The 7 most expensive words in business

Today most healthcare practices own a wide assortment of electronic equipment to run their business and help produce revenue.

A medical facility can own hundreds of pieces of equipment from many different manufacturers. As a result, trying to manage all of the warranties and service agreements associated with this equipment, which includes various terms and conditions, coverage dates, payment terms, and prices, becomes an arduous task.

The following seven words may be costing your organization more than you think..."We have always done it that way." In many healthcare practices across the country, buying the service agreement directly from the OEM (Original Equipment Manufacturer) is standard practice because that's the way it's been done for years. Typically, the service agreement is purchased at the same time the equipment is purchased. But is it truly a best practice for your organization? In recent years, cuts to Medicare and Medicaid reimbursements have put a strain on hospital and healthcare providers' budgets forcing many to cut expenses and limit patient services in order to stay afloat. It may be a good time to get out of the "WHADITW" box and start exploring new ways to economically manage equipment maintenance and repairs.

The Devil is in the Details
Gather all your equipment service agreements and read them. I know it doesn't sound like a fun way to spend your day, but a service agreement is useless if you don't fully understand what services are incorporated in the cost. You will also need to keep track of the agreement's inclusions, exclusions, and expiration dates for each piece of equipment. A full understanding will help maximize your return on investment. In some cases, you may discover that the full service agreement is critical for that piece of equipment; but in other instances, you may find that full coverage on a particular instrument is not necessary. You may also identify coverages that need to be eliminated or changed in future agreements. For example, a lack of coverage for overtime if you have a business that runs 24/7, or add loaner coverage for equipment that is mission critical.

Time is Money
The task of keeping up with different service agreements can be time consuming, but that's just the tip of the iceberg. Unless your job title includes service agreement manager, it can be vexing to find enough time in the workday to devote to agreement analysis, calling service vendors, troubleshooting, scheduling maintenance, etc. It takes you away from your main responsibilities – the care of patients. Time is money and the end result of managing multiple service agreements can lead to increased cost and greater burden.

Service Expectation
Being asked to do more with less has become the new norm in today's workforce. Now more than ever, the expectation of healthcare facilities is to try and find creative ways to cut costs while extending the life of capital investments. Multiple service agreements can be cost-prohibitive if you aren't managing them correctly. Equipment maintenance costs money; but unchecked service events or a negligent service technicians can cost even more money. Are you receiving the best service at the best price? Don't be fooled by the notion that better service comes with a higher price tag. Mergers, acquisitions, and corporate restructuring has forced many manufacturers to reduce their workforces in order to improve profitability. When choosing a service organization to support your equipment, it is important to be sure that they will have adequate technical support in your area to support your equipment. Tracking the quality of service and vendor performance is paramount in determining if your money is being well-spent with your current service organization.

Service Options
When you purchase the service agreement from the OEM, you are contractually locked into using their service technicians, whether they provide good service or not. You run the risk of this service organization not having parts available or not having enough service technicians to accommodate your location or the amount of customers requiring service at that time. You have essentially eliminated any competition for your business until the service agreement expires. Without competition, a service organization can lack the motivation that will drive them to meet your needs and improve your customer experience. Multiple service options results in service providers working diligently to acquire and keep you as a customer. In the absence of a maintenance agreement, any future service requests is a billable event (i.e. parts, travel and labor). The manufacturer's service department generates additional revenue from these events and therefore has an incentive to respond quickly because they now have to compete with other service organizations in order to retain your business. And let's not forget, they want to sell you more equipment down the road.

Alternative Solutions
There are favorable alternatives available for managing equipment maintenance and repairs that provide coverage and support without breaking your bank. The bottom line is – managing multiple service agreements, when not done well, can be a financial drain on your organization. Remember that the 7 most expensive words in business are, "We have always done it that way." If you're not happy with the way you've always done it, now's the time to assess your current situation and make a change. Take the necessary time to research and uncover all of your options before signing on the dotted line.

Christi Peters is a Business Development Coordinator at Remi, the alternative to manufacturer service contracts and extended warranties. We put you back in control of your maintenance expenditures and allow you to focus on patient care. To learn more about Remi and the services they provide, visit www.theremigroup.com or call 1-888-451-8916 #1.

The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker's Hospital Review/Becker's Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.

© Copyright ASC COMMUNICATIONS 2019. Interested in LINKING to or REPRINTING this content? View our policies by clicking here.

 

Top 40 Articles from the Past 6 Months