From the August 2013 issue of HealthCare Business News magazine


Kevin Haralson, director of clinical engineering at Arkansas Children’s Hospital: They look toward that service provider to assume all the risks and provide the quality of service and manage financial cost of doing business. Most of the people that are hiring third-party either don’t have any in-house experience to compare with, or it’s been so long that it’s not really relevant anymore. What happens is, the third-party companies are hired to come in and provide a turnkey service, and the big mistake is they also get to provide the financial reports that measure their performance.

When a piece of equipment comes through the door, every service action that happens in that equipment for the first year — everything is tracked. We do a work order to account for the company’s service, but we assign a value as if we have to pay for it. Often, the service reports report how much it would have cost — even if it’s zeroed out because it’s warranty. All services track as though we’ve paid for it.


Then we can track the failures and see what it would have cost had we paid for all of that. That makes comparing that to a service contract much easier. We don’t just do that for the first year — every time there’s a work order, we track the value of the cost had we paid for it. We had a certain machine that we were paying $115,000 a year for a service contract and when I looked back in the historical cost of the device, we were getting on average about $6,000 a year worth of service. That’s a real easy decision. The few times we needed help, we paid for what we needed under time and material.

Todd Reinke, senior director of customer service at Philips: Customers are enticed by the opportunity to lower their operating costs by choosing a low cost thirdparty provider or trying to do the service themselves without giving thought to the costs associated with additional downtime. The lost revenue from 1% of additional downtime can exceed the savings achieved by changing to a third-party service provider or going it alone.

Mike Swinford, President & CEO, GE Healthcare Global Services: I think a lot of times the most common mistake is being too narrowly focused on maintenance and looking at service contracts as a cost rather than a way of maintaining assets. Like many services, with the power of informatics and the internet where we’re pulling information from devices, the majority of our offerings tied to service contracts are focused on education, training, informatics and better throughput, as well as other worklflow productivity types of offerings that can be leveraged. Hospitals spend a lot of money on service contracts and if that money is being viewed as just a cost line item and they’re looking to get the lowest possible cost sometimes that can be a loss.

August 2013 Magazine

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