Return on Investment

Lúcio Flávio de Magalhães Brito, CCE

Engineering Director

Introducing Clinical Engineering

About the speaker

• Mechanical Engineer Federal Engineering School of Itajubá

• Occupational Safety Engineer Industry Engineering School

• Hospital Administration Specialist Getúlio Vargas Foundation

• Certified Clinical Engineer International Certification Commission Healthcare Technology Foundation

• Biomedical Engineering Specialist Campinas State University

• Engineering Director of Medicorp São Paulo - Brazil

Our Agenda

• Concepts and definitions Engineering Healthcare Technology Financial

• Tips During presentation

• Case Studies Clinical Engineering Hospital Engineering Maintenance Technology Administration

Return on Investment

• The greater the risk, the greater the expected return on investment, because the risk must be rewarded

• Minimize operational expenses

• Increase sales volume

• Reduce equipment down-time

• Avoid exaggerated installations

• Increase both “Current Ratio” and “Quick Ratio”

Engineering Concepts

• Clinical Engineering “A Clinical Engineer is a professional who

supports and advances patient care by applying engineering and managerial skills to healthcare technology." - ACCE Definition, 1992

• Other terms used to specify this professional are: Healthcare engineer, hospital engineer,

biomedical equipment technician, equipment managers, technology manager, biomedical engineer, maintenance engineer, healthcare technologist.

Clinical & Hospital Engineering

• Clinical Engineering equipment responsibilities Infusion pumps, defibrillators, monitors, x-ray

machines, cath scan, MRI, ultrasound, ventilators, surgical table and lights, electrosurgical units, pulse oxymeters, CT scan, etc.

• Hospital Engineering equipment responsibilities HVAC, medical gases, electrical systems,

medical compressed air, vacuum systems, elevators, construction support, communication systems, vehicles, steam, hot water, etc.

Typical Engineering Responsibilities

1. Supervision, coordination and technical orientation

2. Studies, planning, projects and specifications

3. Technical and economic feasibility studies

4. Counseling and advisory services

5. Manpower and resource management

6. Inspections, audits, evaluation, survey, technical reports

7. Technical functions

8. Teaching, research, analysis, experimentation, tests

9. Budget preparation

Typical Engineering Responsibilities

10. Standardization, measurements, quality control

11. Constructions

12. Fiscalization of service execution

13. Specialized technical production

14. Technical evaluation of work conductions

15. Management of installation, mounting, operation, repair or maintenance team

16. Execution of installation, mounting, repair and remodeling

17. Installations and equipment operations and maintenance

18. Technical drawing

Engineering or Maintenance ?

GENERALADMINISTRATION

SERVICE X SERVICE YMAINTENANCE

SERVICE

PREVENTIVEMAINTENANCE

CORRECTIVEMAINTENANCE

Engineering !!!

GENERALADMINISTRATION

SERVICE X SERVICE Y ENGINEERING

CLINICALENGINEERING

HOSPITALENGINEERING

TECHNOLOGYPLANNING

PATIENTSAFETY

QUALITY ASSURANCE

MAINTENANCEPROGRAM

PreventiveMaintenance

CorrectiveMaintenance

OTHERPROGRAMS

Healthcare Technology Definitions

• Healthcare Technology. What is it? Healthcare technology includes the devices,

equipment, systems, software, supplies, pharmaceuticals, biotechnologies, medical and surgical procedures, organizational structures used in the prevention, diagnosis, and treatment of disease in humans; for rehabilitation; and for assistive purposes.

Here we will focus on medical equipment and hospital installations and facilities.

Healthcare Technology Concepts

• Technology Efficacy A benefit from a given medical technology under

ideal conditions of use.

• Technology Effectiveness A benefit from a given medical technology under

average (real) conditions of use.

• Technology Efficiency Lowest price when different technologies have

same efficacy and effectiveness.

