Today, capital equipment decisions are based on information. At least, they should be.
Capital equipment acquisition of yore was a fairly simple process: After the decision was made, purchasing issued the PO. Done.
But as the Good Book tells us, “For unto whomsoever much is given, of him [or her] shall be much required.” That is to say, today’s supply chain executives – and all the equipment decision-makers in today’s IDN – have much more information at their fingertips than their predecessors. And their decisions had better reflect it.
“We use 17 different indices and/or decision-support reference points,” says Charlie Miceli, CPM, vice president, network chief supply chain officer, The University of Vermont Health Network. “In the old days, you might have had one or two, or your GPO. The GPO still plays a significant role, but you can’t just go with that.”
And that information doesn’t just display comparative pricing (though there is that). Rather, it helps healthcare executives sort through the complexity of today’s equipment, so they make the absolute best decisions from an economic and clinical perspective. With the many dollars at stake, there’s little room for error.
In the past, whoever offered the lowest price often got the contract, says Miceli. “And you worked in the complexity of physician preference and the science behind it.”
But today, given today’s information sources, IDNs can examine a prospective equipment’s place on the technology cycle, and predict lifecycle costs, including maintenance, updates and support. “It’s an interesting process,” says Miceli.
“The lifecycle of products is much faster and more complex today than ever before,” he says. Consumers know this as well as anyone, given the rapidity with which PCs, tablets, smartphones, etc., evolve from one iteration to the next. “So if you spend a million dollars on a piece of equipment in the third or fourth quarter of its product lifecycle, you could potentially own a boat anchor,” says Miceli.
Decision support tools
One of the decision support tools on which the UVM Health Network relies is ECRI Institute’s TruVu™, which allows the provider to weigh a myriad of variables and key performance indicators before making a technology decision. As a shared application, it promotes collaboration and transparency among all the decision-makers.
“It mitigates subjectivity and forces you to listen to everybody [on the project],” says Miceli. The University of Vermont Health Network has used the tool to guide decisions on medical equipment as well as software.
Tools such as TruVu allow providers to predict the total cost of ownership of a piece of equipment, says Miceli. That includes the cost of installation, service, staffing and – because so much equipment is digital – cybersecurity, interoperability (or lack thereof) and the cost of upgrades. Total cost of ownership encompasses far more than dollars and cents, he adds. “It’s the prioritization of limited resources.”
Another tool employed by the UVM Health Network – Value Analysis Management Software® by the Data Leverage Group – “is like a checklist manifesto,” says Miceli. “If you put that into your business processes, it becomes intrinsic.”
“You have to be able to prioritize, and see where the impact will be. You develop the discipline to look out longitudinally; not just at today, but a year from now, and three years down the road. What will the financial framework of your company be? Are others thinking about this?
“I’ve been doing this for 30 years,” he continues. “This is a paradigm change. You’re trying to be like [retired hockey star] Wayne Gretzky – trying to anticipate what’s going to happen down the road.” (Editor’s note: Gretzky is often quoted as saying something like, “I skate to where the puck is going to be, not where it has been.”)
The supply chain organization is the “tip of the spear,” helping to ensure that the IDN is making the very best investments possible, says Miceli. Acquiring capital equipment may not be as simple as it used to be. In fact, it’s far more challenging…but also more intriguing.
“We’ve had so much change in our industry; it is so disruptive. It’s an exciting place to be. It’s a cool environment.”
Questions for a digital age
Questioning prospective capital-equipment vendors about interoperability and cybersecurity are baseline must-haves for the University of Vermont Health Network, says Charlie Miceli, CPM, vice president, network chief supply chain officer.
The IDN’s Technical Standard Review Board has developed a Technical Standards Questionnaire template to which prospective equipment and software suppliers must respond. “We ask them to tell us how their system works,” and interoperability is part of that, says Miceli. “If their equipment isn’t interoperable, they have to tell us that. What we want to make sure doesn’t happen is, they tell us it will interface [with our EHR], but it doesn’t.
“The supplier’s answers are subsequently incorporated by reference into the contract with the respective supplier.”
Just as important is cybersecurity. Can the equipment or software supplier meet the IDN’s cybersecurity requirements? “Cybersecurity equates to patient safety,” says Miceli, who is a board member of the National Patient Safety Movement Foundation (www.patientsafetymovement.org).
The University of Vermont Health Network
At a glance
- Physicians: 1,063
- Specialists: 812
- Primary care providers: 251
- Licensed inpatient beds: 1,161
- Inpatient discharges: 37,766 in FY 13
- Almost 1.6 million outpatient and professional office visits in FY 13
Approximate number of employees
- Central Vermont Medical Center: 1,500
- CVPH Medical Center: 2,300
- Elizabethtown Community Hospital: 190
- UVM Medical Center: 7,000
2014 budget
- Central Vermont Medical Center: $166M
- CVPH Medical Center: $296M
- Elizabethtown Community Hospital: $25M
- UVM Medical Center: $1B