Medical equipment needs to be managed. This may seem a logical statement, but each year billions of dollars worth of unused medical equipment and supplies are thrown away. They end up in dumpsters and landfills across the country. Still more lays idle in warehouses and storerooms, or worse, ends up in the wrong hands. It’s a growing headache and a waste of space, time and money since most of that equipment can be resold, refurbished or reused. Whatever the situation, it’s worth managing properly.

Today’s hospital administrator faces many challenges in dealing with excess medical equipment, equipment still in service and future equipment purchases. Downsizing and consolidation have forced hospital managers to oversee multiple departments and facilities. On the front end, this situation creates a number of obstacles, including confusion on the actual inventory of assets (compared to what is on the books), storage issues (both on-site and off-site) and excess equipment being undersold or simply scrapped.

To effectively manage all resources, facilities must create, implement and enforce standardized processes which reduce or eliminate storage costs, create returns on capital equipment investments, reduce administrative time and create re-utilization opportunities within systems. Not having a process in place leads to poor equipment purchases, redundancies and budget overruns on the back end. Too many times, major capital purchases are made without taking stock of what assets are already on-site. Avoiding this scenario requires implementing equipment accountability, utilization and planning strategies.

If these examples sound familiar, you’ll want to identify your specific requirements for managing excess medical equipment, equipment still in use and equipment acquisition strategies.

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The first part of your strategy is to define what excess medical equipment means to your organization. A facility should place equipment that is not in use or soon to be not in service into one of the following categories: Equipment to be scrapped, equipment to be reutilized or equipment to be sold or donated.

Scrapping. Equipment that is to be scrapped has little to no fair market value. This means that even though the item may have value on the general ledger, the piece of equipment does not have the return on investment in administrative time or financial returns to warrant redistributing, selling or donating. Labeling equipment to be scrapped can sometimes be difficult, but this honest approach will save your facility in the long run. This exercise will provide you with more time to deal with equipment that can be reutilized, sold or donated.

Reusing. Reutilizing medical equipment within your system or co-op has several benefits. Creating a system for redistributing and reusing medical equipment creates the obvious benefit of not purchasing new medical equipment. But what some facilities fail to do is factor in the cost of eliminating unnecessary purchase orders. Most internal purchase orders have administrative costs associated with them and can be calculated into your overall savings. Research has shown that internal purchase orders have a rate of $150 to $250 per request. Hospital co-ops have been emerging as a great resource to exchange medical equipment and increase the value of participation for facilities.

Selling. Selling medical equipment can be demanding, but it can also provide a good alternative revenue stream for facilities. The challenge is monitoring the personnel time to prep and transport the equipment that your facility sells to ensure that you are actually making money in the process. There are several online services that allow facilities to sell their equipment. The greatest challenge is ensuring that your facility is getting the best value from the equipment being sold. If you are selling to a medical equipment dealer, there are many factors to consider, including which side actually handles the equipment preparation and transportation. You should also investigate if the vendor handles multiple items or only specializes in a certain category. The final question should be who stores the equipment during the sales process. When you find out the answers to these questions, the impact of administrative time and storage space should be factored into your final decision.

Donating. Donating medical equipment is a great way for a hospital to align its actions with its mission statement and continue to contribute to the community. Several non-profit organizations will pick up a facility’s excess medial equipment and either sell it (to support their efforts) or ship the equipment to third world countries. Some organizations will even take expired medical supplies. Tax benefits are usually available for the donations.

Defining excess policies

The next part is creating a standardized process in dealing with the equipment that your facility categorizes as excess. It is very important that the key contacts in your departments or facilities understand the process and strictly adhere to its guidelines. This calls for the creation of clear definitions to identify excess medical equipment. Then it calls for the defined resources and policies to scrap, transfer, sell or donate the assets.

 
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Once you have effectively communicated your strategy internally, then you have to do the heavy lifting. You need to know what equipment you have and where it is located. This means that you must perform an inventory of what medical equipment you have both on-site and off-site. Most facilities already need to furnish detailed audits for budgeting and capital planning, so it would make sense to incorporate an inventory of all your capital assets into your capital equipment strategy. Inventories can be done internally or they can be outsourced. If you are doing the inventory internally, make sure that you have the administrative support to effectively execute the process. If you are receiving support from other departments, make sure that they fully understand the importance of the thoroughness and objectivity that is required in their efforts.

If you are using an outside service provider, make sure that the inventory times and dates are clearly communicated to all department heads and their staff. Make sure that this is also communicated during shift changes. It is always helpful to have someone introduce the inventory team on each floor prior to execution and that the crew has the necessary badges or passes.

Whether you are doing the inventory internally or externally, provide a standardized method of how you want the equipment listed (make, model, etc.) and have the most up-to-date list of equipment for a final reconciliation. It is also important to locate equipment that is in off-site storage or is housed at another location.

Once the inventory has been completed, you now have a more comprehensive and global view of the equipment that you have in your possession. This is when you can assign the predetermined categories for the equipment. Once you have assigned the grouping, you can execute your strategy.

Scrapping. Throwing away medical equipment can be a costly and time-consuming endeavor. Make sure that you contact your local sanitation department to make sure that you are properly disposing of the equipment per their standards. You should also consider the financial costs of renting a dumpster and the administrative impact of scrapping the equipment. Once you factor in these costs, you might want to consider hiring an outside salvage and disposal company.

Reusing. The success of reutilizing medical equipment within your system or co-op relies on the communication tools that you incorporate in how you advertise, authorize, transfer and document the unused medical equipment. Internal emails and electronic bulletin boards are an adequate way to publicize the equipment. Company newsletters are another reasonable means to get the word out. The tricky part is authorizing and documenting the process. Make sure that you create an approval process for requests and that you can handle it when multiple facilities want the same equipment. The approval process should also factor in the administrative and monetary costs associated with transferring the equipment. This is especially important if the equipment is a fixed asset and needs to be de-installed. Finally, make sure to document the entire process and provide the information to the necessary departments. You may find that all of this will negatively impact your staff and look for ways to outsource this practice.

Selling. Selling medical equipment can be a great source of alternative revenue for your company, but it can also be a huge administrative burden. When looking for an outside party to purchase your equipment, try to locate one that will purchase the majority of your equipment. Dealing with multiple specialty vendors (those who deal with a specific category) can consume a great deal of your personnel time. Also look into vendors who will professionally prepare and transport the equipment. It is an added bonus if the vendor stores the medical equipment during the sales process. This will make an immediate impact on your on-site and off-site storage space. If you are using off-site storage space, make sure that you share the savings information with your department head and accounting.

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Donating. Donating your medical equipment is a great alternative that will assist your facility in carrying out your facility’s mission statement or charter. When choosing a non-profit organization, make sure to see if their mission statement aligns with yours. Also inquire about their transportation and logistics support. If a charity cannot pick up the equipment then you will be burdened with the shipping charges although these are tax deductible. Once the donation has been completed, make sure to communicate the information to your public relations or community relations department. This is a great way to showcase your efforts internally and externally.

In a nutshell, everyone understands the importance of managing their medical equipment, but few have the time and resources to create and execute an asset accountability program. But not implementing such a program will negatively impact your facility or system in the long run. HPN