Technology Life-Cycle

• A process by witch technology is created, tested, applied, and replaced or abandoned. Know the maturity of a technology Support systematic and rational decisions

Cost-Effectiveness

• A process that combines qualitative and quantitative considerations in order to know the costs of a project compared to the resultant benefits. Costs are normally expressed in dollars Benefits in terms of:

Lives saved Disabilities avoided Quality-adjusted life years saved Other relevant objectives

Life Cycle Cost analysis (LCC)

• Initial purchase price

• Shipping

• Renovations

• Installation

• Supplies

• Associated disposables

• Cost per use

• And OTHER costs as: staff training, ease of use, servicing, spare parts, upgrades, networking …

Ease of Use

• Clinical Evaluation Prior to Purchase Decision Prepare the user for proper operation

Inservice Training Documentation

Equipment design User’s ability Human factors

Patient and user discomfort Keyboard Device controls Alarms

LCC & NPV Analysis

ItemsInitial

CapitalYear 1 Year 2 Year 3 Year 4 Year 5

Hardware Costs $ 225,000 $ - $ - $ - $ - $ -

Software license $ 17,500 $ - $ 18,200 $ 18,928 $ 19,685 $ 20,473

Facilities costs $ 25,000 $ - $ - $ - $ - $ -

Disposable costs $ - $ 4,500 $ 4,680 $ 4,867 $ 5,062 $ 5,264

Support costs $ - $ 3,375 $ 3,510 $ 3,650 $ 3,796 $ 3,948

Service costs $ - $ - $ 11,250 $ 11,700 $ 12,168 $ 12,654

Training costs $ - $ - $ 1,125 $ 1,170 $ 1,217 $ 1,265

Misc. costs $ - $ 1,125 $ 1,170 $ 1,217 $ 1,265 $ 1,316

Cash out flow $ 267,500 $ 9,000 $ 39,935 $ 41,532 $ 43,193 $ 44,920

Present value of $1discount rate at 10% (NPV = 1/(1+I)n)

- 0.9091 0.8284 0.7513 0.6830 0.6209

Net present values $ 267,500 $ 8,182 $ 33,082 $ 32,203 $ 29,501 $ 27,891

Total present value $ 398,359        

Modules for practicing?

• Full Clinical Engineering Implementation

• Partial Clinical Engineering Implementation

• Technology Advisory Counseling

• Accreditation Preparation

• Technology Audit & Action Plans

• Technology Inventory

• Economic Rescue Plans

• Technology Incorporation Planning

• Case Studies

Full Clinical Engineering Implementation

• 16 Complementary areas Diagnostic Studies Inventory Market Procurement Law Standards and Regulations Equipment Control Costs & Expenses Control Process Management Risk Management Contract Management Personal Management Technology Incorporation Maintenance Patient Safety Technology Planning Training Quality Back

Diagnostic

• Evaluation Criteria Continuing Education Risk management Technology Incorporation & Acquisition Equipment Control Legal Standards & Regulations Maintenance

Preventive Corrective

Documentation Administrative Technical

Safety

Diagnostic

• Excellence & Quality

Leadership: participation Planning: actions Social Concerns: attended Clients: necessities Information: use Personal: capacitating Processes: practice Results: defined

Diagnostic

• National Accreditation Organization Physical Projects Management Physical Infra-Structure Facilities Management Waste Management Medical Equipment Management Safety Management

• SWOT Strengthens - I Weakness - I Opportunities - O Threats - O

Back

Inventory

• Applied to medical equipment and facilities and accessories• State of Conservation• Age of Technological• Registers in organizations as FDA• Recall Evaluations• Value – US$

New Substitution

• Energy consumption• Technical & Administrative Data

Serial number Model Manufacturers Owner Contracts Warranty Technical Responsible

Back

Market Procurement

• Improve the knowledge of medical equipment market

• Improve the knowledge about the market of healthcare facilities Medical Equipment Fairs Mechanical Fairs Electrical & Electronic Fairs Specialized Magazines Technical Papers and Newspaper Internet groups Engineering and Maintenance Associations Benchmarking Back

Law, Standards and Regulations

• Municipal, State and Federal Laws Water Quality Electricity Supply HVAC Sterilization

• Standards NFPA, ANSI, ASHRAE, ISO, AAMI, JCAHO

• FDA Registers, Recalls

• ECRI – 1991 13,000 standards and guidelines

800 organizations and agencies (North America)

Back

Equipment Control

• Equipment history

• Maintenance procedures

• What are the expenses and costs related to maintenance? Are they high?

• How many hours of work?

• Who is the Responsible for the equipment?

• What are the maintenance indicators? MTBF MTTR Availability

Up Time Down Time

Back

Costs & Expenses Control

• Actions may be applied to the two principal types of costs and expenses, i.e.: Medical equipments Facilities

• In addition, actions may also be taken to recuperate money as related to: Review contracts

How to obtain more from the same contracts? Contractual compliance New contracts New technologies

• What kind of knowledge can be used to change the operational costs?

