As healthcare leaders, you know the situation all too well — the pressure is on to do more with the same or even fewer resources and to lower costs, all while meeting financial goals and improving efficiencies. It may seem that there is little left to cut in organizational expenses without sacrificing service and quality.
But the truth is that most U.S. hospitals and health systems have a hidden opportunity for cost savings and improved quality: better management of clinical assets and productivity.
Today's patients are surrounded by more technology than ever; in 2010, there were an average of 13 devices at the bedside, up from 8 devices in 1995. As a result, service and maintenance costs per bed have exploded. With so much technology in the modern hospital setting, hospital executives can uncover savings in better managing the acquisition, distribution and maintenance of mobile equipment.
At its most fundamental, the problem with increased cost in healthcare organizations is that average utilization of mobile devices rests around 42 percent, meaning that hospitals are not using technology in direct patient care at its full potential or capacity. Yet many hospitals feel strapped for equipment, with feedback such as: "We can't find IV pumps in this nursing unit." This leads hospitals to buy or rent pieces of equipment — often unnecessarily — to satisfy perceived need, and, as a result, health systems today spend nearly double what they did 15 years ago to maintain what often turns out to be an unnecessarily inflated and underutilized asset inventory.
Get the bigger picture
The first key to uncovering savings in clinical assets is to do a baseline analysis and understand what you already have. Most organizations lack insight into their utilization of assets and do not have a fully-developed, data-based sense of how much or how frequently equipment is used. At GE Healthcare, we've found that most hospitals we work with are initially off by at least 60 percent in inventorying their mobile clinical assets.
Implement a holistic approach
When faced with bloated spending on equipment, many multi-facility health systems have traditionally addressed the issue on a "per facility basis," seeking improvements from hospital to hospital. While this is a good step, it is just the first on the journey to controlling equipment inventory and costs. Health systems should consider attacking mobile asset management at a system level, leveraging a comprehensive centralized distribution model. Under this model, the health system coordinates assets for all facilities in the organization from a central location, handling everything from procurement, to utilization, to infection control, to equipment maintenance and service. This allows for greater control of assets and for better location-specific distribution for patient care needs and operational objectives. Many health systems are leaving money on the table by not managing assets through a centralized model. In our experience, asset optimization initiatives typically produce a 25 to 30 percent reduction in inventory per facility.
Consider tracking technology
Tracking technology is crucial in asset management and especially the centralized distribution model. Advances in technology now allow organizations to tag and track equipment for a deeper, real-time understanding of when and where equipment is being used. Tracking technology can provide continuous data on asset location and movement, empowering hospitals with factual information for smart, data-based decisions. With a sense of where mobile clinical devices actually are day-to-day as they travel in a hospital, executives can control asset flow and supply chain processes, ensuring that devices are quickly accessible, clean, and in working order when clinicians and staff need them.
Address workflow issues
With better tracking, hospitals can often reduce the amount of equipment inventory on-hand, which consequently reduces maintenance and service costs. Also, smaller inventories will cost less to replace as equipment ages. With fewer units to procure, the organization can reduce or avoid capital spend that may otherwise be in the million dollar range. These numbers are very appealing; however, while cutting down on equipment seems great from a financial perspective, it is important to note that simply cutting inventory will not fix the very fundamental issue of utilization. Workflow plays a huge role in how efficiently devices are being used, and workflow issues must be improved to make an impact on an organization's utilization numbers.
Create a replacement strategy
Often, the purchase of equipment is driven by subjective observations such as "we have trouble finding telemetry monitors in this nursing unit." This, may lead to a bloated inventory as hospitals purchase or rent more equipment than is really needed — and then pay to maintain and service that equipment. The important question to ask when staff cannot find equipment is: Why is equipment hard to find in the first place? Of course, hospitals should take into account front-line feedback, as physicians and nurses are often the eyes and ears of a department, but this feedback should be balanced against a strategic plan for equipment replacement and insights gathered from tracking assets and utilization.
