The best ways of meeting demands to cut HTM expenses are often not the obvious ones. With persistence, careful analysis, and a willingness to experiment, departments can reduce costs while increasing their effectiveness
It’s no secret that hospitals are dealing with increasingly stringent budget restraints that are filtering down to all departments, particularly those like biomedical and clinical engineering.
The problem faced by these departments, which are responsible for maintaining their hospitals’ most expensive and most critical pieces of equipment, is how to contain costs while maintaining a high level of quality and service.
Encourage Vendor Competition
Nader A. Hammoud, BME, biomedical engineering manager at UCSF San Francisco General Hospital, says that one of the ways biomedical engineering departments can start productively achieve cost-effectiveness is by fostering competition among vendors.
“Some hospitals are so used to dealing with specific vendors that if they need to make a purchase, they’ll just go to one of those vendors,” Hammoud says. “Those vendors are going to feel like they can sell anything to that hospital and price things the way they wish. So you want to enable competition between vendors. Even if a vendor is your first preference, check with someone else, and that will eventually lead to cost savings.”
It’s also important to re-examine service contracts, Hammoud says, pointing out that in many cases a hospital may be paying for more than it really needs.
Tim Burwell, CBET, at Vidant Health in Greenville, NC, says that like most biomedical engineering departments, his is being squeezed to bring costs down as much as possible. Like Hammoud, he has been looking at his service contracts.
Burwell reports that his hospital has been able to show a significant return on investment by re-evaluating service contracts, which can involve something as basic as trying to determine whether they are even necessary. “Has the contract ever been used in the history of the device, or has it simply been renewed over and over again?” Burwell asks.
Burwell says his department asked for repair histories of the devices in question from the original equipment manufacturers. The department then examined its own internal repair capabilities to decide whether, in a worst-case scenario, it had someone in-house who could service that device, and do so at a lower cost than for a 5-year contract.
“That was a big step,” he says. “We were able to show a significant return on investment with contract costs once we reviewed what we were doing, how often devices failed, and whether we had the capability of taking it in-house.”
There was some resistance on the part of vendors, he says, particularly when it came to purchasing parts. For example, he found out that in order to buy preventive maintenance kits for ventilators costing $400, he would be required to have one of his technicians go through a training course that cost $5,000.
“But they were charging $500 labor to put [each kit] in,” Burwell points out. “And while the class may have cost $5,000, we have 38 machines. And if you can save $500 per machine, that outweighs the cost of the training.”
Hammoud also says that biomedical departments should be intimately involved in assessing service contracts. “In some hospitals, the people who evaluate service contracts have a minimal amount of experience with medical equipment,” he says. That can lead to signing service contracts that aren’t necessary or that don’t provide the coverage that is actually needed.
“The persons who are really capable of evaluating the need for that contract are experienced biomeds who know about the device being serviced,” he said. “And when you’re looking at it from the perspective of cost savings, you have these experienced biomedical managers and technicians, so why are you paying those salaries if you’re not going to take advantage of their experience?”
Consider the Alternatives
Allison White is manager of biomedical engineering at Catholic Health System in Buffalo, NY, which contracts out its clinical engineering service department. Catholic Health just recently changed its clinical engineering service provider, and the process of going through that change “was a great time to look at where we could generate cost savings,” White says.
Catholic Health was able to use the request for proposal timeframe to ask potential providers to submit bids that promised guaranteed savings. After selection and sign off on a disclosure statement, the new service provider looked at the numbers and came back with “a solid number” that offered significant cost savings.
In conjunction with that, White says, has been an effort to achieve a certain percentage of cost savings by eliminating service agreements. “Whenever a service contract is about to expire, I review it to see if it’s really worth having or whether we can do it in-house,” she explains. “If I think it can be done in-house, I’ll present it to [my clinical engineering services provider] and ask them how much they’ll charge to cover it.”
“Obviously, I won’t switch over to them unless there is a guaranteed savings,” she says, adding that the amount saved should approach the guaranteed percentage her provider has given Catholic Health regarding total cost savings. But even in cases where the savings don’t approach that percentage, it may still be worthwhile because of “value adds” like reductions in response times. This effort to eliminate service contracts has resulted in cost savings of 27% since January of this year, White reports.
Another cost containment technique that’s proved successful has been including clinical engineering training with capital equipment purchases, White adds. “We have four different sites, and if, for example, we have to do replacement for patient monitoring, we do a multiyear replacement.” With a multiyear replacement and bulk purchasing, she continues, “we are able to work on an alliance agreement with a vendor, and that will entitle us to a cost savings.”
In addition, she says, “we’ll get discounted pricing for clinical engineering training, which is something we wouldn’t necessarily be offered if we were buying it after the fact,” she adds.
Burwell has also targeted training as a way in which he can cut costs. “We wanted to make sure that we had in-house experts in all of our areas,” he says. “And if that meant training someone, we wanted to make that happen.”
For example, while it may not be necessary to have everyone trained on IV pumps, Burwell says, it is extremely helpful if a department has a subject expert who can serve as a guide or take over a repair if it gets too complex or involved, “and do it quicker and cheaper.”