Back

Process Management

• How to manage a clinical engineering department using processes? Define how workers and patient can have

benefits from processes Create internal administrative procedures

To open work orders To prepare requisition of spare parts and consumables Register engineering activities to monitor performance

to achieve defined goals Issue management reports Evaluate medical equipment Register activities of maintenance

– Corrective & Preventive and others

Back

Risk Management

Back

• Helps hospital by to: Avoiding exposure risks Minimizing liability exposure Staying compliant with regulatory reporting

requirements

• JCAHO – PSTM Require minimum technology-based risks

management activities Recognition, evaluation and risks control

– Determination of technology-related incidents with followed-up steps to prevent recurrences

– Evaluation and documentation of the effectiveness of these steps

Contract Management

Back

• Helps hospital fully explore its contracts on: Service and Maintenance Electricity Medical gases Combustibles Warranties Acceptance tests Price of spare parts Timeframes Performance indicators evaluations

Personal Management

• Helps the hospital’s maintenance and engineering staff be: Involved Prepared to execute its functions Properly assigned to specific technical tasks Creative and solution-oriented Capacitated Focused on objectives and goals

Back

Technology Incorporation

Back

• Helps hospitals organize and take full advantage of technologies by: Analyzing needs and developing specifications Developing a vendor list Analyzing proposals and site planning Evaluating samples Selecting finalists Choosing the best proposal Controlling deliveries and installations Performing acceptance testing Final acceptance

Technology Incorporation

Back

• Healthcare is increasingly using TCO Initial price

Equipment, installation, initial training costs an support over the long-term

Long term costs On-going training, equipment service, supplies,

connectivity, up grades TCO

Acquisition costs Operation and maintenance costs

– Installation and Supplies

– Down time and Spare parts

– Test equipment tools

– Depreciation

Technology Incorporation

Back

• Clinical Team Requirements Ability of staff to assimilate the technology Medical staff satisfaction (short and long term) Impact on staffing (numbers, functions) Projected utilization On-going related supplies required Effect on healthcare delivery and results (convenience,

safety, or standard of care) Written, clinical practice guidelines Credentialed staff Clinical staff initial and ongoing training Effect on existing technology in the department or other

services/departments

Maintenance

• Preventive Documentation

Operational manual Operational maintenance Registers

Tools Adequate tools required Simulators and performance equipment tests Calibration certification of these equipments

• Corrective Service manual Training Functional principles

• Management of these processesBack

Patient Safety

• Safety is a condition of being safe from: Danger Injury Damage

• Regulations and Standards Air conditioning (tuberculosis) X-Ray dose Medical air quality Electrical current leakage Burns associated to electrosurgical units Alarms management

Back

Strategic Technology Planning

• Is an accountable, systematic approach to ensuring that cost-effective, efficacious, appropriate, and safe equipment is available to meet the demands of quality patient care, and allows an institution to remain competitive.

In house service management Management and analysis of external service providers Involvement in the equipment acquisition process Involvement in facility planning and design Reducing technology related incidents Training equipment users Reviewing equipment replacement needs On-going assessment of emerging technologies

Back

Training

Back

• Helps hospital to: Disseminate user’s manual an other information Process and track hazard, recall, and regulatory

data Provide initial and on-going personnel training Investigate equipment-related incidents,

hazards, and problems Include discovered error in staff training

programs Engineering and maintenance personal

Corrective: X-Ray machines and autoclaves Preventive: Almost all

Quality

• Quality of Care It means providing healthcare with the most

efficient use of resources

• Measuring quality of care Quality Assurance (QA) & Quality Improvement

(QI) are formal sets of activities to measure the quality of care

Selecting, monitoring, and applying corrective measures

Indicators Benchmarking

Back

Quality of Medical Technology

• Inventory Institution’s experience with that and similar

devices Equipment functions Industry standards (state of art) Age Current device condition

• Select a valid indicator to measure equipment’s clinical performance Availability Functionality Financial performance Safety

Back

Quality of Medical Technology

• Types of indicators Type and # of devices scheduled for service Total # and type of devices inspected Type and # of devices that failed an inspection Type and # of devices for which on-demand service was

requested Type and # of devices found with physical damage Type and # of devices for which user’s complaint was

registered, but no problem found Type and # of devices involved in accidents or incident Type and # of devices that were serviced more than one

time in any 7-day period Type and # of devices for which abnormal labor or

replacement parts were required

Back

Partial Clinical Engineering Management

• Refers to the partial application of the 16 programs previously mentioned Medical Equipments Hospital Installations - Facilities

