Slashing Imaging Equipment Maintenance Costs

Slashing Imaging Equipment Maintenance Costs

While Increasing Uptime and Reliability

Patrick Lynch, CCE, CBET, MBAGlobal Medical Imaging

Charlotte, NC

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Some things that every Radiology Administrator needs

to know about medical equipment service

Patrick Lynch, CCE, CBET, MBAGlobal Medical Imaging

Charlotte, NC

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Who am I?• CBET (Certified Biomedical Equipment

Technician)• CCE (Certified Clinical Engineer) • 36 years in Healthcare Technology Management• Active in certification of BMETs and CEs• Member of all Biomed Associations (approx. 40)• Managed large in-house (Carolinas Medical

Center and Northside Hospital, ISO (Premier) and corporate Biomeds (TriMedx)

• Currently, works for GMI in sales development, who sponsors my activities.

11/19/2009 3

Why are we here?

• Problems back at the hospital . . . . .– Reimbursements are down– The future is uncertain.– Administration cut our budget.– My boss won’t let me hire staff I need.– Do the same work with less staff.– Administration demands cost

reductions.– Capital budgets squeezed.– I want to be prepared for the future.

11/19/2009 4

Why are we here?

• Problems back at the hospital . . . . .– Reimbursements are down– The future is uncertain.– Administration cut our budget.– My boss won’t let me hire staff I need.– Do the same work with less staff.– Administration demands cost

reductions.– Capital budgets squeezed.– I want to be prepared for the future.

11/19/2009 5

Fact: You are the focal point of a very intense battle for

money.

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Fact: You are the focal point of a very intense battle for

money.

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Not just for the money that changes hands when you buy a new piece of equipment

Fact: You are the focal point of a very intense battle for

money.

• The fees you pay year after year to keep technology operational, accurate, safe, and generating revenue.

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Not just for the money that changes hands when you buy a new piece of equipment

Manufacturers are NOT your friends.

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•It’s all about Money.•They give up a lot on the sale.•They intend to make it back during the equipment life.

Fact: You will spend more to maintain medical technology

that you paid for it new.

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Fact: You will spend more to maintain medical technology

that you paid for it new.

Medical Equipment has a lifespan of >7 years.Medical Equipment costs 15% (average) to maintain.7 years x 15% per year = 105% of purchase price.

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Cumulative Cost of Medical Equipment Maintenance(as a percentage of purchase price)

How do you know if you are

paying too much for

medical equipment service?

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Service Value Ratio

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Service Value Ratio

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Examples

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Plastic PortfolioCost - $20Extended Warranty (Office Depot) - $2.00 (10%)

Examples

ComputerCost - $500Extended Warranty - $75 per year

(15%)

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Plastic PortfolioCost - $20Extended Warranty (Office Depot) - $2.00 (10%)

Examples

ComputerCost - $500Extended Warranty - $75 per year

(15%)

11/19/2009 18

Infusion PumpCost - $6,000Extended Warranty – 800 per year (13.3%)

Plastic PortfolioCost - $20Extended Warranty (Office Depot) - $2.00 (10%)

Examples

ComputerCost - $500Extended Warranty - $75 per year

(15%)

11/19/2009 19

CT Cost - $1,000,000Extended Warranty - $150,000 per year (15%)

Infusion PumpCost - $6,000Extended Warranty – 800 per year (13.3%)

Plastic PortfolioCost - $20Extended Warranty (Office Depot) - $2.00 (10%)

Myth: Manufacturer-supplied parts are better than parts from other

sources. They only sell new parts.

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Myth: Manufacturer-supplied parts are better than parts from other

sources. They only sell new parts.

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Myth: Manufacturer-supplied parts are better than parts from other

sources. They only sell new parts.

• False.• Manufacturers repair broken, traded in

parts and resell them, just like everybody else.

• OOB (Out-of-Box) failures are equivalent.

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Fact: Full-Service contracts are NOT the least expensive option.

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Fact: Full-Service contracts are NOT the least expensive option.

• Contracts provide 3 Things– Predictable budgeting, even payments

each month.

– Protection from out-of-the-ordinary costs.

– Sign it and forget it.

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Fact: Many companies pay their service engineers a commission

on the parts they sell.

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Fact: Many companies pay their service engineers a commission

on the parts they sell.

• There are lots of stories about unneeded parts installed.

• Does this violate your hospital's conflict of interest policy?