Efficiency = Cost Containment
In many cases, cost containment just means being more efficient, Burwell says. “One of the reasons I was brought here was to take a look at processes and procedures, look at what the biomeds were doing, and see how we could do it better, faster, and for less money.”
Simply because his institution added more equipment, was an extra full-time employee necessary? Burwell wondered. Or was it possible that some untapped manpower was being wasted because biomeds were finding themselves bogged down in paperwork and processes that prevented them from getting hands-on time with the equipment?
Burwell decided he wanted to test how much more efficient he could make his department by automating its preventive maintenance activities. “So we basically ran a race,” he says. “We set up a trial with a purely automated system in which we had one technician who had some training on fully automated PM procedure devices and one technician who did it the way the department had always done it—by bringing the paper along, and then at the end of the day, coming home and closing those work orders in the department.”
Burwell says that he was able to show, depending on the kind of preventive maintenance that was involved, that the department could improve efficiency by 30% or 40% if the work orders were done with that automated system in real time and on-site.
“The numbers showed that by giving everyone in the department an automated system,” he says, the department could free up the equivalent of 10 to 12 technicians. “And time savings is cost containment. We don’t need to have as many full-time employees on the floor, and we can get more done in a workday. People are expensive, and streamlining the process was one of our first steps toward trying to contain costs.”
Sometimes costs can be contained just by ensuring that biomeds are being properly deployed. Matt Baretich, PhD, president of Baretich Engineering Inc, often consults on clinical engineering operations and benchmarking. He says that when he takes on a client—particularly, if it is a facility with Joint Commission accreditation—he’ll start a conversation about how it complies with those standards. And it’s often the case that the facility is operating based on versions of standards that are several generations old and is “doing things simply because that’s the way it’s always done it.”
For example, he had one client where the clinical engineering department was doing electrical safety testing on office equipment. “And there is just no requirement to do that—there’s no sense in doing that,” he says. “That’s not a safety risk that needs the attention of a trained biomedical technician.”
Benchmarking
One of the ways in which a clinical engineering department can approach cost containment is through benchmarking. Benchmarking is the process of comparing quantifiable measurements, such as cost, quality, productivity, or downtime, within one’s own department over time, or among similar companies, departments, or institutions, with the idea it can help with quality improvement and cost containment.
One of the problems with trying to benchmark is that it isn’t easy to do because it’s difficult to get comparable information, Baretich says.
Some hospitals’ benchmarking efforts are unsophisticated, he says. They may, for example, rely on a rule-of-thumb approach that equates the number of pieces of equipment in a facility with the number of full-time technicians necessary to service them.
“It’s pretty obvious that’s not going to be a very useful measure,” Baretich says. “Taking care of one oxygen flow meter is going to be much different than taking care of one MRI scanner. Just counting numbers like that won’t get you very far.”
These kinds of concerns were the impetus for development by the Association for the Advancement of Medical Instrumentation of its Benchmarking Solution, an online tool that biomedical or clinical engineering departments can use to measure staffing, budgeting, inspections, and other areas against their peers.
Subscribers answer a series of questions online, input data from their programs, and are then able to compare their facility to others, with the ability to customize those results based on the size, region, or type of facility.
Baretich serves as one of three subject matter experts for AAMI’s Benchmarking Solution. (The other two experts are Frank Frank Painter of Technology Management Solutions and the University of Connecticut and Ted Cohen of UC Davis Medical Center.) AAMI’s system, says Baretich, is one of two useful benchmarking tools available to clinical engineering programs, the other being ECRI Institute’s BiomedicalBenchmark.
Each has a different focus, Baretich says. Benchmarking Solution focuses on the operation of a clinical engineering program more from a management perspective, while BiomedicalBenchmark can go into finer detail, and provides information like the costs of service contracts for certain types of equipment.
The value of something like Benchmarking Solution—particularly because it’s customizable—is that it allows the user to use multiple criteria to define a peer group, Baretich says. “So it allows me to compare what I’m doing with other organizations I think of as being similar in some respect. And the value of that is that if I see some other hospital like mine doing better on some kind of performance parameter, I can dig down and try to understand why that is happening.
“And it’s not arbitrary,” he points out. “It shows that it’s actually possible to do better because it demonstrates that other departments are doing better. It identifies opportunities that are achievable.”
So this becomes a quite useful too for cost-containment purposes, Baretich says. As an example, a hospital administrator may tell a clinical engineering department it needs to cut costs by 5%. Using the tool, he says, “I can benchmark to see that maybe I’m overstaffed in some area, or that perhaps I should use an outside service contract somewhere else.” There are many parameters that can be examined, he says, “but the point is that you can use this to find areas where you should focus your attention, rather than just arbitrarily cutting staffing by 5%. It allows you to be smarter about the kinds of cost-containment opportunities you want to pursue.”
Michael Bassett is a contributing writer for 24×7. For more information, contact editorial director John Bethune at [email protected].
