Equipment Evaluation and Purchasing: Part I
Meeting the Challenge of Outfitting Today’s ASCs
By Michelle Beaver
WHEN MEMBERS OF AN AMBULATORY SURGERY TEAM START THEIR BUSINESS, A FEW PIVOTAL DECISIONS LOOM LARGEST BEFORE THEM — SUCH AS HOW BIG THE BUILDING SHOULD BE OR WHEN TO OPEN SHOP. A DECISION THAT SOMETIMES SEEMS LESS IMPORTANT IS THE EVALUATION OF EQUIPMENT NEEDS. THE PROCESS CAN LOOK DECEPTIVELY INNOCUOUS EVEN THOUGH PIECE BY PIECE IT CAN DETERMINE THE FATE OF A CENTER.
EQUIPMENT IS ONE OF THE BIGGEST EXPENSES IN THE opening of any ambulatory surgery center (ASC), second only to the purchase or construction of the building. No entrepreneur plans to gloss over such important details, but in the fog of war and without a strategy, proper equipment evaluation can fall by the wayside.
Equipment evaluation does not change radically, but technology does, says Jim Freund, director of business development for HELP International, a medical equipment consultant and planning company.
“The biggest change that we have seen is the impact that technology has had on healthcare, and that technological (rather than physical) obsolescence is much more of a factor now than it has been in the past,” Freund says. “This has become an integral part of your evaluation process.
“In terms of evaluations,” Freund adds, “another important component to consider today is biomedical certification, which encompasses everything from the design and development of medical equipment and devices, to the ongoing maintenance and quality aspects of the technologically advanced equipment and tools in use in today’s healthcare facility.”
Plan Ahead
One of the first steps in the equipment evaluation process is the formation of a comprehensive, realistic budget that allows for “wiggle room” in case unexpected problems present themselves. Even with extra equipment money allotted for worst case scenarios, be aware that mistakes or surprises in other aspects of the budget (information technology, custodial services, etc.) could cut into your equipment budget.
ASC owners and managers should stay prudent and rational while working with vendors, since some vendors are adept at building relationships that overshadow the true needs of a facility. New owners of ASCs are still trying to find their footing and are therefore more vulnerable than their elders.
Your equipment is only as good as the company that stands behind it, says Chris Walters, product manager of surgical lighting at STERIS Corporation. He suggests that ASC owners and managers ask the following questions:
- Is the person selling the equipment representing the original manufacturer and highly knowledgeable about the equipment?
- How many direct service technicians does the company have?
- Does the service technician who covers your area live close enough to provide timely service?
While it’s extremely important to start planning equipment needs and strategies early, it’s a good idea to keep a flexible attitude. After all, in the time it takes to open the facility, new products and deals may become available, and older products may become obsolete. “ASC managers can’t possibly predict how their equipment needs will change in the coming years, so they need to plan for that unpredictability,” Walters says. “For instance, surgical lights will hang in an operating room (OR) for 10 or more years. Managers need to find a lighting system that is designed to grow with the ASC. They should ask how easy it would be to add a light or a monitor to the system later. Can they upgrade the lights to LED lights in the future? Their equipment supplier should help them plan for these inevitable changes by providing products that are modular and upgradeable.” Flexibility can allow for better adoption of trends, according to Walters.
“Even if owners don’t think they will need it now, any new ASC that is opening today should have a plan to integrate video into their ORs in the future,” he says. “Putting the infrastructure in place during construction, before the drywall is up and the ceiling is closed, costs far less than installing it all later.”
As for aesthetics, atmosphere should certainly be considered in the planning of a building, but should not trump logistics (such as ceiling elevations) that determine what equipment should be purchased, where it should go, etc. For instance, if too much space is allotted for a grand lobby and not enough is left over for the proper storage and cleaning of equipment, that’s a problem. Conversely, if an ASC is opening in an existing building, the big equipment that is purchased should be compliant with building codes, and each piece should fit with every other.
Additional equipment considerations include the time and trouble it takes to install a piece, and how much training is required to use it. Architects and foremen must be aware of large equipment needs as far in advance as possible, as changes too far down the line can throw a major wrench in their operations.
