One of the overriding challenges facing healthcare systems today is to provide a consistently high level of patient care while managing and maintaining a sound operating budget. As a result, hospitals are exploring new avenues of cost reduction with a careful eye on not sacrificing patient care.
Confronted with this challenge during an expansion in 1996, Bon Secours Health System Inc (Marriottsville, Md) initiated a program to review system-wide operating expenditures and identify cost-saving opportunities within its clinical technology area. The program?called “Building a Unified Bon Secours”?was designed to reduce costs by creating centralized models and aligning processes among the system’s 24 acute-care hospitals at the time.
The assessment revealed a prime cost-saving opportunity in capital management. Expensive, high-end equipment?from mobile defibrillators to massive imaging devices?not only cost millions of dollars to purchase, but also require millions more to maintain, service, and upgrade throughout its life cycle. Bon Secours identified two areas for reducing costs: streamlining the maintenance of imaging equipment and extending equipment life by redeploying and recycling existing technology. With cost-saving opportunities now realized system-wide, Bon Secours was poised to introduce a more cost-efficient model.
Capital Equipment Management Program
As it stood, each Bon Secours facility was responsible for managing its own equipment. Since there was no consistent maintenance program among the facilities, some relied on third-party vendors; others used in-house resources.
In an effort to reduce expenses, Bon Secours test-piloted a program to streamline equipment management at one of its hospitals. Recognizing the benefits of this streamlined program, Bon Secours’ senior leadership mandated that the program be implemented across the system.
Aramark Healthcare Management Services (Philadelphia) was selected to manage Bon Secours’ clinical imaging equipment maintenance program. Under the original 3-year partnership agreement (signed in September 2002 and then renewed through September 2007), Aramark Healthcare Management Services?Clinical Technology Services was responsible for servicing 45,000 pieces of equipment in most of the system’s facilities. Today, Aramark services 63,000 pieces of Bon Secours’ equipment in all of the system’s facilities, with a combined asset value of $150 million.
One of the factors that contributed to selecting Aramark was the company’s guarantee of a 25% reduction in capital maintenance expenditures. “The guaranteed savings made our decision to work with Aramark across our portfolio of hospitals very easy,” says Ron Brady, VP of materials management at Bon Secours. The organization also needed a program that could be implemented and managed easily across all of its facilities.
Due in part to Aramark’s ability to streamline processes, Bon Secours documented savings?both direct cost reductions and cost avoidance?of nearly $6.7 million.
Seamless Workforce Conversion
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| Good Samaritan Hospital in Suffern, NY, is one of more than 20 Bon Secours facilities that was helped via Aramark’s equipment-management program. |
At the beginning of the project, it was determined that approximately 45 employees were going to be affected by the transition. “Despite initial concerns about workforce conversion, [we had] a well-planned and well-managed transition process,” Brady says. “In fact, there was little resistance from the employees.” Today, 105 employees have been successfully transitioned to the Aramark team. With Aramark in place to administer the maintenance program, Brady was able to continue focusing on his day-to-day job. “It allowed me to devote more time to managing other important aspects of the supply-chain operations,” he notes.
One specific way in which Aramark became involved in the Bon Secours’ business was by operating as a partner, as opposed to an outside vendor. “As a partner, Aramark is truly invested in our business and the success of our capital equipment management programs,” says Lance Martucci, regional director of materials management for Bon Secours.
Another important aspect of the partnership was Bon Secours and Aramark jointly creating the Equipment Management Services (EMS) committee, which was, and still is, tasked with developing policies and procedures across the board. These technology managers and system administrators meet several times each year to review and update these methods if necessary.
Imaging Recycling Report
In addition to its day-to-day maintenance program, Bon Secours also launched the Imaging Recycling Report (IRR), a comprehensive study that helped the organization identify processes and strategies that could extend equipment value.
Bon Secours’ program was designed to evaluate maintenance expenditures on high-end imaging equipment through 2007. With Bon Secours anxious to identify cost-savings opportunities, the Aramark team developed a detailed analysis program that was applied to both equipment and service locations. The team conducted evaluations based on a number of criteria, including the “technological competency” of a site to ensure that each site was operating at peak performance levels, and the site’s overall significance to the strategic goals of Bon Secours.
David McCombs, VP of supply chain operations for Bon Secours, was pleased with the ease of executing this assessment. “Aramark provided a platform that allowed us to apply a consistent model and give an objective review of our equipment across the entire health system,” he explains.
After collecting and analyzing results, as well as soliciting input from Bon Secours’ planning department, the IRR team developed a number of solutions that focused on value extension rather than capital expansion. They included reallocating and recycling equipment to contain inventory; consultation during lease and contract negotiations with equipment manufacturers; development of financing options; and creation of a streamlined, centralized process for buying imaging equipment. These action items, initiated in September 2002, are still being implemented.
In 2004, Aramark’s evaluation found that Bon Secours would need approximately $33 million in equipment replacement or acquisition over the next 3 years. In the same assessment, Aramark identified 12 opportunities to redeploy underutilized or unused technology from one facility to another. Aside from avoiding the duplicate purchase of equipment, the reallocation of this equipment is projected to save Bon Secours $3.2 million in capital purchases.
Overall, the report and consulting services provided Bon Secours with a capital management foundation that, once implemented, will yield both short- and long-term benefits. Bon Secours’ capital imaging equipment expenditures continue to decrease from year to year.
Moving forward, Bon Secours can operate in a framework that gives the health system better leverage with equipment manufacturers, better buying power that can yield even greater savings, and a host of other strategic improvements.
Boosting Customer Satisfaction
“A key factor of patient care is delivering the right supplies, equipment, and staff requirements to the right patient at the right time,” McCombs says. While Bon Secours prides itself on providing quality care to all, the programs introduced under “Building a Unified Bon Secours” serve to enhance its services.
Bon Secours has recognized real benefits from this project and is currently exploring opportunities to expand its relationship with Aramark to some of its other nonclinical service areas, such as facility management and food services. McCombs notes, “I anticipate the rest of Bon Secours will benefit from their expertise the way that we did.”
Mary Ann Wyman is the president of Aramark Healthcare Management Services?Facility Services and Clinical Technology Services.
