Cardiac unit saves 17% on inventory expenses
Cardiac unit saves 17% on inventory expenses
Is an asset management program in your future?
Have you considered hiring an asset manager? Setting up a system costs big bucks at the outset, but can save equally big down the road. 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.
Tracking the costs associated with expensive equipment and systems is a daunting burden. Your facility's machines are probably deployed throughout the institution and under the auspices of various staff. Keeping on top of leases, license terms, usage constraints, and maintenance schedules can be frustrating. Without an asset management program, you may be losing money because it may be difficult to verify whether vendors are honoring the terms you agreed upon or whether you are being invoiced correctly. You may even be paying for hardware that's no longer on the floor.
Spend money to make money
For about $100,000 for software, "you can set up a repository tool that will save at least that much in less than a year," says Larry Shoup, president of Janus Technologies, a software firm in Pittsburgh specializing in the management of information technology assets. (See article by Shoup outlining advantages of an asset management program, p. 77.)
Stephan Moore, operations director of cardiothoracic services at Children's, says that asset management can be compared 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," he says.
Children's contracts with R.P. Kincheloe Co. in Dallas, and Kincheloe subcontracts with the vendors. (See contact information for this and other asset management companies, below.) "Our contract has worked out well," says Moore. Because his facility's radiology and cardiology departments have common needs, the two departments share an asset management contract.
Rick Doan is Kincheloe's asset manager, and he is responsible for triaging equipment troubles at Children's. He works on-site and coordinates visits from vendors, "so that responsibility is taken off management," says Moore. For a facility the size of Children's, a minimum contract of $500,000 is required to launch a program with a manager on-site.
"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."
Asset managers want to keep equipment in as good condition as possible, and they make sure vendors who come in to repair the equipment do what they should. They encourage the use of refurbished parts if they're just as good as new.
"I try to save the customer as much money as I can," says Doan. He is able to make sure the vendors perform preventive maintenance on the equipment when scheduled because he keeps track of when the maintenance is due and monitors service histories.
Overcome resistance
Physicians often are initially resistant to instituting an asset management project. Large equipment manufacturers can lose money when a hospital employs an asset manager because the manufacturers can't strike as good a deal with the managers as they can with a hospital directly. The companies sometimes warn physicians away from asset management by telling them the service may not be as good as when no middleman is involved.
"That's not been our experience," says Moore. "The equipment has been running fine. In fact, our service through our asset manager has been better than that we'd been getting from the vendors, probably due to the responsiveness of our on-site rep."
Cost Management in Cardiac Care asked Moore how Children's overcame resistance from its physicians: "We discussed the importance of cost savings with them," he says, "and pointed out that if we didn't reduce our costs there, we'd have to reduce them somewhere else." Moore's team asks physicians to give them feedback if the system isn't working.
"We're a small pediatric facility," he says, "and we have a close working relationship with our physicians, so trust has built over the years."
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