Slashing Imaging Equipment Maintenance Costs While Increasing Uptime and Reliability

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1 Slashing Imaging Equipment Maintenance Costs While Increasing Uptime and Reliability Patrick Lynch, CCE, CBET, MBA Global Medical Imaging Charlotte, NC 1 Some things that every Radiology Administrator needs to know about medical equipment service Patrick Lynch, CCE, CBET, MBA Global Medical Imaging Charlotte, NC 2

2 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/ 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

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/ Fact: You are the focal point of a very intense battle for money. 6

4 Fact: You are the focal point of a very intense battle for money. Not just for the money that changes hands when you buy a new piece of equipment 7 Fact: You are the focal point of a very intense battle for money. Not just for the money that changes hands when you buy a new piece of equipment The fees you pay year after year to keep technology operational, accurate, safe, and generating revenue. 8

5 Manufacturers are NOT your friends. It s all about Money. They give up a lot on the sale. They intend to make it back during the equipment life. 11/19/ Fact: You will spend more to maintain medical technology that you paid for it new. 10

6 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. 11 Cumulative Cost of Medical Equipment Maintenance (as a percentage of purchase price) 12

7 How do you know if you are paying too much for medical equipment service? 11/19/ Service Value Ratio 11/19/

8 Service Value Ratio 11/19/ Examples Plastic Portfolio Cost - $20 Extended Warranty (Office Depot) - $2.00 (10%) 11/19/

9 Examples Plastic Portfolio Cost - $20 Extended Warranty (Office Depot) - $2.00 (10%) Computer Cost - $500 Extended Warranty - $75 per year (15%) 11/19/ Examples Plastic Portfolio Cost - $20 Extended Warranty (Office Depot) - $2.00 (10%) Computer Cost - $500 Extended Warranty - $75 per year (15%) Infusion Pump Cost - $6,000 Extended Warranty 800 per year (13.3%) 11/19/

10 Examples Plastic Portfolio Cost - $20 Extended Warranty (Office Depot) - $2.00 (10%) Computer Cost - $500 Extended Warranty - $75 per year (15%) Infusion Pump Cost - $6,000 Extended Warranty 800 per year (13.3%) CT Cost - $1,000,000 Extended Warranty - $150,000 per year (15%) 11/19/ Myth: Manufacturer-supplied parts are better than parts from other sources. They only sell new parts. 20

11 Myth: Manufacturer-supplied parts are better than parts from other sources. They only sell new parts. 21 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. 22

12 Fact: Full-Service contracts are NOT the least expensive option. 23 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. 24

13 Fact: Many companies pay their service engineers a commission on the parts they sell. 25 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? 26

14 Fact: OEMs charge premium prices for after-hours PMs. 27 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. 28

15 Fact: Items such as MRI coils and Ultrasound probes can be repaired very economically. 29 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. 30

16 Fact: If not careful, you ll get nickel and dimed to death. 31 Fact: If not careful, you ll get nickel and dimed to death. after hours PMs 32

17 Fact: If not careful, you ll get nickel and dimed to death. after hours PMs non-covered parts 33 Fact: If not careful, you ll get nickel and dimed to death. after hours PMs non-covered parts operator-related issues 34

18 Fact: If not careful, you ll get nickel and dimed to death. after hours PMs non-covered parts operator-related issues Batteries 35 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 36

19 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 37 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

20 Fact: Manufacturers have a whole list of reasons that you should not reduce or eliminate their contact. 39 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 40

21 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 41 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 42

22 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. 44

23 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. 45 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

24 What Service Sales tells you: Here s how much we charged you last year $ Here s what service last year would have cost you without the contract: $ You saved $ by having the contract with us. The Real Story: True, you saved $ if you had purchased all parts and labor from the manufacturer at nondiscounted, published rates, but... Work could have been done by somebody who has a cheaper labor rate. Parts could be purchased from a cheaper supplier. 47 What Service Sales tells you: Here s how much we charged you last year $ Here s what service last year would have cost you without the contract: $ You saved $ by having the contract with us. The Real Story: True, you saved $ IF you had purchased all parts and labor from the manufacturer at nondiscounted, published rates, but... Work could have been done by somebody who has a cheaper labor rate. Parts could be purchased from a cheaper supplier. 48

25 Options: Eliminate all contracts Hospital-employed engineers Hospital-based engineers supplied by a professional service company Shared responsibilities between inhouse and a service company 49 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. 50

26 Disadvantages: Must be large enough to make financial sense Staff retention Cost of training 51 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. 52

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