A new model for today’s health system
By M. Shafi Hussain, Thomas McFadden and Lyanna Ly, May 25, 2012
How to coordinate thousands of pieces of equipment across multiple locations.
Health systems continue to be challenged to reduce costs to meet regulatory and financial realities, and most probably feel that there is little left to be cut. There is one area, however, where opportunity remains for most health systems: The cost burden associated with acquiring, distributing and maintaining mobile equipment. This class of devices — which includes ventilators, infusion pumps, telemetry units and other workhorse equipment on the front lines of patient care — accounts for approximately 95 percent of a hospital's clinical asset base. In a multi-facility health system, mobile assets can represent thousands of devices and millions of dollars in capital and operating expenditures.
How do assets affect a hospital's bottom line?
The cost burden is growing. The volume of clinical devices per hospital bed has jumped 62 percent over the past 15 years. In 1995, a patient was surrounded by eight devices; by 2010, there were 13 devices at the bedside. As a result, service and maintenance costs per bed have skyrocketed to 90 percent despite the fact that per-device maintenance costs increased only about 15 percent during the same period (roughly the rate of inflation). The core of the problem is that the average utilization of mobile devices is only around 42 percent, which means that health systems today spend nearly double what they did 15 years ago to maintain a bloated and severely underutilized asset inventory.
Managing assets in today's health system
With an increasing number of mergers and acquisitions taking place today, hospitals face an emerging challenge — how to coordinate thousands of pieces of equipment across multiple locations and ensure that everyone has what they need while still respecting the bottom line.
Health systems have the opportunity to save hundreds of thousands of dollars currently being misspent on underutilized assets through a two-pronged approach that combines improved distribution processes with technology that enables tracking and monitoring of mobile assets. In our experience, many multi-facility health systems seek to make improvements on a per-facility basis. Addressing asset workflow and utilization issues at the local level, however, is just the first step on the pathway to reining in mobile asset inventories and the excessive operating and capital expenditures they generate. Even greater potential for improvement, in our view, lies in attacking mobile asset management at the system level. We contend that many health systems are leaving money on the table by not leveraging the scale of their operations to manage assets via a centralized distribution model. Using information supplied by an integrated hardware/software solution, such a model is demonstrating the ability to help health systems:
- Drive higher utilization with reduced inventory levels;
- Address fluctuations in demand across multiple facilities;
- Exercise fiscal responsibility on excess inventory and rentals; and
- Deliver desired economic and quality outcomes.
Centralized distribution: Managing assets at the system level vs. local level
The idea of a centralized distribution model provides enterprise-level capabilities to support effective mobile asset availability at each site. However, there are several key elements to a truly centralized model. They are:
- Asset optimization: Understanding asset workflows at each site in the system.
- Informatics and technologies: Tracking equipment with organized and accessible data for effective decision-making.
- Quality and regulatory compliance: Established policies and processes with oversight and audits to validate compliance and understanding among staff members at all facilities.
- Equipment maintenance: A quality maintenance program maximizes equipment uptime and minimizes repair time while keeping operating expenses low.
- Technology and capital planning: Access to utilization data and other informatics for more knowledgeable oversight of the installed base and more effective decision-making regarding future spend.
- Governance: Clear ownership, metrics and operating mechanisms established to measure success and identify continuous improvement opportunities.
Mobile devices are managed in a random, transactional manner in most hospitals today. Often, there is no reliable, systematic process to ensure that, for example, a nurse can find a clean, usable IV pump when one is needed. Processes vary from unit to unit, floor to floor, hospital to hospital. As a result, the most meaningful markers of hospital performance suffer: quality of care, efficiency, patient safety, productivity and cost control. When that scenario is compounded across multiple facilities in a health system, there is at once a serious problem and an exceptional opportunity to make a meaningful improvement in care delivery through centralized asset distribution.
About the authors
Shafi Hussain, Thomas McFadden and Lyanna Ly all work with GE Healthcare's Asset Management Professional Services business. More information can be found at http://nextlevel.gehealthcare.com.
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