Broader benefits of managing assets
By effectively managing assets, hospitals can improve utilization and discover opportunities to reduce the amount on unnecessary inventory on hand, lowering overall costs. However, the impact of great asset management extends beyond an organization's bottom line into the most important mission of healthcare — quality patient care and clinical outcome.
When devices crucial to quality patient care are easily accessible, clean and ready to be used, good things happen. For example, physician orders can be fulfilled in a timelier fashion, and nurses can spend less time chasing down equipment and more time at the bedside, which can help with improving the increasingly important measurable outcomes of length of stay and readmissions. From a cultural perspective, a solid asset management strategy also provides staff and clinicians with a uniform set of processes, technologies and informatics.
Asset management may seem like a daunting prospect. However, there is significant opportunity for executives to achieve savings and increase productivity by right-sizing and strategically managing equipment inventory. In a multi-facility health system, mobile assets can represent thousands of devices and millions of dollars in capital and operating expenditures. With more control over efficient equipment usage and the amount spent on maintenance and inventory, leadership teams can re-allocate hospital funds to other critical areas within the organization and foster a more cohesive, cross-facility culture.
Richard Neff is the vice president of GE Healthcare’s U.S./Canada Service business. More information can be found at http://nextlevel.gehealthcare.com.
*The figures and calculations herein are estimates made for informational purposes only, and are based on GE Healthcare's prior experiences with its clients. The potential opportunities estimated herein are not intended to be a commitment, guaranty, or warranty from GE Healthcare. As each hospital is unique, your facility may have other costs, capacities, or other variables that may not be reflected herein. For a more detailed assessment of the potential for your particular facility, please contact your GE Healthcare representative. GE Healthcare accepts no liability for the consequences of any actions taken on the basis of the information provided.
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But the truth is that most U.S. hospitals and health systems have a hidden opportunity for cost savings and improved quality: better management of clinical assets and productivity.
The technology revolution
Mobile equipment, such as ventilators, infusion pumps and telemetry units, comprise around 95 percent of a hospital's clinical asset base, representing not only a significant upfront investment but also an additional, continued cost in service, maintenance and, eventually, replacement.Today's patients are surrounded by more technology than ever; in 2010, there were an average of 13 devices at the bedside, up from 8 devices in 1995. As a result, service and maintenance costs per bed have exploded. With so much technology in the modern hospital setting, hospital executives can uncover savings in better managing the acquisition, distribution and maintenance of mobile equipment.
At its most fundamental, the problem with increased cost in healthcare organizations is that average utilization of mobile devices rests around 42 percent, meaning that hospitals are not using technology in direct patient care at its full potential or capacity. Yet many hospitals feel strapped for equipment, with feedback such as: "We can't find IV pumps in this nursing unit." This leads hospitals to buy or rent pieces of equipment — often unnecessarily — to satisfy perceived need, and, as a result, health systems today spend nearly double what they did 15 years ago to maintain what often turns out to be an unnecessarily inflated and underutilized asset inventory.
Getting assets under control
By better understanding current asset inventories and then taking steps to manage and distribute those inventories fairly and strategically, healthcare organizations can reduce the number of assets, bring down associated costs and improve utilization and productivity. Several key considerations for asset management are:Get the bigger picture
The first key to uncovering savings in clinical assets is to do a baseline analysis and understand what you already have. Most organizations lack insight into their utilization of assets and do not have a fully-developed, data-based sense of how much or how frequently equipment is used. At GE Healthcare, we've found that most hospitals we work with are initially off by at least 60 percent in inventorying their mobile clinical assets.
