David Bellamy is regional radiology services administrator for Kaiser Permanente’s Colorado region, Denver, in which the nonprofit HMO serves 350,000 plan members. He is responsible for the operation of a central radiology reading facility and of radiology departments in 16 medical offices.
Chris Burney is director of facilities at Stamford Hospital, Stamford, Conn. He is responsible for operations of all medical and nonmedical equipment in the hospital.
Mary Ellen Pratt is assistant administrator for professional support services at Thibodaux Regional Medical Center, Thibodaux, La. She is responsible for ancillary and support services at the medical center, four satellite clinics, and a small hospital.
Q: What motivated you to pursue a multivendor single-source service strategy?
Bellamy: At Colorado Kaiser, having 16 offices (some as many as 80 miles apart) poses some service challenges. In the past, we had considered providing in-house service, either independently in Colorado or through our larger California organization. Studies conducted by the Colorado and California management found that this would not have been cost-effective due to the distances involved. As a result, we maintained service contracts with the vendors of each piece of equipment.
In 1996, each individual office had a service contract with the vendor that had provided approximately 60% of our equipment, so we consolidated those agreements into one regional contract. This made service simpler and allowed us to take advantage of some discounts. In 1998, however, we began to investigate the use of a single-source service solution for all of our equipment. Several vendors were considered, and we asked our regional-contract vendor to present a proposal. Through our purchasing department, we were able to design a beneficial contract with that vendor.
Pratt: Thibodaux Regional Medical Center is a community hospital in South Louisiana that has 149 beds and four clinics at a distance of about 45 minutes from the hospital. Each clinic has diagnostic and mammography equipment. We also manage a very small hospital that has 20 beds and a very basic radiology department. This means that our equipment is spread out over some distance. We have 1,500 pieces of biomedical equipment in 32 imaging units.
Our hospital’s management company has a strategic partnership with one multivendor single-source service provider, so we knew that this concept had worked in some of the management company’s other hospitals. Of our imaging equipment, 60% was manufactured by the management company’s preferred service provider. This preexisting relationship led us toward that company. At the time when we were making this decision, we also were experiencing some instability within our biomedical engineering department; we had been unable to recruit a department manager, and this was another force driving us toward a single-source solution.
The prospect of cutting our costs was, of course, another important motive. Most of our imaging-equipment service had been paid for on a time-and-materials basis, with service contracts in place only for CT and MRI. Those contracts were about to reach their renewal points. A large amount of nuclear medicine, special-procedure, and radiology/fluoroscopy equipment was also reaching the end of the warranty period at the same time. This prompted us to consider bundling our service together.
Q: Who was involved in the decision-making process?
Burney: We are constantly redefining our asset-management needs. We are in the midst of a system-wide reengineering program; those involved in decision-making are a steering committee, a project team, and a purchased goods and services committee, as well as the many department heads and vice presidents who are affected. That scope is broad; for example, the first time that we heard of the multivendor single-source service strategy was when we were approached by a vendor that wanted to take over maintenance of everything in the hospital: elevators, boilers, medical equipment, computers, phone systems, and radiology equipment.
Pratt: I was the proponent at our facility because of the need to do something in the imaging department. When the decision was made, I was not yet administratively responsible for biomedical engineering. The vendor’s first presentation was made to the CEO and CFO, but I, more than anyone else, was the person who needed that solution. When the presentation was made to me, I saw that it could really work for imaging.
I pushed the issue and kept it on the table. Any organization needs someone to do that; multivendor single-source service is a complicated process involving much data analysis, and it can easily be overlooked during the time needed to reach a decision. Someone must keep the process moving. On the biomedical engineering side, the nursing department must become involved. At our facility, we brought the director of nurses and the operating room director into the decision-making process. We gained their support by allowing them to express their concerns and ask any questions that they might have. We were then able to bring the idea to the hospital administration so we could gain approval to approach the board.
Bellamy: I was responsible for all of the radiology equipment, including about 60 pieces of imaging equipment. The biomedical engineering aspects of service involved all other departments, so that was more complex. We pursued service for that area, but determined that including it would slow the decision process considerably, so we limited our agreement to radiology equipment. We continue to look into single-source service for biomedical engineering, but the need to pursue it is less urgent because there is a separate contract in place that covers it. The success and cost savings that we have seen thus far for radiology are, however, likely to influence other departments in favor of multivendor single-source service in the future.
Q: What role does service quality play in your choice of a multivendor solution?
Pratt: Cost savings were a given factor, as our costs would certainly be lower under a single-source strategy than under the existing situation. Remote diagnostic capability for equipment problems was very important to us. In our semirural setting, the ability to solve our problems by telephone is a great saver of time. Management reports were another major advantage; we wanted to be able to control our assets and to manage them better. Our biomedical engineering department lacked the computer technology that would have allowed it to provide us with that kind of feedback, but we wanted trend analyses so that we could start making better-informed decisions. Ease of access to service personnel and the accountability of the vendor were also highly important to us.
Bellamy: Cost was a good starting point, but quality was paramount. We have the busiest MRI service in our area; if our equipment is down, then we must send patients elsewhere, increasing our patient-care costs and decreasing patient satisfaction. We want to ensure that good service will be available to keep our machines running. We even excluded a vendor who had provided less-than-adequate service in the past from our single-source bid list. Our top two vendor choices were similar in cost, but quality swayed us in the direction of the bidder that was ultimately successful.
Burney: Since we are still in the selection and thinking process, quality has not been an issue. We assume that any vendor will be able to match our current quality standards. Every department measures quality differently, however. For the biomedical engineering department, it is indicated by the percentage of inspections made by their due date. For the maintenance department, it is indicated by the percentage of work requests completed within 24 hours. For radiology, it is indicated by many factors, including the percentage of examinations that must be repeated and the percentage of studies completed on time.
Q: Is your single-source solution meeting your expectations?
Bellamy: Through our national organization, we were already able to obtain good discounts, but our multivendor single-source service contract has saved us 13%, compared with our previous arrangements. For us, that represents more than $100,000.
Burney: Since we have not yet made our service decision, the surprises that we have encountered have come to light during our due-diligence phase. The variations in the reports that we receive are amazing. One hospital might be taking a service vendor to court, and another might be ending its relationship with the same vendor for nonperformance, yet other hospitals are equally likely to say that this vendor’s program has saved them incredible amounts of money. It seems that the culture at each hospital must have much to do with the success of these programs. If the cultural mix is wrong, the relationship will not work, no matter what the vendor says or promises.
Pratt: We were seeing over $800,000 per year in maintenance and repair expenses. The single-source service provider was able to save us approximately $100,000, and we could not have achieved that in any other way.
Kris Kyes is technical editor of Decisions in Axis Imaging News. This article has been excerpted in part from Dissecting the Single-Source Decision, presented at HealthTech ?99 on April 26, 1999 in Baltimore, MD, and sponsored by a multivendor single-source service provider.