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Hospital Healthcare Europe

Managed equipment services


17 December, 2014  

A satellite symposium entitled Managed equipment services: together, better, stronger? was presented at the HOPE Congress 2014 on 27 May in Amsterdam.

The presentation was given by Mr Lodewijk Wuite, General Manager MES, Toshiba Medical Systems Europe BV. The purpose of the Symposium was to illustrate the benefits to hospitals of a managed equipment service.

In healthcare, many countries around the world are confronted with an ageing population, smaller workforces to support them, assertive patients, and increases in chronic and lifestyle-related diseases, such as COPD, obesity, and cancers, to name but a few, creating an increased demand for healthcare. By contrast, budgets are being decreased continuously, best practices are not very well shared, production is still favoured over quality, and e-health harmonisation is only making slow progress. In short, healthcare systems will become unsustainable and unaffordable in the near future if no major breakthrough occurs.

In May 2014, COCIR, the European Coordination Committee of the Radiological, Electromedical and Healthcare IT Industry, published a study that presented alarming data related to ageing equipment (Table 1): with the exception of a few countries (typically those countries that received structural funds for investments in healthcare from the EU in the last years), the average age of high technology equipment is increasing. In all computed tomography, magnetic resonance imaging and angiographic cardiovascular systems, the percentage of installed base of one to five years old is decreasing. This means that, even though we have become more demanding and we want to have better images, faster procedures and newer technologies, in reality, there is an issue with the age of the equipment: it cannot keep up with the demands of the market.

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BOX 1

Toshiba Corporation, a Fortune Global 500 company, channels world-class capabilities in advanced electronic and electrical products and systems into five strategic business domains: energy and infrastructure; community solutions; healthcare systems and services; electronic devices and components; and lifestyle products and services. Guided by the core principles of ‘Committed to People, Committed to the Future’, Toshiba promotes global operations towards securing ‘Growth Through Creativity and Innovation’, and is contributing to the achievement of a world in which people everywhere live in safe, secure and comfortable society. 

Founded in Tokyo in 1875, today’s Toshiba is at the heart of a global network of over 590 consolidated companies employing over 200,000 people worldwide, with annual sales surpassing 6.5 trillion yen (US$63 billion).

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What are managed equipment services?

The concept of managed equipment services (MES) is the outsourcing of all aspects of medical technology to a third party company that specialises in providing this type of service. This company will provide the expertise to purchase, install, replace, manage and maintain a portfolio of medical equipment, and train users on a long-term basis. The MES provider will usually own the equipment and provide it as part of a managed service, which encompasses all the necessary elements to support effective use of the equipment. Because the MES provider has a single focus on medical equipment and a larger presence in the market than individual healthcare providers, it is able to provide a higher standard of service at a cost-effective price.

The outsourcing of non-core activities is common in large organisations that seek to transfer risk to third-party specialist organisations that are better able to manage it. This can enable the healthcare provider management to concentrate on its core role of providing a high standard of clinical services to patients.

MES provide a strategic approach to managing technology, which ensures that medical equipment is maintained to a high standard and is replaced through an agreed investment plan. The replacement plan is flexible over time and allows for modifications in cases of hospital strategic or environmental change. This ensures that patients and clinicians always have access to the required standard of equipment to perform their work, thereby reducing clinical risk and increasing productivity. With MES in place, the availability of medical equipment is rarely a concern.

The need for a MES

The role of the industry is changing in the healthcare arena. Companies should support  hospitals in achieving their strategic and operational objectives, thereby creating a state of togetherness (proactive collaboration and co-creation), that is better (leading instead of suffering from changing circumstances) and stronger (transferred/shared financial operational and technological risk, and shared responsibility and success). One of the tools that can help to achieve this is a MES.

What is a MES? 

At its core, it is the supply of functionality rather than the sale and service of equipment, under a long-term outsourcing contract, with the aim of:

  • Entering into a true, long-term partnership with a customer
  • Actively supporting department/technology rationalisation
  • Actively supporting workflows and process improvement programmes
  • Offering strict service level agreements to assure availability.

