White Paper

Ways

Five

Comprehensive

Lifecycle Management

Can Help Reduce Total Cost of Ownership

Although there is evidence of

an improving economy, hospitals large

lifecycle management plan will bring maximum value to

acquisition, usage, and disposition of medical equipment

and small are still facing significant financial challenges

assets. And as it is implied in the definition, this type of lifecycle

caused by lack of access to capital,

management of medical equipment involves a more all-inclusive

reduced reimbursement rates

group of individuals than just the biomed department including

and reduced census. With

professionals from IT, purchasing, facilities, and finance.

little to no control over

A comprehensive plan of this stature can address the business

these challenges, many

and clinical needs of the hospital resulting in significant

hospitals are looking

reductions of the TCO of equipment by eliminating variations

for new ways to curtail

in products, workflows and purchased services and right-

expenses and boost

sizing capital investments.

the bottom line without

sacrificing quality of care.
One remedy that is currently
saving millions of dollars for

More than just capital equipment planning; a comprehensive

When it comes to comprehensive lifecycle management of

equipment, there are five key areas to reduce a hospitals TCO
and improve the bottom-line: capital equipment and technology

hospitals across the country is the ability to reduce the

planning, selection and procurement, implementation,

total cost of ownership (TCO) for medical equipment through

management and support, and end of life management.

a comprehensive lifecycle management plan.

www.trimedx.com

877-TriMedx

info@trimedx.com

Technology. Training. Teamwork.

Capital Equipment and

Technology Planning

Right-sizing the inventory, or evaluating and removing excess

equipment, will gain significant savings and can even create
income for the entire system if the unnecessary inventory is

The best place to start planning

physically removed and replaced with revenue-generating

for capital equipment and

equipment. It not only removes excess and unnecessary

technology acquisition is visiting

equipment, it also eliminates excessive labor, preventive

the organizations mission, vision

maintenance, repairs, and parts. Right-sizing inventory

and long-term goals. Whether your

maximizes the current spend while helping the hospital

organization wants to be the leading

prepare for future equipment and technology needs.

heart hospital or the number one cancer

center, every acquisition across the entire
system should reflect the ultimate goal and align with that
mission. This requires careful consideration and thorough
evaluation of the technology to understand what is available
to purchase today, what new technology is on the horizon and
what is needed to accomplish the organizational goals.

Right-sizing inventory maximizes

the current spend while helping
the hospital prepare for future
equipment and technology needs.

The best place to start is by conducting an inventory

assessment across all departments and modalities to
determine where there are gaps and overages.
Once the inventory is right-sized and you have moved excess
inventory to an end of life management program, youre ready
to purchase new technology. Every hospital has a long-term
plan for the entire facility that involves mission and vision (not
just for capital equipment); therefore, its critical to align the
comprehensive lifecycle plan with the long-term
goals for the entire hospital or
system, not just the biomed
or clinical engineering
department. In other words
dont just look at the sticker

Often times, when it comes to purchasing new

price or make a decision

technology and equipment, many health systems have

based on the latest and

a limited or sometimes restricted view of planning

greatest technology.

across all departments. The hospital can operate in a very

Carefully

compartmentalized environment rarely using standardized

consider and

resources and processes to drive decisions creating costly

evaluate

inefficiencies system-wide. This behavior leads to over or

technology

under buying of technology and equipment. If a hospital

to ensure it

inventory is not right-sized, the effects are costly including

fits with the

lost opportunities to aggregate and plan volume buys;

purpose and

increased costs on consumables, training, and service parts

need for today

due to lost economies of scale; and difficulty budgeting

and matches

across the system due to variation in criteria used during

the vision for

facility/system level prioritization.

the future.

www.trimedx.com

877-TriMedx

info@trimedx.com

White Paper

...creating standardized
processes among key
stakeholders can lead to robust
capital negotiations to reduce
total cost of ownership by
balancing clinical needs with
price, warranties, training, and
service strategies.

Selection and Procurement

When beginning the capital
equipment purchasing
process, hospital leaders

Again, creating standardized processes among key

stakeholders can lead to robust capital negotiations to
reduce TCO by balancing clinical needs with price, warranties,
training, and service strategies.

should consider what makes

Know whether it makes sense to purchase new, used or

sense system-wide, not just

remanufactured equipment. Consider the costs of service

department by department.
Choosing the right product can save

contracts, warranties and compare those with the goals of

the organization. Are you more interested in service contracts

significant time and money in the long run. For example,

at a premium cost or saving money by engaging in limited

in the imaging world, will the picture archiving and

coverage post warranties? Also consider the maintenance

communication system (PACS) interact seamlessly with the

over the course of the equipments entire lifecycle. How much

computed tomography (CT) scanner and electronic health

do parts cost? How much for service labor? How long do

record (EHR) system? Will it truly capture the information that

patients have to wait, be rescheduled or diverted? Does this fit

needs to be stored?

into the facilitys long-term plan? Can I leverage consumables,

During the selection and procurement process, its

parts, PM with other like models?