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Fact: OEMs charge premium prices for after-hours PMs.

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Fact: OEMs charge premium prices for after-hours PMs.

Other service providers accept this as a necessary part of the service offering.

You will not lose have to schedule a room down for PMs.

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Fact: Items such as MRI coils and Ultrasound probes can be

repaired very economically.

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Fact: Items such as MRI coils and Ultrasound probes can be

repaired very economically.

Many manufacturers declare them “unrepairable”

and sell you a new one.

Many companies repair these items for

a fraction of the costs.

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Fact: If not careful, you’ll get nickel and dimed to death.

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Fact: If not careful, you’ll get nickel and dimed to death.

• after hours PMs

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Fact: If not careful, you’ll get nickel and dimed to death.

• after hours PMs• non-covered parts

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Fact: If not careful, you’ll get nickel and dimed to death.

• after hours PMs• non-covered parts• operator-related issues

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Fact: If not careful, you’ll get nickel and dimed to death.

• after hours PMs• non-covered parts• operator-related issues• Batteries

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Fact: If not careful, you’ll get nickel and dimed to death.

• after hours PMs• non-covered parts• operator-related issues• batteries• probes and accessories

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Fact: If not careful, you’ll get nickel and dimed to death.

• after hours PMs• non-covered parts• operator-related issues• batteries• probes and accessories• physical damage

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Fact: If not careful, you’ll get nickel and dimed to death.

• after hours PMs• non-covered parts• operator-related issues• batteries• probes and accessories• physical damage• Repeat calls for the

same problem 38

Fact: Manufacturers have a whole list of reasons that you should not reduce or eliminate

their contact.

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Fact: Manufacturers have a whole list of reasons that you should not reduce or eliminate

their contact.• go to the end of the list if you call for

service

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Fact: Manufacturers have a whole list of reasons that you should not reduce or eliminate

their contact.

• go to the end of the list if you call for service

• 'free' software updates won't be free

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Fact: Manufacturers have a whole list of reasons that you should not reduce or eliminate

their contact.

• go to the end of the list if you call for service

• 'free' software updates won't be free• nobody knows as much as the

manufacturer42

Fact: Manufacturers have a whole list of reasons that you should not reduce or eliminate

their contact.• go to the end of the list if you call for

service• 'free' software updates won't be free• nobody knows as much as the

manufacturer• Your engineers might quit 43

Fact: All manufacturers have a Service Sales Department.

Their job? convince you of the economy of a full service

contract.

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Fact: All manufacturers have a Service Sales Department.

Their job? convince you of the economy of a full service

contract.• caution - all figures presented to you reference manufacturer parts at list price.

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Fact: All manufacturers have a Service Sales Department.

Their job? convince you of the economy of a full service

contract.• caution - all figures presented to you

reference manufacturer parts at list price.• caution - all reports sent to you reflect all

parts replaced, even ones that were not needed but were replaced out of convenience for the manufacturer. (Example: FRUs instead or discrete parts.) 46

What Service Sales tells you:Here’s how much we charged you last year –$100.00Here’s what service last year would have cost you without the contract: $285.00You saved $185.00 by having the contract with us.

The Real Story:True, you saved $185.00 if you had purchased all parts and labor from the manufacturer at non-discounted, published rates, but . . .Work could have been done by somebody who has a cheaper labor rate.Parts could be purchased from a cheaper supplier.

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What Service Sales tells you:Here’s how much we charged you last year –$100.00Here’s what service last year would have cost you without the contract: $285.00You saved $185.00 by having the contract with us.

The Real Story:True, you saved $185.00 IF you had purchased all parts and labor from the manufacturer at non-discounted, published rates, but . . .Work could have been done by somebody who has a cheaper labor rate.Parts could be purchased from a cheaper supplier.

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Options:

• Eliminate all contracts

• Hospital-employed engineers

• Hospital-based engineers supplied by a professional service company

• Shared responsibilities between in-house and a service company

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Advantages:

• Faster response

• Free after hours maintenance

• Many options for repair parts, tubes, etc.

• Many options for less expensive service

• The manufacturer is still there, if needed.

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Disadvantages:

• Must be large enough to make financial sense

• Staff retention

• Cost of training

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The bottom line:

• If you believe that your original equipment manufacturers are the only source of quality service, you are wrong.

• Investigate in-house service, either provided by hospital employees or an dedicated service company which is NOT attached to the manufacturer.

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