Capital Equipment Selection Process

“Provide for the current clinical needs and plan for the future while being fiscally responsible” is the guiding principle of Healthcare Technology Consultants. The medical equipment budget must meet the needs of the clinical staff but do so in a cost-effective manner. Identifying appropriate equipment clinically, outlining the technology and how the equipment interacts within the hospital infrastructure, providing cut sheets and site-specific drawings to the design team, modeling the equipment within the drawings, and equipment procurement are all part of the services provided to the health system and the design team. The first step in this process is assessing the needs of the clinical staff and obtaining the health system vendor standards but balancing this with the requirements of the project and the needs of the design team. Creating and producing a medical equipment budget, the selection of capital and software, can be difficult and understanding the client’s needs can vary from health system to system. Does the client focus solely on a vendor standard, what the clinicians are accustomed to for providing patient care, or is the client concerned with costs? In many instances it is a mix of both clinical expectations, costs with an additional concern of future operational expenses, labor, service, and supplies, and new and emerging technologies. Annually each health system creates capital, software, labor, and project budget based on the requests by the clinical, support staff, and the market These budgets vary based on the size of the health system. One health system may have annual capital, software, and project budgets of over $100 million while others may have less than $1 million. How these dollars are allocated and distributed are usually handled by a committee but within smaller systems decisions could be made by one individual. Distribution of these funds are based on safety and regulatory concerns, the return on the facilities investment, improvement of the patient experience, clinical efficiencies, or an expansion of services. Accounting for all the equipment, future capital requests, existing inventory, new inventory, and equipment that will be provided by supply agreements need to be considered to provide an accurate equipment budget. The capital equipment budget should include the IT infrastructure behind the scenes, both hardware and software, and detail the interaction between the medical equipment and the hospital network.

GPO

Most health systems belong to a Group Purchasing Organization or GPO. These GPO’s negotiate vendor equipment costs, supplies, service, and 3rd party support services (EVS, Clinical Engineering, Facilities, etc.) up front and pass these savings to its members. Some GPOs across the country include Premier, Vizient, HealthTrust (HPG), and Intalere. The health system pricing within these GPO’s varies among the health system and there are variabilities as the sophistication of the equipment increase, cost increases, and pricing is discounted. The cost to the facility by the vendor equipment model, supply part #, or services can be viewed within the vendor contracts on the GPO websites by the Health system. This price is always the start of the negotiation process and is used a guidance of costs, price reductions above and beyond GPO discounting can be acquired and some vendors are more willing than others to further discount equipment costs. Some other negotiable items outside of medical equipment include supplies, extended warranties, service, training, and software options.

Vendor Standards

When a health system has a vendor standard, the system is usually referring to a GPO contract standard, a contractual requirement to buy a percentage of equipment across the organization by a single source. Most GPO’s have several vendors under contract for similar modalities, so these health systems are not limited to a single vendor when selecting capital. Imaging and patient monitoring are examples of modalities where health systems have several choices to choose from if the vendor is contracted with the GPO. Vendor standards are sometimes determined by a clinical standard, a specialty only one vendor can provide or a clinical preference to a single vendor. The health systems clinical standard could be determined by a clinical specialty and these clinical specialties may have a limited number of vendors that can provided these services. An example of a clinical specialty is robotic surgical-assisted devices and the leader in this market is Intuitive (da Vinci).

Existing Equipment

Hospital systems can reduce their overall capital dollars by repurposing as much of their current equipment as possible. Obtaining a detailed list of all existing equipment which includes vendor standards, models, serial numbers, purchase dates, and service history can help speed up the process. Some factors to consider when deciding on whether to use existing equipment or purchase new are:

• End-of-life of a system

• Cost of deinstallation, moving, and reinstallation

• Availability of clinical and service support

• Antiquated technologies

• FDA recalls

• Service history

• Safety concerns

The vendors can provide the end-of-life letters for their equipment and the cost of deinstallation, moving, and reinstallation. Service history and safety concern information can be provided by a health systems Clinical Engineering and Information Technology team. FDA recalls should be within the Clinical Engineering team’s database but can also be reviewed on the FDA website.

Vendor Relationships

Establishing and maintaining a positive vendor relationship is crucial to delivering a timely and cost-effective equipment package. At times, HTC will be working with the health system to help negotiate pricing beyond GPO contracts, requesting extended warranties, supplies, service, and training during the capital selection process. In some instances, the health system may not have a relationship with a vendor, Healthcare Technology Consultants can help to bridge this gap and help to establish these relationships. If a vendor standard has not been established or the health system decides to move outside the vendor norms, multiple vendors may be competing to provide equipment or services usually through an RFP created by Materials management. This RFP outlines the request, terms and conditions, provides a timeline for submission, and stipulates the length of the agreement. This RFP usually includes an interview and a decision timeline. Providing the health systems vendors with timely updates on the status of a project and schedules will help with obtaining cut sheets, technical specs, and site-specific drawings. Some of this information is provided prior to vendor selection but some situations the vendor will only be provide necessary information, like site-specific drawings, upon an issuance of a PO or a commitment from the health system.

Conclusion

When the design/clinical/technology requirements are met, GPO and vendor standards/relationships are established, the existing and future equipment is vetted, and IT infrastructure is accounted for, the capital selected will meet the demands of the design schedule, will reduce errors and rework, and satisfy the client with the technologies and services provided.