Capital Equipment Resale Process: Does your facility have one? – December MRG Newsletter

Many hospitals tend to be reactive around decisions associated with reselling decommissioned assets. This mindset starts at the replacement budget process and runs through the time when a piece of equipment is decommissioned and removed from service.

A facility will sell surplus equipment for different reasons: the equipment has been replaced by newer technology, the hospital is standardizing their medical devices between multiple facilities, the hospital may no longer offer clinical services the equipment was intended for, storage areas need to be cleared for clinical use, etc. Too often, hospitals allow multiple departments to handle their own surplus sales and fail to have a proactive plan in place that accounts for all decommissioned assets. The most effective resale efforts are streamlined through a single department within the facility and have a policy/procedure in place that dictate the best course of direction when an asset is pulled from service.

It is common for hospitals to have Purchasing handle the resale of capital equipment change-outs and have the Biomed staff handle the resale for the equipment in storage for a period of time. Each department may use different processes to sell equipment. One department may notify each sister facility prior to resale to see if re-utilization is an option, the other department may not. A department may have a plan for equipment that does not sell, whereas the other department may not know how to dispose of equipment with no resale value. Streamlining the resale process to a single department will allow all parties to collaborate and utilize strategies that offer the best course of direction for each circumstance associated with the where and why equipment is being removed from service.

When a process is being developed, it’s important to look at the complete lifecycle of a device and build a plan of attack that addresses the decision making process before an asset is decommissioned. This involves identifying the parties/departments that will be involved, where allocation of funds generated from the sale will reside and having the best information at your fingertips to make an informed decision once equipment is removed from service, i.e. trade-in, redeploy, resell, donate or salvage etc.

Hospitals will benefit in the long run from creating a resale process. Some benefits include: all departments are on the same page, increased potential for trade-ins, minimizing storage space while increasing returns on investment and maximizing efficiencies for the departments that will oversee the resale process. Does your facility have a resale process?

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How to track equipment that stays and goes…

In order to keep proper records of your capital equipment, your facility should
have a system in place for checks and balances. Setting up a spreadsheet
tracking system for both your Materials Management Department and Biomedical
Engineering will help both departments track incoming new assets and equipment
removed from the property.

Below is an example of some of the fields that should be considered when tracking your
equipment:

  •  Manufacturer / Make
  • Asset type
  • Model number
  • Quantity
  • Description
  • Serial Number
  • Internal tag number if available
  • Building Location / Campus / Department
  • Room number / suite number

When developing your asset tracking system, it is best if your spreadsheet contains unique fields for each demographic captured on the asset. Some asset software packages capture multiple identifiers and places them into one field inhibiting the ability to sort information properly. Accurately identifying the equipment and location can save a lot of future headaches when it comes time for a facility inventory or a reconciliation of your general
ledger.

 

Consequences of Healthcare Reform on the Medical Device Industry

Now that plans for Obamacare are moving forward for Americans, we wonder what effect the healthcare reform will have on medical device companies. Only time will tell, but the changes will come fast as year-end quickly approaches.

OEMs as well as medical remanufacturers are now expected to pay a 2.3% excise tax on equipment sold. This will result in a ‘trickle down’ effect as companies try to absorb these additional costs to support the reform.

What will this mean for consumers, manufacturers, and refurbishers? Well first off, hospitals may not receive as much for the trade-ins of their equipment as they have in the past. This will mean that hospitals will be less likely to upgrade to newer technology if their current assets are out of date but still functioning well. With this in mind, there will ultimately be a decrease in the development and innovation of new products, and costs will increase in the long term for hospitals when purchasing new equipment as well.

A few major medical device manufacturers including Stryker, Boston Scientific, and Welch Allyn are already preparing for layoffs and facility closings. Other companies have considered working overseas for the production of some of their equipment or parts, which again will take jobs away from America. In addition, others are considering shifting their full time employees to part time hours to absorb some of the additional costs of the reform. If the medical device industry takes a lead in an increase in part time employees, it is certain that hospitals will also be affected with this change as well as other service-related industries.

Beginning January 1st, medical device businesses are expected to begin making semi-monthly payments, which has many companies scrambling.