Top 6 Things for Hospitals to Consider When Purchasing Capital Equipment

As the nation slowly digs out of one of the toughest recessions in recent history, healthcare providers are searching for ways to wisely invest in capital equipment that positively impacts patient care and the bottom line. It isn't easy, though, considering factors such as healthcare reform legislation that pushes the entire system to reduce costs and improve patient outcomes. A new tax on medical equipment and devices for manufacturers will likely mean an increase in equipment costs for healthcare providers. And let's not forget the predicted $155 billion Medicaid/Medicare reimbursement shortfall for hospitals over the next 10 years.


Regardless of your exact circumstances, you can likely relate to feeling the pinch when it comes to capital equipment purchasing. Now more than ever it's important we make smart decisions during initial planning in order to save money in the long run.


Here are six main points to consider when engaging in the capital equipment investment process.


1. Consider in-sourced service models v. OEM service contracts

One of the primary areas often overlooked for savings opportunities or potential expense reduction is service contracts. During the capital equipment purchasing process, the original equipment manufacturer (OEM) may convince the purchaser and/or department head (key decision maker) that they need an extended service contract for maintenance and repair after the warranty period. Typically, these are expensive contracts and many times the maintenance and repairs can be done for less by on-site technicians or through a local service partner.


Healthcare facilities can reduce expenses through an in-source model instead. Rather than rely on manufacturer service contracts, invest in in-house technicians who are trained and qualified to perform these duties at a fraction of the cost of an OEM. Plus, technicians on-site or nearby can respond immediately to the service call, which greatly reduces downtime and helps increase patient throughput. If you've already committed to a long-term service contract, weigh the financial impact of breaking that contract and taking a financial hit if you can save money in the long run using in-house maintenance and upkeep.


2. Manage equipment through extended warranties

During the procurement process, beware of point-of-sale service contracts from the OEM, which can sometimes result in lost leverage after the purchase order has been issued. Alternatively, look for opportunities to extend warranties that ensure training, include software updates and service keys (built into the purchase contract). This puts the hospital or healthcare provider in the driver's seat when it comes to equipment management — not the OEM.


3. Make medical devices a biomed purchase

You may find additional opportunities for savings and expense reduction involving medical devices that have not historically been a part of your hospital's biomed program, such as sterilizers and beds. Many times, these devices are under an external service contract that is unnecessary. Moving forward, stop considering hospital beds, for example, as just another piece of furniture. Certain "smart" beds are sophisticated, and can now be included as therapeutic and diagnostic medical devices. Therefore, it's imperative to have them under the guise of equipment experts. This not only helps protect an investment that can cost up to $50,000 per bed, but also keeps healthcare providers compliant with regulatory agencies who require therapeutic and diagnostic medical equipment to be inspected and maintained according to stringent standards.


4. Standardize

You can help reduce expenses by balancing "preference" driven by department heads and doctors. A sensitive subject, capital equipment planning committees must harmonize the end user's desires to optimize medical equipment with the organizational goal to control expenses. Standardizing medical equipment across the organization is one way to curtail expenses that also offers several fringe benefits. Not only can you garner greater economies of scale when purchasing in larger volume across multiple departments or sites, end-user training is expedited due to the existing familiarity with specific product lines. Plus, there is increased potential for interoperability with existing networks and devices, which not only reduces expenses, but gets new equipment up and running faster and lowers the risk of loss of patient data and workflow disruption.


Standardization of medical equipment reduces cost for everyone. For example, the end user (a nurse) of the equipment doesn't have to know how to operate three different types of pumps, for example. The technician maintaining the equipment is able to focus on one type of pump. When parts are needed and purchased, the variability in vendors and parts is reduced with one model and manufacturer. In addition, the information technology department doesn't have to worry about integrating the new device into the system.


5. Don't overspend on equipment extras

Everyone likes the latest and greatest features and functionalities. Many times, though, a hospital will purchase a medical device with extensive bells and whistles, and then find they don't necessarily need those "extras." While in some cases it is advantageous to purchase medical equipment that will support the needs of tomorrow today, but sometimes less is more. Make sure the medical equipment has the features and functions to do the job, but don't get caught up with the need to have the "next big thing." The basic model may have all of the features and functions necessary to do the work and cost significantly less. Just like when buying a new car, be especially cautious of purchasing based on emotion. Do your homework in advance to know exactly what you need to achieve your business goals, and that will help you avoid getting caught up in the hype.


6. Partner with a vendor-neutral third party

There's a lot to consider when planning for capital equipment purchases — it can seem overwhelming. It may be beneficial for you to consider partnering with a vendor-neutral third party that can help you examine the total cost of ownership of equipment, as well as help make sure you have the right parties represented at the decision-making table. Inviting an independent consultant to be part of your capital equipment project ensures that no one particular party moves too quickly without a proper review of the purchase and that everyone's interests and needs are taken into account for the final decision.


Dale Hockel is the vice president of clinical engineering services and supply chain at TriMedx (, an Indianapolis-based healthcare equipment services provider and consultant.

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