Equipment evaluation skills don’t necessarily come easily, says Gayle R. Evans, RN, BSN, MBA, CNOR, CASC, president of Continuum Healthcare Consultants.
“Most managers or owners have the knowledge from what was used in the hospital,” Evans says. “It is important for them to tour other facilities or identify a consultant that will provide a list of what is needed and maybe scale the purchase of equipment over time based on utilization.”
Another factor to include in the equipment planning process is maintenance. Sure, one tool may be far cheaper than another, but will it lead to high repair costs, headaches and wasted productivity? To get these answers, talk to peers, check consumer reports, and request as much information as possible from product representatives.
Less is More
Equipment evaluation is a time for discipline, not whimsy. For instance, do receptionists need the most high-tech phones and do patients require the most comfortable waiting room seats on the market? Chances are that high-end purchases are not needed, especially in the office.
“Think ‘what is the minimum I need,’” Evans says. “Outpatient surgery does not require the major operating room lights, large washer/disinfectors, etc. They do require the equipment but what size and price? With the minimal invasive era we have less instrumentation to clean. It does not take a large washer to accomplish the task. Using a pass-through window and an under-thecounter washer will suffice.
“Likewise with lighting we do not have large wounds that need visualization but small areas that require a good spot light or no light at all,” Evans points out. “Consider what is really required vs. what the wish list for the center is. Use the capital budget to purchase equipment that is going to make money for the center.”
And there are certainly creative solutions of which to take advantage, such as getting supplies through a just-in-time basis.
“With just-in-time you can have the supplies as they are needed,” Evans says. “Equipment can be borrowed from the manufacturer on a loaner basis to trial the equipment. This delays decisions in purchase and a center can review utilization.”
Second-hand equipment can also be beneficial. “Used equipment for tables, lights, sterilizers — the major equipment, not specialty equipment — is the best way to go,” Evans says. “Buyer beware though. When purchasing used equipment make sure it is purchased from the company that does the remanufacturing. This is important for warranty and access to service just like new equipment.”
The most vital principle of responsible equipment evaluation is to be honest about what’s needed. The biggest mistake that new ASC owners make, according to Evans, is over-purchasing.
“I have seen centers where consultants were involved and washer disinfectors were purchased to clean large volumes of large instrumentation and the center was an eye center,” Evans says. “This equipment costs $20,000, will never be used, and should have never been suggested. In a start up, buying too much delays profitability. Having the cash up front to pay for excess supplies can be trying on a new ASC’s cash flow. Over-equipping the facility can limit the center in purchasing much needed equipment after the center is open and operating.”
Overbuying is indeed common in the surgery center market, according to Freund.
“Surgeons often come from a hospital environment that has the resources and infrastructure to support the latest technology in their ORs, the vendors they work with push this technology, and they feel to have the best center and attract the best partners, that this is necessary,” Freund says.
“However, the reality is often much different,” he adds. “You have to be more flexible. You have fewer rooms, often times many specialties, and few resources. You have to work within the constraints of a budget (not only the equipment costs but all the associated ancillary costs), and you have to come to a consensus as to what makes the most sense for your facility. Creating realistic expectations is imperative. You want to consult with people who have done this before, have been successful in doing this, and can tell what works and what doesn’t work.”
While “less is more” can be true, for equipment another adage, “you get what you pay for,” is also applicable, Walters contends.
“Surgical center managers sometimes focus too heavily on up-front costs rather than analyzing the total cost of ownership,” Walters says. “If they are purchasing capital equipment like surgical lights or tables, they are going to live with their decisions every day for the next 10 years. Saving a little money now may not look like such a great deal a year or two later when additional capabilities are required or the equipment has proven to be more costly to operate or replace than another system.”
Asking for Help
There is tremendous growth in the equipment planning and consulting industry, Freund says. HELP International, for instance, provides systematic strategies, creates capital equipment budgets, and helps with equipment coordination and installation.
