Clinical Asset Optimization

¶ … service cost, Devices, and Cost per bed Qualitative research design model Secondary Data Collection Research Validity and Reliability Across the U.S., hospitals are overspending millions each year on mobile assets that are not utilized effectively. Despite more than adequate inventories, equipment often is not available when needed. As a result, more units are bought, leased, or rented. And those units, in turn, get lost in the system and therefore, underutilized. In fact, the number of mobile devices per U.S.

hospital bed has increased 60% in the past 15 years while costs have doubled. Yet in most hospitals, the device utilization is approximately 45%. In the present study, the need for optimization and efficiency methods with clinical assets is investigated. Introduction Hospitals in U.S. have to incur increased expenses for acquisition of medical equipment utilized for their normal operations. The cost of equipment purchased is high and hospitals are required to maintain a backup inventory of the equipment in order to efficiently carry out their daily operations.

The hospitals utilize the equipment based on their needs and an increased number of equipment is either reported to be missing at times. The misuse, theft, wastage, and unavailability of medical equipment when required pose an economic challenge for these institutions. The result of all these issues can be interpreted in a huge annual loss, damaged reputation, and inefficacy in hospital operations. The primary research objective is to perform detailed analysis of the elements concerning high cost of hospital operations and present a framework for optimization of clinical assets.

The cost of operation is also increased through losses of clinical assets. The research will explore and identify the possible reasons for clinical asset losses. The secondary objective of the research is to provide a framework for rectifying the possible cures of the situation. The research will also focus its attention in terms of providing the strategy that can facilitate in handling hospital operations, inventory management, and security of clinical assets.

Finally the third objective of research is to propose recommendations for reduction of mishandling, theft, and misuse of the clinical resources. The usage of technology options will also be explored for clinical asset's traceability, allocation, and optimization (Pflaum, Meier, Muench, Fluegel, Gehrmann, Hupp, & Sedlmayr, 2010). The research will also be able to address clinical assets optimization issues in particularly in United States and generally in other parts of the world. Literature Review One common source of financial stress for hospital executives is equipment replacement.

While new technology is paramount to providing remarkable patient care, its cost can often be measured in the millions of dollars. With most healthcare delivery systems already feeling pushed when it comes to operational costs, the common request to reduce spends simply part of the budget. Across the U.S., hospitals are overspending millions each year on mobile assets that are not utilized effectively. Despite more than adequate inventories, equipment often is not available when needed. As a result, more units are bought, leased, or rented.

And those units, in turn, get lost in the system and therefore, underutilized. In the present paper, the need for optimization and efficiency methods with clinical assets are investigated. In a research Kelly (2009) Thompson Reuters, it suggests that there is anywhere from $75 billion - $100 billion of waste in healthcare due to what is labels as "Provider Inefficiency and Errors." Of that category it specifically describes inefficiencies in the utilization of equipment. In the same article by R.

Kelly, it referenced a May 2009 interview with NPR, Peter Orszag director of the White House Office of Management and Budget whom said, "Estimates suggest that the $700 billion a year in healthcare costs do not improve health outcomes. They occur because we pay for more care rather than better care.

We need to be moving towards a system in which doctors and hospitals have incentives to provide the care that makes you better, rather than the care that just results in more tests and more days in [the] hospital." According to Baretich (2004) the hospitals procure the devices and required clinical assets for usage in critical times. It is also noted that the procurement is made in advance and additional assets are kept in adequate amount in order to respond emergencies and smooth normal operations.

However when required these assets are hard to locate and as a result the normal operations of hospital are disrupted (Nabelsi, 2012). The major issues found during the review of literature highlights that significant loop holes are identified for assets management and allocations. The three major issues entailing to non-availability of assets are theft, misplacement of the assets, and efficient retrieval from inventory. It is required to effectively handle these issues for eliminating the problems of non-availability at required times.

The operations management in hospital particularly with respect to inventory control allocation of resources is the major reason for hyped costs of clinical assets. The optimized usage of the clinical assets is the second stage after rectifying the issues of inventory management and allocation of required assets. The management of hospitals required to implement effective procedures with the help of technology to identify the required assets (Christe, Rogers, & Cooney, 2010; Castro, Lefebvre, & Lefebvre, 2013).

