Medical, Lab & IT Equipment Benchmarking & Analytics

Medical, Lab & IT Equipment Benchmarking & Analytics

April 19, 2017

Blog

Bending Your Hospital’s Cost Curve: A $95 Billion Opportunity for Innovative Expense Reduction

Healthcare executives seem to be adjusting their strategies to become more efficient and lean, regardless of what ends up happening in Washington.

For example, the most recent Advisory Board Company annual survey of healthcare CEOs this year had some surprising responses. An entirely new concern – finding innovative ways to reduce expenses – hadn’t appeared in previous years’ surveys and was 2nd among 26 issues ranked.

Based on the analysis of the results, the Advisory Board Company’s chief research officer commented that “our survey shows executives are considering new strategies to remake their cost structures to respond to the changing environment.”  As you can imagine, this particular point jumped out at us.

As most of you already know, remaking cost structures and finding innovative ways to reduce expenses is always easier said than done.  Many of the obvious opportunities to reduce spending – like payroll and supplies, the two largest expense categories for hospitals – have already been tapped.

There is, however, one overlooked and underleveraged area where hospitals can become more efficient, leaner and help remake cost structures: capital equipment spending.

Though a smaller percentage of total hospital spending than payroll or supplies, capital equipment spending is far from insignificant. U.S. Census Bureau survey data indicates U.S. hospitals spend an estimated $95 billion on capital equipment and related expenses (such as service contracts) annually.

From our experience working with hospitals across the U.S., the $95 billion spent on capital equipment every year is far from fully rationalized. However, we have seen clients innovate and “bend their cost curve” by re-engineering not just how they select and buy, but also by paying more attention to their costs to maintain and operate their equipment fleet.

Hospitals embracing a comprehensive lifecycle approach have reaped the savings benefits due to more enhanced perspectives on their capital equipment spending. These hospitals recognize that for every $1 of equipment purchased, at least $2 to maintain and operate are also incurred – expenses that had been overlooked in the past.  This more holistic approach to capital expenses (balance sheet items) as well as operating expenses (income statement items) has allowed them to dramatically reduce total cost of ownership of their capital equipment and significantly increase asset efficiency.

The key to generating improved ROI and significant cost savings has been introducing the right information to enable smarter decisions as well as actionable information to implement these decisions.  These hospital executives not only know the right price, they also get the right price!

If you’re not sure where to get started, feel free to get in touch with us to learn how other hospitals have innovated and remade their capital equipment cost structures.

Know the right price.

And get it.

Having the right information saves hospitals time and money on medical equipment lifecycle costs.

Scott Bosch

Manager of Clinical Engineering

Park Nicollet Health Services

“The groups responsible for managing technology in our healthcare organization need data and analysis to manage costs and make informed decisions. Miga’s EVMS platform is an important and valuable resource that helps us make the right decisions for both our clinical priorities and budget.”

Matt Werder

Chief Technology Officer

Hennepin County Medical Center

“Miga’s data is key to helping us be good financial stewards and validates we are using our resources wisely. The market intelligence provided by Miga’s EVMS platform has allowed us to save substantial amounts of money.”

"Miga’s ability to match equipment donated by their customers with the needs of our medical projects has been a most valuable and welcomed resource."

Jim Tierney

CEO

Suburban Radiology

“Miga’s data, analysis and expertise – in particular related to the fair market value of clinical equipment – is a critical resource we need to support strategic acquisitions, divestitures and joint ventures.”

Eric Hoag

Director, Corporate Strategy & Development

Allina Hospitals and Clinics

“Miga’s proprietary data and expertise was critical to our ability to close an acquisition deal quickly and with a high level of confidence in our valuation.”

Bill Barta

Corporate Director, System Imaging

Fairview Health Systems

“Miga’s objective information-based approach and understanding of the needs of hospitals makes them a valuable resource and helps us make the most cost effective spending decisions.”

Matt Blashill

Enterprise Director of Supply Chain

Lake Region Healthcare

"There’s a personal touch that sets Miga apart from their competitors. They don’t just offer great insights. They always take the time to provide additional analysis that is meaningful and actionable."

Dan Bazinet

Director of Clinical Engineering

Southcoast Health

“In all my years in health care, I’ve used a lot of benchmarking tools. Most simply repeat information passed along from others; Miga’s information tells me what’s really happening.”

COO

Community Hospital

"Miga's negotiating skills save us time and money. And their unique understanding of the market means we’re always playing from a position of strength."

Supply Chain Director

Regional Healthcare System

“All suppliers claim to have excellent customer service. Miga actually walks the talk and always has our best interest at heart. We love working with them."