Managing the Costs of Medical Equipment Maintenance: What is the Best Way?

Abstract

Most things are driven by money. A constant and recurring theme in hospitals is how the monies for medical equipment maintenance should be budgeted and managed. There are two main schools of thought. Distributed model: All charges are paid by the department that uses the services. This means that surgery would budget and pay for all surgery expenses, parts, and contracts. Centralized model: All costs are centralized into a single medical equipment maintenance budget, controlled by biomedical engineering. This budget includes all in-house costs, external costs, contracts, and all overhead for biomedical engineering department operations. In the decentralized model, finance allocates all expenses as closely as possible to the departments that generate the revenue. However, in order for product managers to set rates and manage expenses, they need to have ALL of the expense data to analyze. Missing such a large part like equipment maintenance costs would skew the break-even point and lead to incorrect pricing. The benefits to the centralized system include: 1. The biomedical manager or director is a service management professional. His or her job, training, and professional life have been spent in the maintenance, repair, and support of patient care equipment. Who in the hospital can better oversee contracts, parts, and outside maintenance? A surgery manager whose main focus is patient care, not equipment costs and performance, is not the optimal person to manage equipment costs. 2. A central budget allows decisions to be made across departmental lines. The same type of equipment is owned and used by many different departments in the hospital. The decisions and choices made by a single department are often different than if the entire facility is considered. 3. Outside vendors will always be used to some extent. These vendors must be monitored and their work added to the comprehensive medical device record. Compliance and cooperation from the outside vendors cannot be attained except by the person responsible for paying for the service. 4. Unless the funds are in the biomedical department budget, they will not be closely watched and scrutinized. Clinical department managers do not focus on maintenance activities. But a biomedical manager who must meet budget and explain variances can more effectively manage a single cost center than try to manage the costs of 30 or 40 subaccounts scattered across the institution. 5. If hospitals are ever to consider less costly (and often more effective) service options than the original equipment manufacturer, the control and oversight must be given to the biomedical department. 6. As required by the Joint Commission, every biomedical department maintains a complete and upto-date medical equipment inventory. The software that keeps this inventory generally has the ability to track costs of every medical device and generate reports of labor and parts costs. These reports can be as granular as necessary, all the way to the device level, or summarized for each department. These reports can be the charge-back mechanism product line managers need to identify and manage their department costs. If a hospital is going to employ a professional manager of medical equipment service, that hospital must not tie his or her hands by removing the most powerful tool available—the money to negotiate and control costs and activities of outside companies and vendors. A centralized medical equipment maintenance budget in the hand of a professional biomedical manager is the best and cheapest way to care for your equipment. n