Hospitals take on a variety of costs associated with storing surplus medical equipment. Storage can be managed in-house or through a third party offsite warehouse. When medical equipment is decommissioned in a hospital, they typically move the surplus into their warehouse, an onsite shell space not being utilized by the hospital or an offsite third party storage facility. Once there, hospitals rarely manage the surplus equipment in a timely fashion.
Costs are then associated to these assets through storage fees, warehouse labor, and cost of square footage if the space is rented etc.:
- Material handling fees range from $8.00-$11.00 in handling of a pallet or piece of equipment.
- Warehouse labor average wage is $31.50 per person in maintaining a warehouse.
- If a hospital is renting a space, the average cost for per square foot ranges from $4.00-$25.00 depending on location.
- Hospitals can also incur cost associated with insurance for surplus in storage
- Depreciation in value for surplus that can be resold but is sitting in storage
- Lost revenue using new construction shell areas for storage instead of billable services
Applying these costs to one piece of equipment for an extended period of time can add up. When you factor in a significant amount of surplus equipment, it can be surprising how much money the hospital is spending each month for decommissioned assets. The “out of sight, out of mind” concept is costing hospitals money, therefore it’s extremely important to have a process laid out for assets removed from service. Some options are selling on the secondary market, reutilizing elsewhere in the health system, donating, trading in, parting out to maintain current fleet or scrapping.
MRG completed an inventory and appraisal project for four physician practices located in WV with an appraised value of over $700,000.00
MRG Appraisal of the Month:
Tanita TBF-310 Body Composition Analyzer
MRG Hospital Fun Facts:
As part of an ongoing study of out-of-body experiences, 25 hospitals have special messages strategically placed near ceilings so they can only be read from above