Take for example defibrillators. In a large

important not to rush the decision and to invite the right

experts to the table when making the decision. In most

hospital in the Midwest, there were 82 models

hospitals, there is excessive variability in how technology is

of defibrillators from 12 different manufacturers.

Imagine the inconsistencies and inefficiencies

selected and purchased. Many times there is plenty of data

and expertise within clinical, financial and technical areas but

that occur when it comes to service, buying consumables,

there simply are no processes and little communication.

training and retraining staff, conducting PM or repairs, and

Five ways comprehensive life cycle management can help reduce total cost of ownership

Technology. Training. Teamwork.

...a defined process for

installing and integrating
new capital equipment
can prevent costly
infrastructure alterations
and disruption of
workflow.

www.trimedx.com

877-TriMedx

info@trimedx.com

White Paper
ordering replacement parts. By reducing the variability of the
manufacturers and models of the defibrillators, the hospital
could save significantly in the purchase price of consumables
and parts, staff training, and ultimately receive a more mobile
workforce and safer patient environment.
To achieve business objectives selection and procurement
should start with conducting product evaluations that
incorporate clinical, financial, technical, and business criteria.
Once the processes are in place and you have the right team
at the table to save costs, negotiation with manufacturers
can help save additional dollars in both the short and long
run. In most purchases, hospitals should opt for short-term
maintenance and warranty and rely on trained staff to service
the equipment. When negotiating contracts remember to
balance clinical needs with the price of equipment and
service strategies. Again, aligning with the hospitals values
and goals, decide whether it is better to pay a higher price
for a better warranty and service contract options, or do
you need to get a lower cost with less coverage? If your staff
is properly trained you may not need a warranty and can
negotiate lower costs for sale of the purchase.

Implementation

To achieve business objectives

selection and procurement should
start with conducting product
evaluations that incorporate
clinical, financial, technical, and
business criteria.
systems, patient monitoring, radiology information systems
and PACS, electronic medical records, and other financial
systems.

It is important to ensure that newly

The implementation process should include coordination

acquired equipment will work

and communication with facility management and clinical

alongside the current equipment

infrastructure causing minimal

departments. Defined processes for clinical and technical

acceptance testing of newly installed equipment that is

impact on workflow, patient

aligned with capital contract terms and conditions should

care and facility operations. As

also be in place. This standardization of a system-wide

with the previous ideas, a defined

process for installing and integrating new

process will help make certain that equipment is safe and

ready for patient use and is properly integrated into the

capital equipment can prevent costly infrastructure alterations

facilities Medical Equipment Management Plan (MEMP). Post

and disruption of workflow. For example, prior to delivery

installation confirmation of products and services received

(not upon delivery) of a magnetic resonance imaging (MRI)

should also be conducted to include timely and documented

scanner, staff should evaluate workflow, including how the

completion of both clinical and technical training, leading to

equipment will integrate with enterprise resource planning

release of final payment.

Five ways comprehensive life cycle management can help reduce total cost of ownership

Technology. Training. Teamwork.

White Paper
4

Management and Support

well as control service costs and provide critical data needed

to develop strategic plans for capital acquisition in the future.

A good comprehensive lifecycle

Being able to monitor the clinical performance of inventory

management plan takes into

account ongoing management

and the satisfaction of end users as well as track service

and support; and it starts

delivery metrics and Return on Investment (ROI) for each piece

with training. Its imperative to

of capital equipment work hand in hand to reduce annual

operating expenses and extend the lifecycle of your assets.

have well-trained engineers and

technicians to deliver the program with

expertise. Providing effective and on-going

End of Life Management

training for employees and holding each person accountable

As new equipment makes its way

to participate in regularly scheduled training is the first step.

into your facility, you still must

This not only ensures the entire department is proficient

contend with the old equipment

and aware; it also helps to reduce reliance on external

thats outlived its usefulness.

vendor contract services. Another fringe benefit of training is

Should you sell it, trade it in,

improved retention and job satisfaction; trained and informed

dispose or redeploy? Even if no

employees will not only bring more value to your organization,

longer needed, that old equipment

they will feel more valuable too.

can still benefit your department or organization. Whether

A well trained staff will be more successful in optimizing

you call it end of life or retired there are several disposition

utilization of equipment if a computerized maintenance

options and opportunities for yielding value out of that

management system (CMMS) is in place to track, manage and

outgoing medical equipment. If replacing your existing

report on all capital assets. An effective CMMS can

equipment doing your research will pay off. Youll save at

help right-size the inventory as mentioned above as

least 15% by pursuing other options as opposed to simply

trading it in.
Developing a long-term capital asset strategy to reduce
capital expenditures can offset the cost of new purchases
and help to save millions of dollars in a short amount of time.
No matter which choice is made regarding equipment that
has reached end of life, coordination and communication are
keys to success. To avoid over equipped or under equipped
status, the de-installation of assets should be coordinated
and communicated across clinical, finance, facilities, IT and
purchasing departments. Hospitals should engage a longterm disposition plan that includes processes for both large
equipment (such as MRI machines and CT scanners) and
small biomed devices (infusion pumps, bedside tables, fetal
monitors and the like).

Technology. Training. Teamwork.

2882