Implement a holistic approach
When faced with bloated spending on equipment, many multi-facility health systems have traditionally addressed the issue on a "per facility basis," seeking improvements from hospital to hospital. While this is a good step, it is just the first on the journey to controlling equipment inventory and costs. Health systems should consider attacking mobile asset management at a system level, leveraging a comprehensive centralized distribution model. Under this model, the health system coordinates assets for all facilities in the organization from a central location, handling everything from procurement, to utilization, to infection control, to equipment maintenance and service. This allows for greater control of assets and for better location-specific distribution for patient care needs and operational objectives. Many health systems are leaving money on the table by not managing assets through a centralized model. In our experience, asset optimization initiatives typically produce a 25 to 30 percent reduction in inventory per facility.
Consider tracking technology
Tracking technology is crucial in asset management and especially the centralized distribution model. Advances in technology now allow organizations to tag and track equipment for a deeper, real-time understanding of when and where equipment is being used. Tracking technology can provide continuous data on asset location and movement, empowering hospitals with factual information for smart, data-based decisions. With a sense of where mobile clinical devices actually are day-to-day as they travel in a hospital, executives can control asset flow and supply chain processes, ensuring that devices are quickly accessible, clean, and in working order when clinicians and staff need them.
Address workflow issues
With better tracking, hospitals can often reduce the amount of equipment inventory on-hand, which consequently reduces maintenance and service costs. Also, smaller inventories will cost less to replace as equipment ages. With fewer units to procure, the organization can reduce or avoid capital spend that may otherwise be in the million dollar range. These numbers are very appealing; however, while cutting down on equipment seems great from a financial perspective, it is important to note that simply cutting inventory will not fix the very fundamental issue of utilization. Workflow plays a huge role in how efficiently devices are being used, and workflow issues must be improved to make an impact on an organization's utilization numbers.
Create a replacement strategy
Often, the purchase of equipment is driven by subjective observations such as "we have trouble finding telemetry monitors in this nursing unit." This, may lead to a bloated inventory as hospitals purchase or rent more equipment than is really needed — and then pay to maintain and service that equipment. The important question to ask when staff cannot find equipment is: Why is equipment hard to find in the first place? Of course, hospitals should take into account front-line feedback, as physicians and nurses are often the eyes and ears of a department, but this feedback should be balanced against a strategic plan for equipment replacement and insights gathered from tracking assets and utilization.
Broader benefits of managing assets
By effectively managing assets, hospitals can improve utilization and discover opportunities to reduce the amount on unnecessary inventory on hand, lowering overall costs. However, the impact of great asset management extends beyond an organization's bottom line into the most important mission of healthcare — quality patient care and clinical outcome.
When devices crucial to quality patient care are easily accessible, clean and ready to be used, good things happen. For example, physician orders can be fulfilled in a timelier fashion, and nurses can spend less time chasing down equipment and more time at the bedside, which can help with improving the increasingly important measurable outcomes of length of stay and readmissions. From a cultural perspective, a solid asset management strategy also provides staff and clinicians with a uniform set of processes, technologies and informatics.
Asset management may seem like a daunting prospect. However, there is significant opportunity for executives to achieve savings and increase productivity by right-sizing and strategically managing equipment inventory. In a multi-facility health system, mobile assets can represent thousands of devices and millions of dollars in capital and operating expenditures. With more control over efficient equipment usage and the amount spent on maintenance and inventory, leadership teams can re-allocate hospital funds to other critical areas within the organization and foster a more cohesive, cross-facility culture.
Richard Neff is the vice president of GE Healthcare’s U.S./Canada Service business. More information can be found at http://nextlevel.gehealthcare.com.
*The figures and calculations herein are estimates made for informational purposes only, and are based on GE Healthcare's prior experiences with its clients. The potential opportunities estimated herein are not intended to be a commitment, guaranty, or warranty from GE Healthcare. As each hospital is unique, your facility may have other costs, capacities, or other variables that may not be reflected herein. For a more detailed assessment of the potential for your particular facility, please contact your GE Healthcare representative. GE Healthcare accepts no liability for the consequences of any actions taken on the basis of the information provided.
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