used regularly.
When Is It Impractical to Repair?
At some point, replacing older equipment may become more feasible than continuing to make repairs, especially if they’re needed frequently. Although it will vary from organization to organization, the following situations often begin to tip the scale from “repair” to “replace”:
• When replacement parts aren’t available. When a manufacturer introduces a new piece of equipment, it may begin phasing out the old equipment—including replacement parts. This can make it risky to rely on an aging piece of equipment.
• When service costs rise sharply. Service plan costs often rise when a manufacturer stops making those replacement parts.
• When patient care is disrupted. If the machine needs to be repaired so often that it’s out of service more than in service, this can create a major barrier to care delivery. The disruption can also be costly to an organization if the affected patients become dissatisfied and choose to get their care elsewhere.
• When a device racks up a high number of failures. Occasionally, you’ll purchase a lemon and replacement just makes sense. You may see reports of device failures in other markets, or the U.S. Food and Drug Administration may have released a warning. It may be safer from a liability standpoint to return or get rid of that particular device and start over.
• When your patients value the latest innovations. Ongoing technology advancements may also reduce the feasibility of making repairs to some equipment. If your organization has a reputation for being on the cutting edge, you might not want to wait on replacing certain high-end equipment before its standard end of life.
Additionally, Barley points out, you may need to replace a piece of equipment because standards of care have evolved to the point where the older equipment no longer meets the benchmark for technical excellence.
However, Thomas cautions, it’s still important to do a careful cost-benefit analysis. New technology may also require supplemental supplies and equipment to support it, which could ratchet up costs.
The Importance of Planning
Every facility should have an established plan for equipment replacement. Organizations may turn to resources like the American Hospital Association, which has published guidelines such as Estimated Useful Lives of Depreciable Hospital Assets, to make sure they’re on top of the average life expectancy of the equipment they oversee. Facilities may also look at what their competitors are putting toward capital, Heider says.
Tenet Healthcare maintains a comprehensive database with essential information about its system’s medical equipment, including age, physical condition and support status. With that data, Taft has pulled together a five-year plan that includes projections for capital expenditures that will be necessary in that time frame. For example, he might budget for systemwide replacement of a particular series of infusion pumps for an upcoming year, knowing it will be time to buy new ones.
“It gives leadership some idea, some forecast, of what’s going on with capital expenditures,” Taft explains, although he cautions that there will always be variables and unforeseen circumstances.
Thomas also suggests that organizations consult the Association of PeriOperative Registered Nurses’ Guideline for Product Selection if they decide it’s time to buy new equipment. The association developed the guideline in 2010 for the evaluation and purchase of equipment for the perioperative setting, which can include ambulatory surgical centers and hospital operating rooms.
If a facility’s planning process determines that replacement of clinical equipment is in order, HealthTrust’s Capital Equipment Group Buy Program is a helpful, cost-saving solution. The program negotiates better pricing from suppliers by concentrating committed volumes of equipment within a specific timeframe, based on a set annual calendar. This process yields even greater savings for members because the group’s volume will be ordered at one time, positively impacting the production costs of selected manufacturers.