Managing your technology can cut the bottom line

Both price tag, and savings, can be big

Most ICU managers work with hundreds of thousands of dollars' worth of equipment. Look at all of your hospital's ICUs, and all of your high-tech gear, in general, and the figure easily climbs into the millions.

With this lifesaving telemetry equipment comes problems: maintenance and service contracts, license terms, usage constraints, vendor negotiations, and upgrade protection. And could you be paying for machines no longer on the floor? One solution some hospitals are turning to is the use of an asset management plan. It can cost you a lot, but it also can save you a lot and provide assurance that your equipment is being properly cared for.

The Children's Medical Center of Dallas, a trauma Level 1 facility, implemented an asset management program for its cardiology department a couple of years ago. Now the 250-bed facility is showing savings of about 17% annually on service agreements.

Stephan Moore, operations director of cardiothoracic services at Children's, says that asset management is similar to buying an insurance plan for your equipment: "We maintain our existing relationship with the vendors that take care of our equipment, but we know in advance what our annual outlay of dollars is. Our contract has worked out well." Because his facility's radiology and cardiology departments have common needs, the two departments share an asset management contract.

"Asset managers have the expertise to exert leverage and negotiate better pricing arrangements with manufacturers than we could on our own," says Moore. "And the arrangement gives us a fixed cost on a piece of equipment per year - an expense we can count on."

For large hospitals, it's possible for assessment management companies to provide an on-site manager. But you'll probably need a contract of $500,000 a year to warrant that.

The software to set up a resposition tool to create your own assessment management program costs in the range of $100,000, says Larry Shoup, president of Janus Technologies Inc., a software firm in Pittsburgh specializing in the management of information technology assets. Here are some of the advantages he pointed to about asset management:

r Uncovering invoice errors.

Many vendors' billing systems are outdated, and due to consolidation in the vendor industry, many invoices customers receive are simply wrong. This is especially true for the ongoing maintenance fees where the lack of physical deliverables makes the expense particularly difficult to track.

r Managing renewals and cancellations.

Contracts for software, hardware, and other types of high-tech equipment provide a limited window of opportunity to cancel each year. Typically, customers are required to give the vendor notification of intent to cancel the agreement 30 to 90 days prior to the expiration date. The result is that many contracts automatically renew each year.

r Terminating hardware leases.

Timing is critical when it comes to deciding what to do at the end of a hardware lease. Without proper planning and notification, an organization may be forced into an expensive month-to-month rental to ensure uninterrupted use.

It is important that plans related to renewal, capital authorization, and buy-out be made well in advance for end-of-lease equipment. The repository automatically reminds you of these important upcoming dates.

r Identifying underutilized assets.

Tracking all pertinent financial, contractual, and location information for each asset in the repository gives you everything necessary to determine if the asset provides adequate benefit to justify its expense.

r Negotiating with vendors.

Given the rate of vendor consolidation, customers are more responsible than ever for relying on their own asset information. Knowledge is power to anyone involved in negotiation. It is imperative that organizations have the information necessary to negotiate a beneficial outcome.

r Preventing upgrade overbilling.

Having the asset repository provide contractual information to use when verifying vendor invoices ensures that you are not inadvertently billed for upgrades you should receive at no charge.

r Streamlining the budget process.

The budget process for existing assets as well as planned assets is more efficient and expedient through the use of a central repository. In addition, the repository provides forecasting functions that allow easy budgeting of upcoming expenses.

r Increasing productivity.

The repository manages contractual and cost details on-line. Referring to vendor contracts and paper files on a consistent basis is a very time-consuming process given the fact that documents are typically located in multiple departments. Scanned images of legal documents available for instant viewing are stored within the system to aid in answering contractual questions.

r Avoiding compliance penalties.

Software usage is often constrained by the type of hardware or number of users. Vendors can impose penalties if a customer is found out of compliance with the contract. Tracking compliance constraints and usage limits within the repository helps to ensure that these penalties are avoided.

r Avoiding redundant purchases.

The asset repository helps you avoid the cost of redundant purchases and prolong the useful life of assets by providing powerful inventory tracking facilities.

r Evaluating redundant products.

The repository helps users capture initial product evaluation information for use at a later date by other departments.