It is also notable that issue, retrieval, and collection of clinical assets should be managed efficiently along with the regular stock take to eliminate the economic and operational damages caused due to inefficient handling of valuable clinical assets. It has been reported that mobile equipment such as IV pumps, ventilators, and physiological patient monitors, typicallymake up more than 95% of a hospital's clinical assets and said inventory represents thousands of devices and aninvestmentworthtens ofmillions of dollars.

Yet results of a recent study conducted by GE Healthcare disclose that the average utilizationofmobile devices is only 42%, meaning that more than half of the fleet is idle at any giventime. Despite the seeming oversupply, availability isinconsistent;for example, nursesspend anaverage of 21 minutes pershiftsearching forlost equipment.

According to the analysis in the article by Degraff (2013)the averagenumber ofmobile devices perstaffed bed increased62% onaverage between 1995 and 2010.Inthemid to late1990s,the typicalstaffed bedhad eight devices.Today, there are thirteen devices per bed.Thisfinding, coupledwithlowasset utilization, indicates a serious problem and need for asset intervention. With the number of devices increasing 62% over the 15-year period, the overall maintenance costs have risen even more, at a rate of 90%. Degraff (2013) suggests that an average 200-bed hospital had service and maintenance costs for the clinical devices increase from $331,200 to $628,800.

However, the actual per unit cost to service the equipment only increased approximately 19%. Synthesizing this data indicates the aforementioned discovery that there has been an influx of technology over the 15-year period, therefore, driving up operational costs. The attitude that manyhospitals believe, in erroris that it is lesscostly to address equipment availability issuesby leasing, renting, or buyingmore unitsratherthanoptimizinghowexisting devices aremanaged and distributed.This "purchase more" strategybackfires asthe additional equipmentsimplygets swallowed up in the system further drivingup costs.

Therefore, when it comes to assets, most hospitals don't have a maintenance cost problem, they have an excess inventory problem. This idea of an excess inventory problem can also be found in theHorblyuk (2013). In the graph below we can see that while the average cost of maintaining a device has seen a very moderate increase in cost, however the average number of devices per bed has increased significantly, driving the overall cost per bed to almost double in the last few years.

Figure: Average service cost, Devices, and Cost per bed Source: Horblyuk (2013) The data for the study on which the above graph is based were collected by the GE Healthcare Asset Management team in 1995-97 ("1995") and 2008-10 ("2010"), and included number of staffed beds and mobile device inventory count. In the article Yao (2012) on RFID benefits and barriers, it suggests another area for addressing the inefficiencies in clinical assets, that of theft loss.

The article estimates that the theft of equipment and supplies cost hospitals $4,000 for bed each year, which represents a potential loss of $3.9 billion annually. The previous articles did not mention theft lost and its significant impact on overall costs. In a study performed at Bon Secours Health System in Richmond, VA, the health system realized a savings of more than $5 million annually through reductions in equipment costs since adopting an RFID system.

Eighty percent of Bon Secours' savings were attributed to better utilization, which resulted in a reduction in unnecessary equipment. For example, the St. Mary's campus was able to reduce its IV pump inventory from 520 to 392 - a 25% reduction. This reduction also improved the facility's utilization rate. Prior to its use of RFID technology, St. Mary's was at approximately 60% utilization of IV pumps. After the implementation, it was raised to 92%.

In order to address this excess inventory challenge hospital systems need an integrated strategy that drives productivity across the whole process.From making sure maintenances and repairs are performed efficiently and that every device is tracked, monitored and managed to maximize utilization throughout the useful life of the asset and ideally improving care delivery, patient and staff satisfaction.

To answer the question around execution and where should an institution start with a clinical optimization program, Degraff (2013) suggests a five-step process which includes, conducting a physical inventory, optimizing workflow processes, considering deployment of an asset tracking technology such as RFID, auditing all service related costs, and developing a device replacement strategy.

