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Vendor service strategies of tech management

August 06, 2021
Parts And Service
From the August 2021 issue of HealthCare Business News magazine

By James Laskaris

Controlling costs, increasing revenue, and improving patient outcomes are essential goals for the senior executives of any provider organization. A challenge to meeting the fiscal objectives is that not all costs are scrutinized until they significantly affect the bottom line. For example, one such line item is the cost of maintaining medical technology. It may be overlooked due to the fact that it represents just a fraction of one or more service lines’ overall expenses, or it’s assumed to be a part of the cost of delivering a service. The result is that maintenance costs become buried within individual departments’ budgets.

Medical equipment has evolved dramatically over the years. Historically, a medical technology was a simple, stand-alone electromechanical device that required basic service and training requirements. Today, prevailing technologies are complex, software-driven systems that are networked and often require proprietary consumables to perform their functions. What once was just a service strategy now requires an overall technology management solution to propel the mission of the provider while keeping costs under control.

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In 2019, prior to the COVID-19 pandemic, the U.S. medical equipment maintenance market size was estimated to be worth over $8 billion. It is projected to be valued at more than $21 billion by 2030. This growth is based on software-driven new technologies and the increasing demands that preventive maintenance requires.

Hospitals typically spend approximately 4% over their overall budget on capital equipment. Out of this number, roughly half (2%) is targeted to therapeutic and diagnostic medical equipment. While this may appear to be a small percentage, it’s important to consider that very few diagnoses or therapies are made without the aid of medical technology. As a result, acquiring and maintaining the right medical technology is key to the mission of the hospital.

The initial investment of medical technology is closely examined during the buying process. However, other crucial elements associated with medical capital can easily pass under the radar. These include consumables, service, and the training of both the clinician and clinical engineers. All of these are important components in medical technology ownership and can equal or exceed the initial cost of the equipment over the life of the technology.

In a perfect world, a hospital or health system would be able to standardize by using one vendor and service option to meet all of its technology needs. However, few hospitals, if any, have this luxury because of associated costs, varying markets, and user preferences. Another factor to keep in mind is that cost savings often come with risks. As a result, the management of services for the wide variety of vendors and technologies a hospital uses is difficult for all but the most innovative in-house technology management departments.

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