Finance hates that category of products labeled "specialty beds." Daily rental rates vary depending on what product is selected and what additions are made to that product. Rates can vary from a low of $20 to a high of more than $150 per day, per product. With all those "bells and whistles" available, and a wide range of daily cost, it’s easy to see why rentals of these items can add up to significant annual dollars. Additionally, marketing strategies of the bigger companies in this arena are creative and effective. The purpose of this article will be to explore why this category of spend is such a "hot button" for both sides of the relationship and what strategies are effective in resolving this conflict.

Creative and effective marketing strategies are key to the vendor financial success of most rental programs. Products are often offered as part of a "cap" program. In this scenario, the vendor will use historical annual usage to determine what the "cap" should be. For example, if in 2004, City Hospital spent $100,000 for specialty product rentals, the vendor may offer to "cap" 2005 payments at $80,000, or 80% of the previous year’s usage. This amount may be divided into 12 monthly payments of $6,667. City Hospital makes the monthly payment regardless of their actual spend. Meanwhile, much like the proverbial fox watching the henhouse, a wound care specialist, who works for the vendor, visits City Hospital on a regular basis and develops a relationship with the nursing staff, offering them education and advice on wound care, recommending when and what product to order, and training the staff on the proper use of the beds. This strategy may save City Hospital $20,000 and offer much needed knowledge to the staff; it is a short term win.

While City Hospital pays $80,000 in 2005, they may have actually used $120,000 worth of products during the course of the year. Now it is November of 2005 and time to evaluate what the "cap"will be for 2006 which is 80% of actual usage. So in 2006, City Hospital will pay "cap" of $96,000 (80% of $120,000) or $8,000 per month. Repeat this scenario for five years and by 2010, City Hospital will be using $200,000 of rental beds per year and pay $160,000, or $13,333 per month.

Certainly one cannot believe that patient acuity and real need for these products has doubled in five years! So why has usage doubled? While the wound care specialist does not typically discuss payment models with the nursing staff, nurses manage to discover over the course of the year that no matter how long a patient stays on a bed, or how many beds are ordered, the monthly fee stays the sameIt makes perfect sense to them to keep patients on these wonderful products as long as possible, insuring their facility would not be paying the vendor for any unused time each month. Patients and families like these "fancy beds", and often will complain loudly when they are discontinued. That is typically not a fight that the nurses want to have. Since budgetary oversight for these products may be centralized outside of nursing, the people spending are not the people monitoring that cost. Policies and procedures, although in place for product usage, may not address how to identify appropriate candidates, appropriate product, or appropriate length of time to keep a patient on a particular surface. The procedure for obtaining a rental bed may be based on something as simple as obtaining a physician order for the "appropriate bed." Ask any honest nurse and he/she will tell you, they can usually get an order for any bed or overlay, for any patient, just by asking. Most physicians don’t have a clue about which is the appropriate product for their patients, and rely on the nurse to guide them.

Below is a case study for cost reduction in specialty bed rentals at a medium-size hospital on the east coast. The name has been changed to protect financial confidentiality.

Early in 2004, Northern Hospital, a 500 bed hospital in the suburbs of a large, east coast city, began a cost reduction project. One of the areas the clinical consultants decided to target was specialty bed rentals. Specialty bed rental usage had been growing over the past few years and by 2003, spending was out of control at $795,000. Additionally, their vendor predicted an increase for 2004 to an estimated spend of $867,000, based on increasing usage as the year progressed. The budget line for specialty beds was in materials management, however, the materials management department had no say in when and what items were rented. Their involvement in the process was limited to negotiating the original contract, putting them on the vendors cap program, and then negotiating with the vendor, usually unsuccessfully, each year, to try to keep cap pricing down.