By redesigning distribution and management processes and, in some cases, adding real- time location technologies, hospitals are able to reduce inventory, lower or eliminate rental and lease expenditures, and decrease maintenance and service costs -- all of which can amount to hundreds of thousands, and in some cases millions of dollars in savings each year. In summary, the U.S.

healthcare system is literally "wasting away." To ensure their own long-term viability, individual healthcare organizations need to look in the mirror and identify operational inefficiencies and activate strategies to address by ultimately identifying -- and correcting operational factors that contribute cost, not value, to care delivery. Research Methodology: The basic research process involves four stages including the formulation, execution, analytical and decision making process (Mayers, 2013). The research methodology elaborates the general and current study related aspects of research methods and research design.

The population and sample is also described with its relevance for current research. Data collection in general is relevant for conducting research and as a result the methods used for collection of primary and secondary data are also explained in relevance with the proposal. The theoretical assumption, method of research, data collection methods (Qualitative), approach for collecting the data are also addressed throughout the research design for current work. The model for the qualitative research is illustrated in the figure below.

Figure: Qualitative research design model Source: Myers (2013) Written Approach Data Analysis Approach Data Collection Technique Research Method Philosophical Assumptions Research Design: The current study is designed to take a qualitative approach for identification of economic impact in hospital assets optimization. The interpretive research is taking a philosophical assumption of exploration of the problem statement and to an extent the results of such inefficacy for hospitals.

The action research method is also selected for the discussed study as the approach enables the exploration of considered subject in terms of positive, interpretive and critical. The method of data collection used for the research is also aligned with the qualitative research paradigm enabling the use of documents and participation observations. Population: The large number of hospitals and clinics specifically operating in United States can benefit from the research findings in terms of optimizing their clinical assets (Stantchev, Schulz, Hoang, & Ratchinski, 2008).

Moreover the hospitals facing challenges in terms of increased cost of operations can also use the results of the study in order to identify the sources of leakages and misuse of their assets. The healthcare units operating outside that are facing similar conditions can also take advantage of the study. Therefore the medium to large scale hospitals are considered as the population of current study.

Method of Data Collection: The methods used for data collection are relevant for consideration in order to elaborate the conformity with the research design and selected approach to address the problem. There are various methods that are used by the researchers to collect data in qualitative paradigm of research. It is noted that medium to large scale hospitals in United States are relevant for their consideration in reducing the amount of their operating cost and increasing clinical assets optimization.

The method used for collection of data is predominantly dependent on the research method, the topic of research, and data availability. The current research particularly uses the data collection method of using documents to achieve the desired objectives. The sources used for data collection are particularly important for a research. These methods are elaborated below. Secondary Data Collection: The research is focused to take an approach for collecting and using secondary data.

The data published in various journals, books, news articles, and peer reviewed repots will be used as a basis to interpret and explore the economic impact of optimizing the clinical assets. The comparison of present and updated data along with the previous data will enable the researcher to investigate the changes occurred over time. The interpretation of changes will further enhance the development of requisite for eliminating the variance and creating an applicable model for results improvement.

Ethical Consideration: According to Munhall (2011) ethical considerations are highly important for research that involves an impact on the organizations and later transferred for relevance to the individuals. The ethical aspects of the research should be highlighted and noted prior to start of the research. The unguarded research is terms of ethics is particularly leading towards a dishonesty and earning bad reputation not only in terms of the personal integrity but the institutional issues are also underlined in such respect.

The ethical process further requires explanation of the research process in order to the public to understand the relevance of due course taken to reach certain results. The current research is also conducted through following the limitations of personal, institutional, and organizational ethics. The research is based on the qualitative paradigm and uses the secondary data analysis as its approach. In such respect the most concerned ethical consideration is with respect to interpretation and presentation of the data as well as observations is made in the relevant perspective.

The misquoting of facts and data is highly unethical and it can distort the research findings, therefore it should be avoided at all costs. Secondly the research should follow the academic and ethical requirements to appropriately reference the selected material and provide detailed reference list corresponding to the in-text citations. The literature review in particular and other sections also should adhere to the ethical considerations.

Furthermore the material produced in the research requiring approval form the authors and intellectual property rights holders is also based on the prior permission sought by the researcher. Their consent is the basis of producing, using, and interpreting such material in the present research. In case the use of primary sources is required and the requirement is established it is noted that the names and identities are not produced in the research in order to fulfill the ethical consideration.

