Clinical engineering and the science of the capital budget process

May 24, 2019
From the May 2019 issue of HealthCare Business News magazine

Cost of ownership
When considering a purchase, budget committees require a business analyst to determine the ROI to the facility. Key points to be considered include reimbursement, capital, labor, consumables, overhead, and service costs. Keep in mind that not all reimbursement is positive. There are penalties for “never events” such as readmissions and hospital-acquired infections. Clinical Engineering input centers on service costs, which can have a big impact on the cost of ownership. For example, service for high-end imaging hovers around 10% of the equipment replacement cost. Considering a 1-year warranty, a service contract can exceed 40% of the replacement cost over the 5-year life of the equipment. Clinical engineering is a viable source for proving service data on new equipment as well as identifying alternative service methods that can lower costs and improve the ROI.

Networking is a concept that has been driven by the Affordable Care Act (ACA) and the need to make the delivery of healthcare more efficient. In the hospital environment, almost all high-end technology is connected to the system backbone through either a wired or Wi-Fi connection. Historically, clinical engineering was tasked with determining whether a system would fit in the space identified and whether there were adequate power and/or water connections available. Now the challenge is whether the device is compatible with the hospital network and the existing EMR, and whether there are any security concerns, all which may generate additional costs for a project.

Safety has always been a primary concern for hospitals, but in recent years it has been accelerated by the ACA and by better-informed patients. This increased scrutiny has had a direct impact on revenue as safety becomes a key component in identifying equipment to be replaced. There are two points of entry where equipment safety is a factor in the capital budget: identifying the track record of an incoming technology and recolonizing equipment that should be replaced.

When assessing incoming technology, clinical engineering should identify which equipment has safety concerns and what steps should be taken to minimize risks. Two historical examples are surgical robotics and duodenoscopes. Both technologies have a history of Manufacturer and User Facility Device Experience (MAUDE) reports. But most of the incidents involving these systems were attributed not to system failures but to insufficient user training. Because surgical robot technology is inherently very complex, nurse and physician training are imperative and can be costly. Duodenoscopes have been known to transmit infections when the elevator is not properly cleaned — a problem often attributable to high turnover in the reprocessing department. Issues such as these should be identified so an ongoing budget can be established.

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