Medical Imaging and MedAssets.com (Wood Dale, Ill.) have collaborated on an Internet forum at MedAssets.com’s Web site (www.medassets.com/forum) to provide informative, relevant advice on managing and maintaining a cost-conscious, efficient radiology department.
“What Should It Cost to Run My Radiology Department” is an on-line resource designed to assist radiology and healthcare professionals — such as radiology administrators and business managers, radiologists, hospital CEOs, COOs, and CFOs, purchasing directors and managers and hospital-based directors of biomedical and radiology engineering — in reformulating and refining their businesses to better control costs for capital equipment and maintenance.
IT explosion
Major advances in information technology (IT) in the last three years have modified the concept of asset management, writes Thomas R. Prince, professor of health services and a professor of accounting at Northwestern University (Chicago), in “Asset Utilization and Asset Management in Medical Imaging.”
Asset management in radiology encompasses the effective and efficient use by a healthcare entity of human resources, IT, advancements in imaging, and capital equipment in providing medical services in the marketplace to maximize economic returns and quality care over the long run, adds Prince.
Forecasting demand for medical imaging services in the marketplace and comparing the baseline data with recent patient profile data by type of service for the healthcare entity is an initial step in asset management.
Other elements of effective asset management includes determining asset utilization, a marketplace analysis, financial options for equipment and services and product lifecycle
John Sdanowich, capital equipment administrator for Johns Hopkins Hospital (Baltimore), offers “Strategies to Maximize Your Capital Dollars.” Since the only facts hospitals can be assured of today are increased cuts by the federal government, managed-care pressures and a greater demand for capital and a shrinking capital budget, Sdanowich recommends that healthcare facilities develop a proactive and responsive, yet long-term, plan to maintain market share and maximize capital dollars. Hospitals should explore the possibilities of leasing or buying refurbished equipment, utilizing equipment rentals and installing system upgrades to stretch their dollars.
While the financial strategies vary, he writes the true goal is providing clinical units with the best possible technology in a cost-efficient manner.
Stretching dollars
One way to stretch capital dollars is to stretch the life of the equipment. MSG Rik R. Guinther, director of radiology at Brooke Army Medical Center (BAMC of San Antonio, Texas) and Christopher B. Triplett, a senior consultant with Birch & Davis Associates (Silver Spring, Md.), offer advice on “How to Extend the Useful Life of Capital Equipment.”
BAMC’s radiology department has kept a strategic plan to implement the most advanced technology in medical equipment. In its buying decisions, BAMC evaluates lease vs. purchase options, whether the new technology will improve the flexibility and stability of existing systems, and whether the equipment or systems can be upgraded to keep pace with advancing technology. With those evaluation components in place, BAMC can keep the equipment it has up-to-date with the most current advances in healthcare.
The Internet is playing a much larger role in healthcare today, whether it be in the transmission of patient medical images or in the upkeep of equipment through remote diagnostics.
Medical Imaging’s Business Editor, David Hannon, writes on how facilities are “Utilizing an Intranet to Effectively Manage Equipment within a Health System.”
The total revenue for telecommunication services used in the healthcare services sector was $6 billion in 1997, according to a report from Wintergreen Research Inc. (Lexington, Mass.). By 2002, that number is expected to grow to $14.8 billion. Susan Eustis, president of Wintergreen Research, says the economies of scale offered by using an intranet in a healthcare facility are enough to make or break a facility.
“About 2 to 3 percent of healthcare facilities now are using intranets effectively,” Eustis says. “It is going to go to 100 percent within five years and, if a facility doesn’t start looking at this now, that facility will be driven out of business. It’s going to provide such economies of scale that everybody has to do it.”
Whether it be scheduling meetings or exchanging work orders, the electronic communication fostered by an intranet can streamline the operations within a healthcare system offering increased productivity and minimal communication delays.
“What Percentage of Your Department’s Budget Should be Spent on Maintenance and Repair?” That’s the question posed and debated by Thomas V. Nichols, director of the radiology engineering department at Harris Methodist Health Systems (Arlington, Texas).
Nichols offers some specific numbers on how to calculate and evaluate equipment purchase and service costs, such as glassware replacement. “If we can measure it, we can manage it,” he writes.
To help get a better handle on costs, Nichols devised what calls a replacement inventory value (RIV). The RIV formula is the purchase price of the equipment, minus 7 percent for installation costs, minus an additional 7 percent for warranty costs equals RIV for the piece of equipment. After the RIV is determined, the facility’s goal is an operating cost of 5 percent of RIV.
While there are much more elements to the RIV, Nichols says it can work especially well for larger hospitals, which can leverage some of the expenses.
Who’s in charge
In part one of “Does an In-House Service Operation Make Sense for Your Hospital?,” Allina Clinical Equipment Services’ Tom Zdon, vice president of operations and administration, and Melissa Rabida, director of strategic services, says the challenge facing most healthcare organizations today is maintaining an increasing clinical equipment asset base with ever-decreasing resources, without compromising service quality.
In deciding whether a hospital should service its own clinical equipment as an in-house department or outsource the maintenance, several factors must be considered. While cost is a significant factor in today’s healthcare environment, it should not be the only determinant. The decision to provide service as an in-house operation should be made by the facility’s organization only after a systemic analysis of both the financial and non-financial considerations.
Zdon and Rabida provide some thought-provoking pros and cons. While vendor service contracts tend to be the most expensive option, guaranteed response times, capitated service expenses, minimal administrative hassle and high levels of customer satisfaction make them an attractive argument for that option. The potential downside to vendor service contracts is the difficulty in identifying actual maintenance expense and history. Since contract costs are capitated, individual service calls are not closely monitored and may not accurately reflect actual services provided which can impact equipment service history recording. Some service contracts often do not include preventive maintenance service or a record-keeping system to allow for compliance with Joint Commission for the Accreditation of Hospital Organizations (JCAHO) equipment history guidelines.
In part two of “Does an In-House Service Operation Make Sense for Your Hospital?,” Ira Tackel, director of the department of biomedical instrumentation for Jefferson Biomedical Shared Services and director of the department of supply, processing and distribution at Thomas Jefferson University Hospital (Philadelphia), offers some novel perspectives.
Being a clinical engineer and department director of technology management for the past 22 years, Tackel has tried virtually all options with — in his words — “varying degrees of success. We have compiled reams of statistics regarding the relative merits of such alternatives.”
For large healthcare providers with large installed bases of equipment, and the infrastructure from a management and technical competency perspective, Tackel answers the question affirmatively, adding that there are caveats. The prerequisites include:
1. A large enough inventory to establish a critical mass for the program, perhaps a single manufacturer where the base technology is similar;
2. Either existing technical expertise or the willingness to invest in training for the various equipment types; and
3. Technology management leadership to hold the vision of the program.
Replacement parts
A large part of any service contract is replacement parts and glassware.
Medical Imaging’s Product Editor, Melissa Mac, penned “What Options are Available to Reduce Your Cost for Replacement Parts and Glassware?”
Although the technology may not have changed drastically in the last quarter century, an X-ray tube’s performance, longevity and price remain major concerns for administrators overseeing departments with vascular imaging, cardiac cath labs, CT scanners and angiography. In no time, a broken tube can cost a department $50,000 and result in days of downtime and thousands of dollars in lost revenues.
One option is to have an in-house service organization which assumes primary responsibility for making critical decisions. While the group may not handle all the service work, it would be responsible for the coordination of repairs from the source that the group deems best qualified.
There also is a well-established and reliable market for independent glassware. Typical savings range from 25 to 60 percent off an OEM’s price for the same product.