• Using one program or a combination of specific programs to achieve an objective Inventory & Maintenance Market Procurement Patient Safety

Accident & Incident Investigation

Back

Technology Advisory Counseling

• Administrators Hospital that don’t have enough demand for an

engineering department but have important costs or needs to be supported

Legal standards and regulations, specific information on medical equipment and installations

• Engineers Lack of time Lack of knowledge or information

• Other Professionals Nurses, Infection control programs, occupational

safety professionalsBack

Accreditation Preparations

• Safety Inventory & documentation Equipment and installation performance

• Processes Maintenance processes management

Technical Administrative

• Results – Indicators Quality assurance and improvement indicators Administrative indicators Financial indicators

Back

Technology Audit & Action Plans

• Needs Including utilization rate of current equipment and of new

equipment

• Value of technology

• Technical validity an maturity

• Ability to assimilate and maintain technology

• Medical and other staff satisfaction

• Impact on staffing and healthcare delivery

• Impact on facilities and code compliance

• Impact on healthcare standards and quality

• Economic considerations (e.g., reimbursement, life-cycle cost)

Back

Technology Inventory

• Quantify and qualify equipments and installations Manufacturer Regulatory aspects related

Ionizing radiation Quality of water

Financial information Price Installation

Conservation conditions Reports

• Help hospitals to create performance indicators• Usually necessary to use accounting approach• Help hospitals to plan new investments

Back

Economic Rescue Plans

• Minimize costs, maximize short-run

• Immediate actions that are possible because: Easy to do but nobody has done it yet Have no additional costs to implement the

proposed solutions Logic and reason are the only resources that

need to be applied Simple knowledge is enough to resolve the

situation Economic resources are always scarce and

have to be used correctlyBack

Technology Incorporation Planning

• Prepurchase evaluations The level of information needed for each phase

depends on the acquisition

• Acquisition process strategies Cost of ownership Utilization information LCC Analysis Equipment evaluation The conditions of sale document Final choice Installations Acceptance testing

Back

Study of Case

• Medical de Limeira Medical gases pipelines

• Clínica Ana Rosa Air conditioning system

• Santa Casa de Limeira Oxygen generation

• In house maintenance Less difficult to more difficult activities

Back

Goals of Clinical Engineering

Maintenance - $ 20-30 %

Reduce investment levels by using correct planning techniques - $

10-20 %

Reducing the time for specifications 2-4 weeks

Adequate introduction of technology by using engineering techniques - $

10-90%

Reduce maintenance needs by training the users - $

10%

Medical Equipments (time or costs reduction)

Goals of Hospital Engineering

Reduce investment levels by using correct planning techniques - $

10-20%

Reduce the time needed for planning 30%

Use of Facilities

• Out-Patient Services 20%

• In-Patient Service 20%

• Diagnostic and Treatment Service 50%

Facilities (time or costs reduction)

Bibliography

• Clinical Engineering Handbook – Dyro, J. F. – Elsevier – 2004• Principles of Applied Biomedical Instrumentation – Geddes, L.

A.;Baker, L.E. – Wiley Interscience - 1989• Seguranca no Ambiente Hospitalar - Brito, L. F. M. – Senac – 2003• Meditation on Ethics in Clinical Engineering Practice – Dyro, J. F.,

IEEE Engineering in Medicine and Biology – 1988• Planning Hospital Medical Technology – David, Y.; Jahnke, E. G. –

IEEE Engineering in Medicine and Biology – 2004• Healthcare Technology Management – David, Y.; Judd, T. M. –

Spacelabs Medical – Medical Biophysical Measurement Book Series, 1993

• S.Woolhandler and D.U. Himmelstein, “The deteriorating administrative efficiency of the U.S. health care system,” New Eng. J. Med., vol. 324, pp. 1253-1258, 1991.

• J. Hay, S. Forrest, M. Goetghebeur, “Executive summary: Hospital costs in the US,” Blue Cross Blue Shield Association, October 15, 2001.

• Banta HD. Institute of Medicine, Assessing Medical Technology. Washington DC: National Academy Press; 1985.

Thanks Very Much !!!!Muchas Gracias !!!!

Obrigado !!!!

Lúcio Flávio de Magalhães Brito, CCElbrito@medicorp.com.brlb@engenhariaclinica.com+55-11-83351437+55-11-50855500