Article

Benefits in Strategic Sourcing of Medical Equipment Service

Health systems experience multiple advantages when they apply a strategic sourcing model to their healthcare equipment service programs.

As hospitals form alliances within a healthcare climate abuzz with merger-and-acquisition activity, opportunities to streamline and standardize have become increasingly important.

Strategic sourcing—where health systems systematize procurement efforts to unlock efficiencies through better governance and alignment of purchase decisions1—has played a pivotal role in standardization. But of course, acquiring healthcare inventory, such as mobile medical equipment, is just one part.

Once purchased, assets need to be maintained. That’s why hospitals also benefit when they apply a strategic sourcing model to their healthcare equipment service program. To activate that model for sustainable financial gain, engaging a proven healthcare technology management vendor is critical.

 

Benefits of Strategic Sourcing for Service Programs

As an article from Healthcare Facilities Today suggests, the  beauty of a strategically-sourced program is that it can be developed based on individual needs.2  A community hospital with limited staff may benefit most from a fully-outsourced model that relies on outsourced labor for medical equipment repair—while a larger supersystem with greater scale and talent may opt for a hybrid model that balances in-house and outsourced personnel.

No matter the  structure,the benefits of a strategically-sourced service model are many—and offer unique opportunities for health systems big and small:

Vendor Alignment: Condensing service decisions into one contract can reduce the administrative burden of managing multiple vendors, as well as streamline accounts payable through one point-of-contact.2

Cost Savings: A well-planned service model can yield short- and long-term economic wins, cutting up to 10 to 15 percent in annual operating expenses.3

Inventory Management: Funneling service through a single agreement can help organizations keep better tabs on medical assets and related proliferation problems—especially when vendors offer tracking technology, such as real-time location systems.4

Additionally, single-vendor servicing can lead to a sizeable contract—and thus, greater negotiating power. Within the framework of that agreement, system leaders can: get a high-level view of all inventory and related service needs, more easily engage in contract assessment and compliance, drive clearer accountability for maintenance events and maintain better control over assets within the medical equipment ecosystem.2

But of course, the benefits extend beyond the bottom line. Systems that engage in strategic sourcing for medical equipment tend to find that their clinicians are more satisfied and productive as a result of asset standardization—especially when clinicians have a say in purchase decisions.5  After all, nurses can spend more time at the bedside and less time searching for and cleaning equipment.

That part—cleaning and redistributing assets—is important to note, since a robust service program should consider everyday maintenance right along with service repairs. When staff have to prepare used equipment for the next patient, it takes time away from direct patient care. On the contrary, engaging in a strategic sourcing relationship with a supplier, who includes that as part of the contract, can help support reduced fleet downtime and increased asset utilization, while making the most of clinicians’ time.6

There’s the breadth of experience provided by healthcare technology management vendors to consider, too—as well as their ability to recruit and retain top talent.  For example,outsourced servicers may deploy personnel to help with equipment training, as well as provide data-driven insights related to capital purchases, protocol and documentation, and innovative technologies on the  horizon.2  Large suppliers may also be  uniquely positioned to manage labor shortages.3

 

Taking Steps Toward Standardization

If you’re considering a single-vendor service program, where do you start? Consulting with fellow stakeholders is an essential first  step—especially with M&As where fragmented systems with legacy philosophies look for common ground together. Doing so can be  a challenge—and may require a cultural shift in “the way we’ve always done things.”3

But those are the  very scenarios in which a unified approach to equipment service can yield the steepest benefits, as standardizing contracts can help newly created organizations make the most of their economies of scale. With a bigger and more aligned footprint, systems can enter the market with strategic relationships and a stronger balance sheet—as well as greater buying power to reinvest savings into newer and better technologies that serve patients. Additionally, improvements to clinician satisfaction and care delivery can also help systems enhance their reputation post-merger in ways that affirm the mission within the communities they serve.2

When engaging other decision-makers in the conversation to shift to a strategically-sourced service model, consider big-picture questions such as how resistant to change people might be—as well as what the organization spends on equipment upkeep and whether it will have the talent pool now and in the future to service assets. (With an estimated 50 percent of healthcare equipment service engineers expected to retire over the next decade, this is key).7

 

Looking at the Long-Haul

Though shoring up service into a standardized contract can help in the short-term through a lighter administrative burden and the convenience of having a single contact, it also poises systems for lasting savings long-term.

Engaging the expertise of an experienced healthcare technology management vendor can not only help organizations realize when they do or don’t need more inventory—but it can also help them predict which disruptive technologies might make worthwhile investments down the road. It can also help mitigate risks, such as cybersecurity threats, in ways that an in-house or multi-contract model might have a harder time resolving.

Perhaps most importantly, downsizing service contracts into a single strategic business relationship means that systems get access to easily organizable data that provides immediate and ongoing value. Everything gets funneled into a single dashboard and viewpoint, which then gives that data the  most utility both enterprise-wide and at each facility.3

All of this contributes not only to more informed procurement decisions among hospital leaders, but also better outward-facing market entries in the wake of M&As. Patients may not see the first part, but they certainly feel the second one—so consider how that might affect your system long-term, and then consider how a strategically-sourced healthcare technology management program could help your organization achieve its desired outcomes.

 

References:

  1. Strategic Sourcing: How to get it right. The Journal of Healthcare Contracting.  http://www.jhconline.com/strategic-sourcing-how-to-get-it- right-2.html. Accessed Oct.  23, 2019.
  2. The value of strategic sourcing in healthcare. Healthcare Facilities Today. https://www.healthcarefacilitiestoday.com/posts/The-value-of-strategic- sourcing-in-healthcare--13836. Accessed Oct. 23, 2019.
  3. GE Healthcare data.
  4. Encompass: Simple, Fast, Flexible, Cost-Efficient: A New Paradigm in Real-Time Location Systems. GE Healthcare. https:// www.gehealthcare.com/-/media/41fcb863255342a88ad01d3e680b034b.pdf. Accessed Oct.  23, 2019.
  5. Enhancing the medical supply chain with clinician-driven sourcing. Deloitte. https://www2.deloitte.com/content/dam/Deloitte/us/Documents/ public-sector/us-fed-clinician-driven-sourcing.pdf. Accessed Oct.  23, 2019.
  6. Transformation: From Break-fix Maintenance to Comprehensive Healthcare Technology Management Program, GE Healthcare, https:// www.gehealthcare.com//-/jssmedia/e04346dab0864fcb91046039c537426b.pdf, Accessed Oct.  23, 2019.
  7. "HTM Salary Survey:  Nearing a Tipping Point", 24x7, https://www.24x7mag.com/professional-development/department-management/salaries/htm-salary-survey-2015-nearing-tipping-point/. Accessed Jan. 20, 2020.

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