The nursing education department was responsible for approving bed rentals. Hospital policy and procedures provided that any nurse could request any bed product from the physician. Once the order was obtained, nursing education was called, and it usually gave the approval over the phone. There was no process in place for any other party to evaluate the patient and consider whether the requested product was the appropriate choice. In addition, the wound care specialist, who worked for the vendor, was very popular with the staff and thought of as "an extra pair of hands." She would make patient rounds regularly and identify which patients would benefit from which products. She would also, on occasion, recommend that patients be taken off a surface if there was no improvement over time. The nursing staff trusted her judgment and usually followed her recommendations. Although this wound care specialist often said she was working hard at helping Northern Hospital save money, for some reason, the hospital’s usage and spend increased each year.

In early meetings, which were held bi-weekly over three months with nursing education materials management, finance, and the consultants, nursing was very cooperative and expressed great enthusiasm with what they perceived would be validation that the major problem was lack of physician support to discontinue the bed therapies when the staff requested it. However, they soon realized that the solution had more to do with educating their nurses and taking control of the need identification, product selection, and approval process, than it did with pointing fingers at resistant physicians.

Initial review of their policies and procedures indicated that Northern Hospital needed significant revision to give them the "teeth" they needed to gain control of this process. Several best practice policies and procedures were presented for their review, and the team struggled over what policies would be appropriate for their facility. This was not a painless process, and at one point, the comment was made that "If we use this policy, no one will ever get a bed!" Eventually new, stronger procedures were developed, and staff was educated about the changes. In addition, a scoring mechanism was instituted that would help staff identify which patients were candidates for these beds. The vendor was quite helpful in providing educational tools for the staff so they could make intelligent decisions regarding which product was appropriate for each patient need. And bed approval decisions now came from the on-duty nursing supervisor, who had to actually visit and evaluate the patient, and document his/her evaluation on the medical record. Additionally, a form was developed for the unit secretary to monitor start and stop date, vendor notification date and time, product name and unit. This form was sent to accounts payable, to be matched with the invoice. Finance began the process of moving the budget line for bed rentals to the nursing budget, instead of materials management. The vice president of nursing would now be responsible to keep bed spend under budget for the hospital. And finally, the recommendation was made, and accepted, to come off the "cap" program and monitor and pay for actual usage.

To the credit of the entire staff of Northern Hospital, painful though it was, change took place quickly. In three months, they began to see a decrease in usage and spend. Where the vendor had originally predicted $867,000 in rentals, their actual spend for 2004 was $342,714, saving them $391,234! Additionally, annualizing the usage trend for the last quarter of 2004, they are on track to spend about $110,000 in 2005.

As illustrated in the spreadsheet below, in 2003, with minimal or no oversight of bed utilization, actual monthly cost was higher than the cap cost. Once utilization began to be monitored, in 2004, usage dropped significantly, actual cost dropped and savings accrued at a rapid rate. Additionally, the nurses at Northern Hospital were surprised to discover there was no increase in their rate of skin breakdown or length of time for wounds to begin to heal.

As you can see, there are solutions to each of the causative issues mentioned above, and they are relatively easy, though sometimes painful, to enact and enforce.

The budget for bed/overlay/sleep surface rentals must lie within the nursing departmentAfter all, it is nursing that controls rental bed usage. Once that has occurred, finance must make it clear that nursing will be held accountable to stay within their budget. This is best accomplished by not participating in a "cap" program. Nursing needs to develop a good relationship with the wound care specialist who the vendor provides, using their knowledge to train staff about which products are best for which patients and what the optimum length of time for keeping a patient on a surface should be. Nursing should insist on timely, monthly reports from the vendor that describe which products were used, what units used them, start and end dates, and cost, by product. Policies and procedures must be reviewed and toughened, including who is responsible for contacting the vendor to order and discontinue the bed, how will those dates be tracked and who will compare those dates with the vendor bill. The policies should address how the staff will identify a patient in need of a specialty product, how they will identify what the most appropriate product is, and how "on" and "off" dates, as well as results of therapy will be documented. Additionally, the question of who is ultimately responsible to approve the rental of a product should be addressed. It should always be a hospital employee, preferably one who is involved with budgetary oversight, and never the vendor’s wound care specialist. And finally, include in the policy what steps are to be taken on weekends and holidays when a bed is needed.