Asset Management for Imaging Reduces Waste

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Scarce capital, these days, poses a serious threat to imaging enterprises hoping to see even modest growth. Blame the economy if you will, but there are any number of other contributing factors, including the rapid commoditization of equipment maintenance, punishing tax rates, investment-portfolio losses, and the hold that regulations and legal mandates can place on opportunity.
imageSimon Walls
Given all that, where is an imaging center or radiology department to turn for funding? Look inward, then purge waste, Simon Walls, managing principal of GE Health care’s Asset Management Solutions unit, suggests. “The starting point is your existing base of clinical equipment assets because, in all likelihood, they’re not being optimally utilized, managed, and maintained,” he says. “That means waste is occurring. Reduce the waste and there should be freed-up funds sufficient to support not only day-to-day operations, but also strategic growth initiatives.” Walls contends that few imaging providers ever stop to consider strategically how their imaging assets help or hurt the bottom line. “Unfortunately, taking health care as a whole, the failure to make this link is each year resulting in billions of dollars of wasted potential capital,” he estimates. A New Approach One area in particular where such waste occurs is in the utilization of imaging assets. Within limits, more utilization equals more revenue. According to Walls, however, “An imaging center is going to have a difficult time increasing utilization if it hasn’t got a handle on its utilization picture. Unless you know how your assets are being used, you can’t develop an effective distribution strategy that paves the way for optimally appropriate utilization.” Walls adds that asset management, in GE Health care’s parlance, does not mean what it traditionally has meant: equipment maintenance. “With maintenance, the key metrics include quality compliance, equipment reliability, and uptime,” he says. “On the other hand, asset optimization is measured in terms of how capital investments and operational expenditures are managed in order to take waste out of the system and free up capital so that growth visions can be more quickly and fully realized.” Walls identifies three drivers for asset management in the newer sense of the term: optimization of asset performance, optimization of asset distribution and use, and optimization of asset-replacement strategies. “These three are not separate from one another, but are connected elements that must work together holistically in order to achieve the desired return for the organization,“ he explains. Where the Money Is GE refers to this as an asset-management framework. Applying it, Walls indicates, “can be an eye-opening—and money-saving—experience for a health care organization. For instance, too often, organizations wastefully overspend on maintenance contracts for assets no longer in distribution, or they unknowingly lease equipment when they already own more than enough units to meet demand, but they very possibly might never know this without some kind of asset-management framework to go by.” Walls illustrates this with a client’s success story: the case of Wisconsin Valley Health Network (WVHN), Wausau, Wisconsin. WVHN is a member-owned cooperative managing the supply chain and biomedical-engineering activities of four hospitals and over 40 clinics in North Central Wisconsin. In 2007, WVHN asked Asset Management Solutions to conduct a physical inventory of assets across the organization—not just radiology equipment but infusion pumps, endoscopes, and the works. Going in, WVHN thought that these assets numbered 8,000. To the network’s dismay, the count conducted by the GE team showed an actual inventory of fewer than 6,000 items. “That actually turned out to be a good thing,” Walls says. “WVHN used this census as the basis for a new service contract—one reflective of the true size and composition of the equipment fleet. Eliminating coverage of phantom assets saved the network about $800,000 for that contract year.” Those operational savings allowed WVHN to offset fully the declines in revenue caused by investment-portfolio losses and decreased clinical volume, Walls notes. A delighted WVHN then gave GE a green light to delve deeper into the organization’s clinical assets. “More misalignments were found between inventory and utilization,” he reports. “Since that time, WVHN has become more effective at lifecycle management, capital planning, and asset-replacement prioritization across its entire portfolio of assets.” Three Things Asset Management Solutions has been helping clients in this fashion since mid-2008—its official arrival on the scene, which coincided with the appointment of Walls to head the unit’s team of 25 clinical workflow assessment specialists and support personnel. Expected client demand has Asset Management Solutions taking steps to double the number of its employees by this time next year. When Asset Management Solutions is invited by a new client to help optimize both capital and operating dollars, the first order of business is to make sense of how assets are utilized, determining at what times of the day, week, and month utilization crests and falls and identifying what possibilities exist to modify workflow to improve utilization or, failing that, to divest itself of excess inventory. As a bonus benefit of this initial exercise, the client also gains insights permitting more effective allocation of capital dollars for future replacement of equipment. Next, Asset Management Solutions analyzes imaging volumes by procedure and zip code. The result is a profile of the imaging market surrounding the client’s facility or facilities. Walls says, “This gives an idea of how much of the market you’re capturing and helps you know whether you have excess capacity. If, for example, our analysis shows you have equipment utilization at 25% but you have market share at 70%, then right away, you know you have too much capacity.” He continues, “If your utilization is 25% and you’re only capturing 10% of the market, then obviously, there’s room for growth. What we try to do is correlate opportunity with where the growth is occurring, which helps us answer from a hardware/software perspective the question, ‘Will your equipment, your technician competencies, and your workflow controls allow you to capitalize on market trends and growth areas?’” A Noble Ambition Data amassed by Asset Management Solutions are typically highly detailed. “It’s vitally important to have quality insights in order truly to understand how the various pieces fit together and what can be done with those pieces to transform the client’s business,” Walls says. After analysis of all these data, a solution is then designed and offered. “Implementation is the responsibility of the client, although we remain actively in the picture to provide sustaining and evolutionary support as needed,” Walls says, adding that the reduction of waste through asset management is a noble ambition. “It helps the entire organization become better because, ultimately, the right assets are available at the right time, in the right place, and in proper working order. That sets the stage for staff to be more productive—better able to focus on caring for patients and serving the community,” he says. Equally important, better asset management can even free up capital and operating dollars to support long-term viability and growth. “The current economic crisis in health care is more than just a moment in time,” Walls says. “It is a fundamental course correction presenting great opportunities for those organizations willing to rethink their asset-management strategies. For too long, waste has been tolerated as part of doing business. Today’s environmental pressures and economic realities are changing that attitude.” Rich Smith is a contributing writer for ImagingBiz.com.