A MES is hence not just a financial programme whereby a piece of equipment is leased. It is about:

  • sharing risks
  • a continuous focus on improvements
  • a continuous share of success
  • ‘State of need’ equipment planning
  • providing full flexibility in the imaging needs for hospital department(s)
  • taking away the emotion from new purchases
  • helping improve the balance sheet
  • ensuring optimally trained operational staff
  • assuring timely equipment replacement, substitution and availability
  • helping hospitals become, or remain, the partner of choice of its customers.

A conceptual overview of a MES programme is indicated in the flowchart in Figure 1, while typical added values are shown in Figure 2.

Contracting

The plan of action once a contract is signed include:

  • preparing a detailed inventory of available technology, its status and its use
  • review of the hospital’s strategic plan and defining actions to adapt technology to the future needs.
  • defining a training strategy and plan for users of the equipment.

During the contract, improvement actions will be defined, developed and executed. Technology will be adjusted where needed.

Financial calm

From a cash flow and balance sheet perspective, the hospital moves from a situation of varied capital spend, requiring repeat business cases, to a situation of known fixed monthly charges, with off-balance sheet financing (Figure 3).

For financial management of change, hospitals can follow their own MES project and simulate changes via Toshiba’s proprietary In-the-Cloud Amp2hi® software (Figure 4).

This software supports financial management of a MES contract. It allows calculations of monthly fees. It is also capable of managing change of contract contents in all its aspects and the effects this has on the fee during the contract. Customers are able to access their project through the internet and simulate changes in technology and/or services compared with the contractual content and the effects on the monthly fees.

Access to innovation

Innovation cycles are much shorter than economic life cycles. What does that mean? Often, when a hospital buys a new piece of equipment and the radiologists, or other specialists, have an input on what they want, they focus on latest state of the art. The rationale being that if they have to work for a long, accounting-based, period of time with a system, they know that after a couple of years the technology might become obsolete. In order to cope with this, they want to see this point as far as possible in the future and consequently procure as high specified system as possible.

That means that a hospital would need to invest more money than required based on the actual functional requirements. By running a managed service, and by sometimes bringing in lower class, new systems but replacing them much more rapidly, or bringing high class refurbished systems, hospitals can remain continuously within the clinical and technological requirements of the departments. Of course, sometimes state of the art technology is required, for example if there are R&D programmes initiated and/or ongoing. But in daily practice, state of the art is not always required. It is most often sufficient to work with state of need technology.

State of need is about bringing the exact technology that you require.

This is well illustrated in the following models of functionality versus investment: the former (Figure 5), the traditional model, and the latter (Figure 6) showing how MES counters the pitfalls, to keep within the targeted functionality range.

Critically, MES assures like-for-like functionality when equipment is replaced in the course of the contract, whereby clinical freedom of choice should be provided.

There are many and varied optional services, depending on the customer’s requirements, some of which include:

  • benchmarking of the customer’s internal processes and/or patient flows (versus national or international practices)
  • analysing and optimising radiology department process flows using Six Sigma or similar methodologies
  • equipment usage analysis
  • access to remote viewing/diagnosis
  • mobile equipment services
  • equipment disposal services.

Summary

A managed service is a contractual partnership between a healthcare provider and a technology provider typically for a period of about 10–15 years. In this period, it will replace all of the equipment. It facilitates the supply and maintenance of equipment; it can include financing as well. It takes care to ensure that all the help and first-line service is streamlined for the involved hospital’s imaging departments.

It provides continuous education and training. Besides that, MES provides a variety of additional improvement programmes, that are developed and executed in close collaboration with hospitals.

Another key for a managed service is that there is no technological overkill or underkill. That means that the functionality that is needed at any point in time, taking into consideration changes in environment and requirements, is supplied. And importantly, clinical freedom of choice is guaranteed.