Despite the enormous potential upside for significant operational efficiency and cost reduction, respiratory equipment management has remained one of the most overlooked areas for business improvement.
That needs to change.
The 3 most significant areas for business improvement are:
- Maximizing revenue per unit
- Visibility of assets
- Operational efficiency.
As part of a 3-blog series, we will cover each of these issues in depth, starting here: how to maximize revenue per unit.
Here are the keys to maximize revenue:
Faster Turnaround Time
The adage is true: time is money. Assets tied up in service, repairs, storage, or transit results in lost revenue. Asset utilization is a metric of paramount importance that must be watched closely. The best healthcare organizations have systems in place to ensure they have the right products in the right places at any point in time.
Responsiveness to Demand
COVID revealed the importance of quickly moving respiratory devices where they’re needed to meet demand. To control CapEx, healthcare companies must not allow each branch/regional location to buy its own equipment. Instead, equipment should be managed consolidated through a central location. This puts the data and decision-making above the branch level. Excess inventory should be returned to a central distribution center where it can be maintained and easily accounted for.
Repair or Replace?
Is it more cost-effective to keep servicing units rather than replace them? How long should you service them – what is the break-even point? This depends on the cost to repair vs. the age of the unit.
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- The general rule of thumb is to spend approximately half of the asset’s replacement cost, especially if you can get a couple more years of useful life.
- For a device that is five years old or more, consider establishing a threshold that may be less than half the value. If the asset is in reasonably good condition – and can be “brought back to life” with a good refurbishment – you can maximize profitability by repairing it.
Keep in mind that some units are simply “lemons.” If you have an asset that consistently fails, do not keep investing money in it…send it to the scrap yard. To assess quality, access to service data is important. With a central database containing all service reports, you can make “scrap or service” decisions much easier. Quality Biomedical’s QConnect™ platform does this easily for you.
Handling Scrap
How do you handle respiratory equipment damaged from smoke, insects, or general abuse? Most organizations write the asset off and absorb the cost. Of course, insect infestation may force you to scrap the device. However, “smoker units” can be treated differently. Keep a few “smokers” on each truck so the technician can deliver them to a patient who smokes. To reduce the smoke scent, use an ozinator to kill the scent (you’ll never get it all), but this will help extend the life of your equipment.
Warranties
Because swapping out machines is expensive, be sure your respiratory equipment gets a full refurbishment and, when possible, a one-year warranty on serviced units. This will help establish predictability and ensure confidence in your investment.
What about buying extended warranties? Remember that respiratory devices nowadays are designed for the initial purchase cost, not long-term reliability. Longevity is the key to getting the most bang for the buck from your capital expenses.
If you have a 5-year warranty, should you scrap a unit at the end? That depends on the quality of the respiratory device. Stated plainly, you get what you pay for – some brands are better than others. Essentially, if it costs $200 or less and will extend the life of your device by 2 years, then it may be worth it.
Profitability comes from maximizing the revenue for each piece of respiratory equipment. Quality Biomedical exists to help you do just that. Managed through the intelligence of our proprietary cloud-based QConnect platform, we take care of the repair, warehousing, and logistics so your equipment gets where it’s needed when it’s needed.
Give us a call! We’d be happy to talk to you about the profitability of your particular respiratory equipment fleet.