Large databases can offer great guidance in this arena as well. For example, ECRI Institute, a nonprofit health services research agency and a collaborating center of the World Health Organization (WHO) that advises on the building and renovation of healthcare facilities, offers an extensive database to its members. ECRI Institute has its own medical product evaluation testing laboratories and has created “the largest databases in the world on emerging technologies, product specifications and test results, user experience and clinical guidelines, standards, and regulations in the technology and clinical worlds,” according to the organization’s literature.
ECRI representatives determine which existing equipment should be included in a new or renovated location, and base these decisions on “clinical reliability, safety, service, utilization, standardization, and detailed cost trade-offs.”
Another company, MEMdata, uses a seven-step approach in its capital equipment planning and procurement services for new or renovated facilities. Representatives coordinate with owners, staff, general contractors, and architects. The process includes an onsite assessment of existing inventory wherein a MEMdata representative audits existing technology and creates a master inventory list.
One Man’s Junk
Buying the ideal amount of equipment saves money upfront. Storage fees can cut into profits at alarming rates, which is why it makes sense to buy what you need, and get rid of what you don’t, says Brian Hoehn, a director at Med-XS Solutions, Inc. Hoehn works with employees of hospitals, surgery centers and doctor’s offices to help them dispose of unused equipment.
Several companies contend that equipment planning should start with the appraisal of all equipment (if any) that is being brought in from members’ old practices or from other sources. This should be followed with staff and partner questionnaires or interviews to determine what equipment they need vs. what they want. Vendors should be interviewed and staff members should determine what type of buying methods and schedules they find ideal.
Keeping track of inventory as it is built is crucial, Evans says. “Utilize the inventory management systems that are available,” she adds. “I cannot stress the importance of just-in-time inventory management for everything from syringes to specialty supplies. This saves money and enhances cash flow.”
Hoehn adds the dilemma space constraints add to the issue. “Every square foot of a surgery center is devoted toward patient care and from a financial standpoint, that’s where they are going to make their money,” he says. “If you have a 10,000-square-foot surgery center or less, you can’t afford to have 500 square feet devoted to storage.”
The decision to get rid of equipment — even materials that never should have been purchased in the first place — should be made judiciously, however.
“Many (healthcare professionals) throw out equipment or give equipment away to doctors who are leaving even though the equipment could be resold,” Hoehn says. “The biggest mistake they make is undervaluing, and sometimes overvaluing equipment.”
Again, ASC owners shouldn’t overbuy to begin with, but if they do, or if materials become obsolete, there are plenty of people worldwide who would love to assume the leftovers. Several suggestions are offered by members of the Medical Instrument and Equipment Recycling Program (MIERP), as well as the American Medical Student Association (AMSA).
While altruism is fulfilling and admirable, the correct purchasing of ASC equipment in the first place will mean that at the end of the fiscal year, there will be more cash — rather than otherwise wasted tools and products — to give away.
Good Outcomes All Around
To further address the golden rule of “ASC owners should never overbuy to begin with,” members of the Medical Instrument and Equipment Recycling Program (MIERP) and the American Medical Student Association (AMSA) offer a “spring cleaning” option. This option can lead to tax writeoffs, intrinsic feelings of well-being and greater global health.
What does it entail? One word: donation.
“As developing countries are constantly facing a lack of supplies, many of our domestic hospitals and clinics have a surplus of these resources,” AMSA students write. “Much medical equipment is discarded in this country because it is labeled old or no longer needed, but this equipment is perfectly reusable. These recycled medical instruments and equipment are greatly needed in developing countries.”
It may not seem that a few pieces of equipment from one surgery center would make a difference, but MIERP members contend that it all adds up and collectively makes a significant difference. Functioning equipment can certainly do more good at a clinic in say, rural Uganda, than it does cluttering up a brand new ASC that is trying to get off its feet.
Shipping the materials can be tricky and expensive, but there are several organizations that are willing to help.
“Another concern is making sure they safely make it through customs and actually reach the clinics that are in real need,” MIERP members write. “We have alleviated some of the concern of customs and making sure the supplies are used properly by securing locations abroad.”
Goods can be shipped via the United States Postal Service, private shipping companies, airline companies, or can be sent through volunteer organizations or private individuals who are visiting said country. For more information, visit www.amsa.org.