A patient leaves home at 3:30 a.m. and drives to the hospital for a scheduled outpatient surgery. The physician arrives at the surgery suite to learn that a vital piece of equipment isn’t working. Everyone waits while the scramble begins to find another open operating room. The clinical engineering (CE) team scours the vendor contract to figure out what’s next for this scenario and piece of equipment.
Every day healthcare providers must deliver safe and effective care using well-functioning medical equipment with little downtime. Historically, providers focused on clinical labor costs with less attention to the impact of equipment downtime on patient throughput.
No enforcement mechanism or automated technology option exists for medical equipment repair and service management, unlike with computerized provider order entry or CPOE— a care pathway where clinicians send treatment instructions with a computer application. Instead, clinical engineers must negotiate, implement, monitor performance and manage all contracts across multiple vendors, some of many responsibilities managed within a function known as Healthcare Technology Management.
To better understand the challenges associated with traditional equipment service contract management, PartsSource conducted a study to answer whether a comprehensive analysis would support the identification and drivers of waste industry-wide; whether these issues are generally avoidable or unavoidable; and to quantify the clinical, operational and financial impact for health systems.
This study leveraged robust data and primary research methods to understand the challenges with contract management of medical equipment at hospitals and health systems. The data collected comes from the combination of a nationwide observational survey from more than 100 individual hospitals, time-and-motion studies completed at healthcare providers and analysis of a proprietary data warehouse of 100,000 service contracts and 500,000 service events included over 35 million data points on price variance, quality and the true cost of service vs. value received.
The need for a new model for equipment service was validated in the research findings that highlighted the four prevalent pain points below.
1. Portfolio complexity:
Hospitals are managing a high quantity of service contracts, and much of the cost is on high-end contracts, but the vast majority of service contracts are small.
- Health systems purchased and managed an average of 146 service contracts for medical device repair.
While in-house service remains the goal for health systems, they still manage over 100 low value equipment service contracts, with the majority of them below $50,000.
Solution – Empower the health system to transition service in-house strategically through digital transformation of the contract portfolio that improves the productivity of its labor staff. Establishing trust between the health technology management (HTM) staff of clinical engineers (CE) and other departments throughout the hospital is vital. That relationship develops based on CE’s access to the technology, data and resources to do their job and build long-term sustainability.
Hospitals and health systems made a significant investment of valuable time for each contract reviewed, where most contracts represent small dollars.
- The average medical service contract took 3-4 months to activate, with greater than 75% of contracts (relatively) low dollar.
Solution – Consolidate the full experience of contract management into one enterprise workflow and agreement, ensuring consistent pricing and entitlements, especially for the 65% to 75% of the contracts that are lower value and risk.
3. Cost variability:
Data indicated the contract price for the same model number was widely inconsistent with a significant price variation between health systems.
- 63% of the contracts had different prices for the exact same model.
- Variability ranged from 40% to 60% in contract costs on the same asset and identical entitlements.
Solution – Develop nationally benchmarked, evidence-based outcome data to help reduce the wide variance of service contract costs by 20-30% and upwards of 50-60%.
4. Vendor monitoring:
Healthcare Technology Management staff may often associate high quality with the original equipment manufacturer (OEM). However, the study identified negligible observable differences in service level performance between OEM and non-OEM service providers. And few hospitals had any type of vendor logistics or performance management tool in place.
- Based on 82,000 service events, 92% of hospitals surveyed did not consistently monitor contracted events.
Solution – Implement consistent, unbiased enterprise tools for data capture to assist with evidence-based decision making.
The new model for equipment service
The challenge hospital systems must solve for effective medical equipment management comes down to reducing costs without sacrificing quality, always ensuring the delivery of quality patient care.
When any piece of equipment in the facility is down, such as failed mechanics of an operating table in a surgery suite, those clinical lines don’t function. Then, the hospital must send patients away or extend wait times, factors that delay quality patient care and negatively affect the bottom line. Yet, from a clinical integration perspective, the healthcare system must operate seamlessly and perfectly with no interruptions 24/7.
To make that happen, the healthcare industry must understand and act on this bigger picture of evidence-based, data-driven and technology-enabled solutions for medical equipment management to keep clinical service lines operating effectively and reliably.
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