Health system avoids $18 million in projected capital expenditure over 10 years
Problem
The term cost avoidance describes any action that avoids having to incur future costs. The following ROI story shows how reviewing the capital budgeting process for imaging services with ECRI’s Predictive Replacement Planning services saved $18 million in capital equipment costs over 10 years, by streamlining purchasing and consolidating vendors.
ECRI partnered with a major health system consisting of 14 hospitals to conduct a Predictive Replacement Plan (PRP) and vendor standardization project for their imaging services. Their goal was to establish and maintain excellence in indwelling urinary catheter care.
Solution
ECRI started the project by engaging stakeholders, including imaging directors and radiologists, to determine their strategic plan for imaging services over the next 10 years. Their imaging inventory and current state of equipment was confirmed by conducting on-site meetings with pertinent stakeholders. The PRP was performed, and it detailed a recommended replacement strategy to be implemented over the next 10 years. This strategy was agreed upon by stakeholders and the project sponsor, the senior vice-president of supply chain.
ECRI proceeded to standardize all new purchases of imaging equipment by modality. When the project began, the client employed 17 different imaging vendors for nearly 700 devices across the system. ECRI conducted site visits and vendor showcases as needed, gathering input from administrators, physicians, and clinical staff.
Result
At the conclusion of the six-month project, ECRI was able to assist the client in decreasing the number of imaging vendors from 17 to 5 for major capital devices. The projected savings in capital expenditures over the next 10 years was estimated at $18 million. Alongside savings on capital expenditures, reductions in maintenance costs and enhancements in operational efficiencies were also expected.
Systems that can benefit from this type of project include:
- Systems that have recently undergone a merger
- Systems without a system director or vice president overseeing department directors with
large capital assets - Any hospital with multiple vendors being represented within a single modality or department