HealthManagement, Volume 7 - Issue 2, 2012 HIT

Are You Optimising... Your Capital Equipment Investment?

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Hospitals can no longer afford to let the “squeaky  wheel” or departmental politics drive capital equipment  decisions. Rather, with CESP, the perils of opinionbased  investments are replaced with qualitative and  comprehensive analyses. Hospital executives can now  make better-informed decisions because the provided  data was validated and weighted, most often by an unbiased  third party consultant. 

Custom Metrics 

To develop an optimal CESP, a myriad of metrics are evaluated.  The process begins by assessing your current equipment  as well as your highest priority needs going forward.  The outcome is a multi-year strategic plan that identifies your  hospital’s best approach to capital equipment investment. 

The transparent process asks, for example: Which strategy  would provide the greatest benefit to patients? Which  approach best drives operational efficiency? How do you  capture the greatest return on investment? What is your  risk exposure with phased acquisition? What investment  strategy best supports your business objectives? 

Bottom line, CESP looks at your options from a multitude of  perspectives. The value you place on these different viewpoints  ultimately determines the most efficient CESP for your hospital. 

Integrated Process 

From a high-level perspective, developing a custom CESP involves  three major phases: 

1. Evaluate existing clinical equipment: This includes  compiling vendor-provided equipment lifecycles,  documenting active warranties, evaluating  maintenance histories, understanding true lifecycle  ownership cost, etc. 

2. Identify hospital’s equipment needs: This phase addresses  the necessary capital equipment investment  to support your business objectives. Which equipment  is really needed? At what point do you risk overinvesting?  What is the ideal acquisition timing to capture  newest and most capable technologies? 

3. Propose multi-year equipment replacement plan  within your budget, which strikes the ideal balance  between adding new equipment technologies to  your inventory and the risk of keeping aging assets  current. At this point, ways to further capture value  are considered (e.g., phased and group purchasing).  

Typically consultants are employed to help hospitals walk  through the CESP process. These specialists offer an objective  perspective as well as a potentially broader grasp  of vendor offerings, industry best practices, and new  technologies expected to hit the market. Hospital personnel  will then implement the approved multi-year plan,  making needed modifications due to market shifts, etc. 

Data-Driven Solutions 

Healthcare executives like the data-driven solution CESP provides.  Their business objectives play a direct role in determining  how the evaluation criteria are weighted. Factors such as return  on investment, equipment lifecycles, maintenance costs over  time, exposure to risk, group purchasing opportunities, and  more are assessed and incorporated. The result is a strategically  weighted equipment acquisition and maintenance plan.

Phased Approach 

Given the rising cost of healthcare delivery  as well as other marketplace factors,  some hospitals have delayed replacing or  updating their clinical equipment. Whatever  your scenario, CESP can help you  accurately understand your present situation  and evaluate your highest priority  capital equipment needs.  

In fact, given group purchasing options  and strategic sourcing, CESP can potentially  enable you to upgrade equipment  sooner than expected. 


Medical technologies are one of a hospital’s  largest capital expenditures. Developing  a strategic approach to managing  clinical equipment acquisition actually  can lower your total capital costs and  improve your results. 

CESP is a data-driven solution supported  by a multi-year acquisition programme  based on efficiencies and your  business objectives.  

Otherwise, without a strategic equipment  plan in place, often the “squeaky  wheel gets the grease.” This expenditure  is too costly to leave to chance.

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Hospitals can no longer afford to let the “squeaky wheel” or departmental politics drive capital equipment decisions. Rather, with CESP, the perils...

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