Research Validity and Reliability: The reliability and validity of the research is essential to authenticate and apply the findings in the real world. The resources required to handle the validity and reliability are significantly different in various aspects. The major difference on validity and reliability is created through the approach taken in order to conduct the study. The quality of the research in the positive case studies is particular in definition as validity and reliability.

It further requires the case to meet the required standards and as a result it can confirm the criterion for applicability with quality content (Mayer, 2013). On the other hand the interpretive case studies regard quality of the research in the terms of plausibility and overall argument management. Results: The results of the research will be analyzed on the basis of review of qualitative data. The qualitative data is reviewed in relation to the above mentioned strategy defined in the relevant sections.

The results interpretation will also focus on exploring the issues, the extent to which it is applicable in relation to the economic impact for hospitals (Kaplan, 2004). The tentative amount spent on procurement of the equipment along with the amount of actual usage is also extracted from the qualitative data analysis. The major parts of the results section is focused to highlight and rank the issues currently being faced by the hospitals in terms of their clinical assets.

It is also significant to note that hospitals are particularly incurring a large amount of losses arising from their inefficient polices of assets procurement and allocation. The efficient procurement can be understood in terms of their current viability through purchase, lease, or rental basis. The list of equipment used and its frequency as well as the value can provide a useful insight and enable the researcher to suggest the management for selecting the best possible option for procurement.

It is also important for hospital's management to understand the supplier's operating procedures through which they provide required services. The amount of loss incurred in each hospital with respect to the clinical assets waste should be retrieved through the available data and analyzed with respect to their underlying reasons. The management should have the capability to address these issues through efficient handling as well as the usage of other techniques for optimizing the usage.

The losses incurred through losses in relation to clinical assets should be addressed through quality initiatives and defining clear benchmarks for performance improvement. The clinical asset's optimal usage is one of the key factors in improving the cost of operations and allowing the hospitals to operate efficiently without having to minimize their cost through employee reduction and increase in cost of providing healthcare facilities. The usage of such techniques can widely affect the viability of hospital operations as well as cause additional burden on government and insurance agencies.

The government, insurance agencies, and boards of hospital management can also provide useful guidelines for optimizing clinical assets. The effective usage of resources along with the operational optimization is a key to success in major industry-based solutions. Hospital management is slightly different as the primary attention is to maintain the adequate amount of resources for responding to any emergency. Having agreed with the argument it is also required to efficiently consume resources for being operationally viable in such competitive environment.

The melting economic conditions and heavy expenses of hospital operations should carefully look for solutions providing best possible results in a given scenario. The misuse and mishandling of clinical assets is one of the major issues that have to be addressed. The major misuse can be associated with the equipment that is misplaced during allocation and it is not retrieved after the requirement is fulfilled. The equipment is also used for renting purposes as well as leased to other institutes.

The requirement of 18 devices per bed has increased the vigilance required to place, use, and efficiently retrieve the equipment after usage. The mishandling of equipment is related to the theft and misplacement in various cases. The theft of such valuable equipment should be addressed with particular attention and there are multiple procedures that can be adopted along with the technology-based solutions to safeguard against theft of the clinical assets. The hospitals incur increased expenses due to a large number of required devices per bed.

These devices can range from daily use to intensive and emergency usage. The equipment and devices are categorized as clinical assets and a hefty amount is spent on procurement. The viability of hospital operations is largely damaged due to inefficient and incompetent handing of the assets. The losses incurred due to theft, misplacement, and mishandling amount up to a large percentage of total hospital's equipment and inventory requirements. The economic loss can be cured through efficient management and operational procedures.

It is also observed that technology can provide a cost efficient and effective solution for addressing these issues. The hospitals in United Sates are reported to use a large number of supplies, equipment, and other devices to create an ease in the provision of healthcare facilities. The review of literature has significantly compared the use of devices per bed today and in previous times. The devices used in these days are almost double than they were used in late 1990s.

The advancement in technology has also affected usage of equipment and an addition is observed. However it such advancements in the operational system are also required to curtail the additional procurement (more than the required numbers) as well as their assigning and usage in operations. Discussion: The discussion of the research rests on the basis of discussed issues, highlighted problems, and proposed solution within the research. The problem significantly.