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Margin crunch? Opportunities for clinical engineering to cut expenses and grow revenue

August 20, 2019
HTM
From the August 2019 issue of HealthCare Business News magazine

The larger work that hospital systems should be engaging in for those items where canceling contracts is not ideal or recommended is a combined vendor equipment maintenance contract with other contracts for the same vendor. For example, a master contract with a particular vendor may not only include the equipment maintenance agreement, but also include pricing agreements for capital spend and disposable spend, as well as any other services (IT, personnel, etc.) provided. By bundling the spend under one contract, supply chain department can better negotiate discounts on all areas, further driving down the cost across the organization.

Revenue options
Although most support service departments only focus on cost reductions during a margin crunch, there are opportunities for clinical engineering departments to also generate revenue for their organization.

The first and easiest way to generate revenue is to invest some time in how disposition of equipment occurs. It may seem easy to trade in older equipment to the vendor when purchasing new equipment, however, there are a plethora of third-party companies who may pay up to 40% more for that equipment. The caveat for this equipment disposition methodology is that it has to be started early. Third party vendors may use auctions or directly sell the equipment, however their customers want to know the equipment works. Therefore, departments should reach out to these vendors early in their life cycle process to obtain quotes and shop for the best deal while equipment is still in use. Third-party vendors will want to see the equipment in use and learn what disposables/reusables/batteries are also included. Departments do have to be careful to remove all PHI from devices they sell, which also requires tracking.

Other revenue opportunities include selling services to other medical professionals such as veterinary clinics, private physician offices, and clinics. This strategy does require appropriate staffing and discussions with legal, risk, and contracting to complete, but it has the opportunity to generate significant revenue for the organization.

Conclusion
In times of margin crunch, its imperative that clinical engineering departments focus on increasing their department value and not just on the dollars they need to save. By focusing on value, strategies can align departmental objectives with other clinical and support services departments within healthcare organizations and yield not only the savings needed, but also improve patient safety and experience.

Samantha Jacques
About the author: Samantha Jacques, Ph.D., FACHE is the Penn State Health System director of clinical engineering. She holds a Ph.D. in Biomedical Engineering, is a board member of the American College of Clinical Engineering and a fellow at the American College of Healthcare Executives. She writes standards with AAMI and works with the FDA to provide guidance on a wide range of medical equipment and cybersecurity issues. Prior to Penn State Health, she was director of biomedical engineering at Texas Children’s Hospital in Houston, TX.

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