Medical, Lab & IT Equipment Benchmarking & Analytics

Medical, Lab & IT Equipment Benchmarking & Analytics

November 08, 2017

Blog

Evolving Your Cost Cutting Initiatives to Drive Long-Term Sustainability

For many hospitals today, the question is no longer just how to improve margins; it’s how to craft a financial strategy for long-term viability.

I don’t know when exactly it happened, but it’s clear that at some point recently, hospital management teams figured out that traditional cost cutting measures alone are not enough to ensure financial viability and sustainability.

And in case you need further proof, with an aging population demanding higher and broader levels of care, it is of more than a passing concern that more than 100 hospitals (and more than 80 in rural areas) have closed in recent years.

The battle isn’t being fought (or won) at the tactical level anymore. By tactical, I mean, for example, squeezing your GPO contracts to cut your consumables’ costs another .3% isn’t going to accomplish the goal of keeping you in business. Suddenly, with all the turmoil in the healthcare market combined with increasing volatility in the reimbursement debate and ever-rising costs, hospitals need to plan investments in capital equipment and people in the context of what services will need to be offered in order for the hospital to stay in business.

I ran across a worthwhile discussion of this very topic developed by Bank of America/Merrill Lynch and published in Becker’s Hospital Review that sums the problem up nicely. Based on survey responses from hospital executives as well as a roundtable discussion, the article discusses strategic investments to maintain market relevance, capital investment management and long-term cost evaluation.

I talk to hospital management every day in our mission to help our client hospitals get an end-to-end view of their medical equipment lifecycle and improve their ROI on equipment acquisition, service contracts and value recovery at disposition. These discussions used to be solely about cutting costs, but these days, they’re more about acquiring and profitably deploying the clinical tools and infrastructure that address what the patient population will demand in the next three to five years.

For example, one of our hospital clients had a capital plan to upgrade its digital mammography systems to 3D/tomosynthesis and had the foresight to identify critical networking requirements that were needed to support the expanded clinical offering. In order to fund the additional network costs, the hospital reallocated budgeted capital by upgrading existing mammography systems instead of purchasing new ones, saving 67% on each unit and yielding $1 million in total savings that fully covered the additional network expansion costs. In addition, the hospital increased the average reimbursement by $50 per case, ensuring a positive ROI in less than a year. This is an excellent example of creative long-term planning that can drive strategic value.

Long term financial sustainability and improved margins are really about strategic cost reduction, or as we’ve written about in previous posts, bending your hospital’s cost curve.

Where does your hospital stand in the evolution from tactical cost-cutting to strategic financial planning in dealing with healthcare’s new reality?

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."