3 Tips to Reduce Medical Device Life Cycle Spending
Hospital CFOs are always looking for ways to cut costs and trim margins. Reducing medical device life cycle expenses can help.
In fact, the cost of medical equipment ownership and the repair of medical devices, from infusion pumps to telemetry systems, can be a hefty burden for those in charge of capital budgets. Not to mention, when medical equipment needs down-time for troubleshooting and repair, hospitals must either rent or buy more equipment to compensate for the loss of available assets. After all, real lives depend on medical devices every single day.
Unfortunately, not all medical devices are made equal and not all manufacturers adhere to a robust Quality Management System (QMS) or meet OEM standards. That’s why those in charge of procurement decisions must take extra precautions in vetting potential medical device suppliers and manufacturers to ensure better long-term performance that can help reduce overall medical device life cycle spend.
So, just how much do hospitals spend on medical equipment?
As the United States healthcare sector recovers from the financial setbacks of the 2020 COVID-19 pandemic, hospitals and health systems continue to operate on narrow margins. At the same time, medical device spending increasingly dominates capital budgets.
Pre-pandemic, hospital equipment spending was already on the rise; in 2018, hospitals in the United States spent a combined $36 billion on medical supplies, including medical equipment. That’s an average of $11.9 million per hospital.
In the wake of the pandemic, a growing emphasis on medical technology as a pillar of value-based care is driving capital equipment spending even higher. A 2021 market report by Grandview Research estimates a 5.5% compound annual growth rate that places the value of the medical device market at a staggering $262.4 billion by 2028.
How can hospitals reduce medical device life cycle spend?
Calculating an accurate total cost of ownership (TCO) analysis provides insight into a healthcare organization's total capital equipment spending. Beyond decisions about the biomedical fleet, these insights help companies identify cost-saving actions that can reduce unnecessary medical equipment expenses.
However, biomedical equipment managers should also take a targeted approach to reduce spending in each phase of the equipment lifecycle. We recommend the following:
1. Up the Research Game for Procurement Savings
Don’t rely entirely on vendors for quality information. Discuss materials and manufacturing processes, quality control, brand history, and other factors with OEM reps, then factor this information into the process when making new equipment decisions.
2. Commit to Contract Compliance
Robust contract compliance ensures all warranty services are available when needed. Strategize to stay up to date with OEM preventive maintenance requirements and plan for predictable delays. Audit device handling and cleaning protocols, also retrain staff, if needed.
3. Choose Repair Partners Wisely
As with OEMs, carefully vet manufacturers of 3rd-party replacement parts. A 3rd-party partner who prioritizes patient safety and durability can demonstrate an OEM-quality manufacturing process. Look for a partner with a dedication to precision design, targeted material selection, and exceptional quality-control, that ideally makes all parts in the USA.
Using high-quality parts for repairs can extend the lifespan of biomedical devices. Contracting with a reliable 3rd-party parts manufacturer also streamlines parts procurement. This cuts the time in-house biomedical equipment technicians spend on parts procurement each day.
Learn more about calculating the true cost of medical equipment
The allure of lower purchasing costs can lead to asset decisions that save capital in the short term. However, warranty terms, availability of repair parts, cleaning practices, unexpected device failure, equipment recalls, and other variables can offset procurement cost savings.
Calculating the TCO allows medical equipment managers to understand the aggregate operational costs of device ownership, so they can make decisions that achieve greater capital savings in the long run.
Our latest guide offers healthcare purchasing and procurement agents a comprehensive approach to calculating medical device TCO. This approach addresses the unique nature of each healthcare organization, focusing on individual factors affecting current medical inventory and biomedical equipment utilization requirements.
Topics covered include:
● Examining barriers to TCO accuracy
● Gathering precise data from multiple stakeholders
● Uncovering hidden costs during the full device lifecycle