Manage Resource Group
News & Views
CAPITAL BUDGET REPLACEMENTS
It is budget time again in the hospital world, as many prepare for the upcoming 2012 fiscal year. Healthcare leaders continually face an ongoing challenge regarding the replacement of capital equipment. Recent studies concluded that because of rising costs, hospitals are able to fund less than 50% of capital requests. As a result, hospitals must now have a more stringent process to evaluate the importance of capital equipment requests to determine what will be replaced.
In many hospitals, budgeting for capital assets is a four-step process:
1. Capital requests are prepared and submitted by each department
2. Requests are reviewed and assessed
3. List of expenditures is prioritized with budget that is available
4. Budget Committee which may consist of CFO, Clinical Engineering, Materials Management Department and others approve the capital budget
As far as purchasing new, be sure to work with your GPO for group-buy opportunities. It is best to consider the needs of your entire hospital system. Rather than purchasing just three items for one hospital location, it may make more sense to buy 10 of the same piece and distribute through several locations where there may be a need. Buying in bulk can mean discounted pricing, and also standardizing the equipment as well.
When making capital requests, even though various departments within the hospital provide basic information about the condition of the existing equipment, much more information may be needed. This is when the assistance of both the Materials Management and Clinical Engineering Departments becomes invaluable. Both are experts at verifying whether the department has a realistic need for new or replacement equipment and how it will best serve the department. There are many factors which must be considered when replacing equipment. Clinical Engineering will be in the know of the history, age, condition, operation, repairs, and whether there are still parts available for the current asset.
Once you have made decisions on your capital budget replacement plan, you may wonder what can be done with your current equipment. Challenges providers face are knowing if there is any value for the equipment they are replacing or what the best course of direction is for the decommissioned asset.
Consider the following options:
1. Trade in equipment toward the purchase of new assets
2. Resell it to the secondary market
3. Donate items to a charitable organization
4. Discard decommissioned assets
5. Hold or store equipment as a backup or for future use
As you evaluate your budget, please remember that there are many things to consider for medical system replacements and technology changeouts. The experience of Manage Resource Group, Inc. can assist on several levels:
• Identifying Fair Market Values (FMV) for systems and equipment that will be displaced with new purchases
• Negotiating higher trade-in credits and offering alternative revenue ideas
• Provide a proven sales method for system replacements and change-outs if your hospital decides to sell decommissioned assets.
• Providing hands-on experience and knowledge to manage projects, and help your departments to establish a proactive approach for asset management over time.
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