As clinical technology continues to advance, medical equipment can quickly become outdated and require replacement. What many hospitals don’t realize however is that their continued investment in new equipment often results in a growing pool of unused or underutilized assets, with one NIH study suggesting that 42% of all medical equipment is underutilized. This represents significant hidden costs – and untapped savings. As we reach the end of the year, reducing these hidden costs is an immediate opportunity to boost year-end financial performance and set the stage for greater savings in the coming year.
The foundation for any effective strategy for finding hidden savings in underutilized medical equipment is having the right information with an accurate inventory of your hospital’s equipment. Ideally, this information will include not only equipment specifications but also key financial information such as annual service costs, net book value, and more to let you know what equipment is really costing your hospital. Your hospital then must identify equipment that is no longer in use or is underutilized, and determine if it has value. Every hospital is likely paying to maintain and house equipment it never uses.
Four Strategies for Recovering Value from Underutilized Equipment
Once you’ve identified a piece of unused or underutilized medical equipment, you’ve got several options for how to recover maximum value from it:
Redeploy Equipment Internally
The single best use of underutilized medical equipment is to continue using it by redeploying it within your hospital or health system. The key to redeployment success is proactive planning: knowing the equipment needs of other departments in advance and identifying usable equipment that can be redeployed before it is removed from service and either sold or traded in.
For one hospital upgrading its infusion pumps, the right information meant knowing that another hospital in its system needed and could use the old pumps. Instead of trading them in for nominal value, the corporate supply chain manager transferred the old pumps to the hospital that needed them – eliminating $300,000+ in planned capital spending.
Resell in the Open Market
Implementing an objective resale process helps hospitals recover maximum value for their equipment. The key is knowing what the equipment is worth, how to sell it, and who will buy it. Don’t assume the market value is the same as the net book value or trade-in value, as these values are almost always vastly different from one another.
With the right information, a hospital that was offered a $100 trade-in value for patient monitors they were replacing knew they were worth far more, and they quickly found a buyer for the old monitors who paid $600 each – 500% more than the trade-in offer, and $69,000 in unplanned cash!
Trade-in Toward New Equipment Purchase
Trade-ins are the “easy button” for most hospitals. And while resale will usually create the best financial return, trading in equipment – when used selectively and with the right information – can also yield a good outcome. This is particularly true when trade-in offers include promotional incentives that can make the trade-in value far more than the resale value.
A hospital upgrading a 1.5T MRI was going to sell its old MRI to a local physicians group for $105,000. This was until they learned that the manufacturer could offer promotional incentives that made their MRI worth $165,000 as a trade-in – well above the market value. Armed with the right information, the hospital opted to accept the trade-in offer, realizing an incremental $60,000 (57%) in value recovered.
Donate to Non-Profit Healthcare Organizations
Consider donating usable equipment to one of the many worthy charitable organizations that always need equipment to support global medical missions. While arranging donations can take a bit of time and coordination, it is far less costly than paying to recycle or throw equipment away – with the added goodwill and intangible benefits of contributing to the needs of the global healthcare community.
Recently, a 500-bed hospital was replacing more than 100 15-year-old electric patient beds that they could not trade in. The beds were working and usable, but due to their age, they had no market value. The hospital found a local long-term care facility with even older beds, and they were more than happy to accept the beds as a donation.
Hidden cost and value are lurking in your medical equipment! Instead of overlooking these assets or relegating them to storage, consider them as a source of savings and financial value that will impact your hospital’s bottom line – both now and in the future.