In our daily interactions with hospitals, we often find out that many departments store unused equipment in closets, storage spaces and offsite warehouses. It’s not uncommon to take a tour of a facility’s storage area and the person showing us around asks “how did that get in here?” A few years ago someone in materials told us that they had an offsite location (10,000 sq. ft.) that was designated for storage but there wouldn’t be any surplus equipment there. Upon arriving at the facility it came as a shock to this person that 80% of this storage area had surplus equipment in it. For many facilities it is an ‘out of sight, out of mind’ mentality that takes over when equipment goes into storage. When the storage area is unsecured, you can only imagine how easily the space can fill up as employees from various departments stash equipment no longer needed in their department. Before you know it, those assets are unaccounted for, collecting dust, taking up space, and quickly depreciating in value.
If your hospital is currently storing equipment, you should know the impact of idle assets and how these devices may be costing you money when they can potentially generate revenue. Below are a few things to consider about idle assets:
- Asset depreciation – assets in storage may have resale value but if the asset is not actively being made available to the secondary market it will continue to depreciate. Depreciation can drastically increase if the OEM decides to stop supporting the device or the market becomes saturated with the device. The key is to sell equipment when you can receive top dollar.
- Cost of storage – Square footage is a premium both on hospital campuses and in offsite warehouses that the hospital may lease. This cost is compounded when the warehouse is in a metro market. Idle assets cost money to store.
- Storage areas don’t generate revenue – clinical areas in the hospital generate the most revenue. When idle assets are being stored in new build shell areas or areas where operational support can be housed it has a direct impact on revenue flow into the facility.
- Preventative maintenance – when a device is being stored and has not been removed from the accounting ledger clinical engineering is required to conduct preventative maintenance on the device until it’s decommissioned. It’s not uncommon for third party maintenance companies to include idle assets on their inventory ledgers increasing monthly costs for service.
- Insurance premiums – assets that are still on the hospital ledger but no longer in use can impact monthly insurance premiums.
- Tax liabilities – idle assets that are on the hospital books are considered liabilities and can impact yearly taxes.
- Legal ramifications – risk associated with idle assets that don’t function properly being placed back on floors to be used on patients can have significant legal impact for the hospital.
- Risk of theft – many storage areas are not secure and there is always potential for an asset to grow feet and walk out the door.
Developing a clear process and policy that outlines how assets are decommissioned and removed from the property will minimize exposure to unnecessary storage headaches. There will be times when devices need to be put into storage but being proactive when it comes to idle assets is always a best practice approach. It may be out of sight but it’s always worth keeping in mind.
MRG Recent Projects:
MRG Inventory & Appraisal project – Northeast OH:
MRG recently completed an inventory & appraisal project for hospital wing that included 23 exam rooms, 5 imaging suites, 4 laboratory rooms and administrative areas. Over 1,200 assets were audited at this property with a fair market value that exceeded $250,000.00.
MRG’s Appraisal of the Month:
Diopsys Nova VEP Vision Testing System, FMV: $12,500.00
MRG Fun Facts:
After a long, cold winter many were excited to celebrate Memorial Day, an annual kick off to summer and a time to remember our military men and women. Below are a few interesting facts about Memorial Day:
- This holiday was originally celebrated on May 30th until 1971 when we began recognizing it on the last Monday in May.
- It was originally known as “Decoration Day,” its purpose was to honor the fallen soldiers at cemeteries by placing flowers on graves of those who had died in the Civil War. It was not until 1882 that many people referred to the holiday as “Memorial Day.”
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Manage Resource Group, Inc. is a privately owned healthcare equipment management company headquartered in Berea, Ohio. Our client focused services create strategies for each customer to increase profitability on capital equipment. We are industry experts offering the following service lines:
- Inventory services
- Appraisal services
- Resale management
For more information, visit our website at www.manageresourcegroup.net