Technology planning for hospital equipment is anything but simple. And yet, a data-centric approach can help demystify the process to make optimal decisions about when to maintain assets and when to retire them from service.

For any hospital, it’s tempting to reactively manage health technology management (HTM): when something needs maintenance or it breaks, you fix it.

But those ongoing investments for upkeep and repair may lead to wasted costs if the assets themselves rarely (if ever) get put to work. Remember the fallacy of sunk costs: even if you initially spent money to a buy a machine, it probably isn't cost effective to pump more money into repairing it if clinicians never use it anyway.

But when is it better to retire an asset so that you can focus on new capital purchases that will deliver value? How do you even make that call? You start with the data, that’s how.

Data’s role in a post-pandemic reality

Hospitals must lean on insights to assess the full lifecycle of a piece of equipment—including how much time it has left—before reinvesting back into it. If a facility doesn’t do that due-diligence assessment and instead tries to get more mileage out of assets that never got that much usage to begin with, it can waste valuable funding.

Now more than ever, hospitals can’t afford such wasteful expenses. Though healthcare had already felt cost pressures well before crisis struck in the form of COVID-19, the pandemic has only intensified the need for austerity. Some hospitals, for example, stand to lose an estimated $1,000 per hospitalized patient as a result of the novel coronavirus.¹

While it may seem like the current climate isn’t conducive to new asset purchases, it’s also not the best environment to reinvest in outdated or unused equipment so that they can limp along and ride out the turmoil. That choice not only has financial repercussions, but it also exposes systems to added risk in a time when they can’t afford a misstep. Old and outdated technologies can introduce new liabilities like cybersecurity vulnerabilities into the risk management matrix.

At any time—but especially now—many hospitals would do well to map out their asset decisions against a streamlined, data-informed system to track equipment utilization and need. This system, outlined below, can help administrators identify the start-to-finish lifecycle of every asset within the HTM ecosystem to make the “reinvest-or-retire” decision much more straightforward.

Start logging inventory and asset utilization

The first step is to take a complete inventory of every piece of equipment in operation. To make that happen, institute a pathway for standardization so that every asset can get counted as part of a computerized maintenance management system (CMMS). Standardization will very likely involve consolidating contracts and engaging experienced HTM vendors and stakeholders so that you know what’s in service, from rentals to owned equipment. Pay particular attention to new assets that might go uncounted in the wake of mergers and acquisitions and, notably, chaotic events like COVID-19.

Once you have that master list of assets, start tracking their journey throughout the enterprise, preferably with a real-time location service (RTLS). Often used in retail and logistics to supervise supply chains, RTLS can play a significant role in supporting lifecycle management for a hospital’s mobile fleet (such as infusion pumps or other durable medical equipment).²

Because RTLS technology displays when, where, and how often assets get used, hospitals can use that data to create a “diary” of equipment and chart their lifecycle. Another benefit is the ability to calculate the asset utilization rate—that is, the percentage of time any given asset is in service. If you’ve never calculated your asset utilization rate before, you may be in for an unfortunate surprise: The average rate has hovered somewhere around 40 percent,³ meaning most of the time, equipment doesn’t generate revenue.

While you might boost utilization rates by reallocating assets from units of low demand to those with greater need, not all low rates warrant improvement. Dismally low utilization may represent assets that simply aren’t needed—which means maintenance and repair may not be either.

But before making those decisions based on inventory and utilization alone, add the final pieces to the puzzle: your actual and projected needs. By aligning your available assets with current and anticipated demand, it can help optimize technology planning decisions throughout the enterprise so that value is sticky and sustainable.

Putting that process into action, here’s a sample scenario:

In working with GE Healthcare to create a comprehensive inventory of all equipment and analyzing RTLS insights, a community health system realizes opportunities to optimize its asset mix and redistribute equipment between facilities. It transfers many devices between two facilities based on utilization variances, but the system also realizes that despite sufficient inventory, some technologies rarely get used in either facility. After speaking with the staff and looking at current and projected volume, the team learns that clinicians don’t use those assets because clinical or operational workflows no longer include them. As a result, the system puts those assets out of service and saves on future maintenance and repair costs.

Be ready for what’s around the corner

As resources will become more limited in a post-COVID-19 era, data-based decisions will play an essential role in removing waste and maximizing enterprise value while advancing patient care.

Ultimately, investing time and attention in lapsed assets will only cost more in the long-run, and likely deplete staff morale. And yet, most facilities won’t know when those assets have neared the end of their lifecycle until they dig into the data. By using combined insights to create a diary of asset activities, recognize trends, and better inform capital replacement choices, administrators can best optimize their equipment mix to divert dollars back into machines that need to stay in service while retiring those that don’t.

References:

“Even with Billions from Congress, Hospitals Set to Lose over $1K per COVID-19 Case.” Healthcare Dive, 25 Mar. 2020, healthcaredive.com/news/even-with-billions-from-congress-hospitals-set-to-lose-over-1k-per-covid-/574791/. Accessed 7 Apr. 2020.
“Taking Medical Asset Tracking to the Next Level With RTLS.” GE Healthcare, 2019, gehealthcare.com/article/taking-medical-asset-tracking-to-the-next-level-with-rtls. Accessed 7 Apr. 2020.
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