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Monday, April 10, 2017

3 Ways Hospitals Can Drive Immediate Medical Equipment Savings After a Merger or Acquisition

As the healthcare landscape sits under a cloud of uncertainty - and looks to remain so for the foreseeable future - more and more hospitals are joining forces, merging as margins tighten and as competitive leverage in insurance negotiations grows tighter. In the first six months alone of 2016, Kaufman Hall found an increase in mergers and acquisitions of 6.1% from the year before. Just this month, PinnacleHealth announced its acquisition of four hospitals and partnership with University of Pittsburgh Medical Center (UPMC).

There’s much advantage to be found in such moves, to be sure, but once they take place, there’s often a mad rush to eliminate excess cost and inefficiencies as soon as possible. Budget cuts and layoffs are often first on the list...and these changes don’t tend to have the best aftertastes. But what if we told you there were other hidden areas of cost savings that didn’t involve cutting anything?

In our experience, many hospitals tend to overlook an opportunity to create incremental and recurring savings from these deals. It's called initiating a medical equipment standardization strategy, and it can quite literally save your hospital millions of dollars during a merger or acquisition.

Fleet standardization tends to be the most overlooked activity in a hospital merger or acquisition. This is partially because, while it offers significant savings opportunities, it is also incredibly difficult. The accurate information you need to make smart decisions about inventory and service contracts is hard to find, as is figuring out the value and what to do with all the underutilized equipment that turns up in these deals.

If your organization is undergoing a merger or acquisition, here are 3 great tips to help you uncover those savings:

1.     Leverage Spot Market Pricing to Supplement Your Fleet – Most health systems choose to standardize certain types of equipment with one manufacturer to streamline costs and make it easy for staff.  Look to take advantage of “spot” market prices and special discounts or promotions; a well-timed supplemental purchase of equipment can save as much as 20% compared to what you would otherwise have paid.  Before you buy, make sure to benchmark any quotes you receive.

2.     Identify and Recover Cash Value From Underutilized Assets – With many hospital mergers or acquisitions, there can be duplicate or overlapping services that can often result in a surplus of clinical assets.  Many of these assets may be relatively new and in good condition, but don’t let the temptation of putting them aside for a “rainy day” win you over.  The best time to recover maximum value for clinical assets is at the time when you stop using them!  A systematic utilization review can enable you to identify the potential market value for resale, trade-in or continued use. 

3.     Stretch Capital Budgets By Purchasing Pre-owned Equipment – There is rarely enough capital in most hospital budgets to meet all the needs and “wish list” requests from physicians and staff.  Mergers often present great opportunities to introduce new savings strategies and if your hospital doesn’t currently consider pre-owned equipment as a way to save, maybe now is the time.  You can often find quality, pre-owned equipment at up to 40% less than the cost of new without impacting reimbursement.  An effective clinical engineering team or third party service provider can frequently provide reliable services for many different pre-owned systems and help keep equipment running reliably for many years.

We will continue to use this blog as a venue to share other insights and savings ideas related to the medical equipment lifecycle. As always, please don’t hesitate to share your own thoughts or suggest other topics of discussion. It would be great to hear from you!

Monday, April 3, 2017

Learning From How The Masters Manage Tradition and Change

It’s April and if you’re a golfer, it’s Masters Week!

I’ve never been to Augusta National or the Masters, but my friends who have describe a tradition and event unlike any other. The azaleas in bloom, the birds singing, the verdant green of the fairways, the Southern charm, pimento cheese sandwiches that cost $1.50 and beer that costs $3.00 (our local high-school events charge at least triple these prices!), the manual scoreboard, prohibition of electric vacuum cleaners (too noisy)—it all adds up to the mystique of an historic golf course and event.

But as much as people may think there is a timelessness to the Masters, apparently no major golf tournament has changed as much in the last couple decades. The golf course that Tiger Woods tamed in 1997 has dramatically changed. The length of the course has increased (by over 450 yards - the equivalent of adding another par 4 hole to the course) and the fairways are much narrower. The greens are now almost twice as fast, as measured by a device called a Stimpmeter (7.9 vs 13.5 - like putting on a marble floor!)

What’s even more interesting is just how much new technology and reliance on information is employed by Augusta National. There is a state-of-the-art irrigation system that feeds data to a custom-made, on-site weather station. The greens are regulated by unique subterranean cooling. There are miles of high-definition fiber optic cables underneath the fairways. Lasers are set up on each fairway and greens can track the position of a player’s ball; this data lets viewers see on an aerial map what’s going on.  To improve the TV viewer’s digital experience, the Masters’ website uses multiple data centers and even employs predictive analytics.

This interesting mix of tradition and change is something many of you have told us you struggle with.  Your organizations want certain levels of traditions maintained and want to use the same budget processes every year.  But yet, there is also the need to keep up with the challenges of the times and to employ the most effective resources available.   Every capital budget cycle brings new challenges – new technology to be evaluated, new pricing to be negotiated, interoperability and software requirements that need clarification.

As you think about how to deal with this, let us know how we can help you.  We have always worked with clients to balance the need for maintaining traditions while also using new information, new techniques, and new approaches to accommodate the need to change.  For example, one of our clients identifies a couple of departments every year where he provides new information that can help them with their decision-making, often resulting in savings for their departments. Needless to say, he continues to deepen his relationships with his internal clients every year.

Like the stewards of the Masters, there is a way to balance Tradition and Change in such a fashion that continues to deliver outstanding results!

Monday, March 27, 2017

Benchmarking 2.0®: The Miga Mantra

Late last year, I penned a post for Becker’s Hospital Review that reflects the challenges facing our hospital clients. Hospital leaders, now more than ever, have a critical need to attack the many hidden cost inefficiencies lurking in their organizations. The medical equipment lifecycle remains one of the key untapped areas of cost savings, but how do these hospitals go about tackling it? By taking a Benchmarking 2.0® approach. Read the original post here and I’ve also included an excerpt below.

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The medical equipment lifecycle (MELC) - all the activities related to the purchase, service, and disposition of medical equipment and technology – presents some of the most complex and murky challenges for hospitals trying to reduce their spending. Due to a lack of accurate information, internal resources, bandwidth, and specialized expertise, even the most diligent hospitals are missing savings of as much as 12-16% of their entire MELC costs – or $12,000 per bed per year. That’s why we at Miga Solutions have developed a methodology that directly attacks these cost inefficiencies in the medical equipment lifecycle. We call it Benchmarking 2.0® and it has two simple concepts at its core: Know the Right Price and Get the Right Price.

Know the Right Price
In order to make smarter, more confident buying decisions, you need the most complete, currently updated, and relevant information available. You need a robust database of sources, models, and manufacturers at your fingertips; information not just on new equipment but also on used equipment, service contracts, repair costs, and trade-ins. The first-generation services you’re likely using rely mainly on hospital-reported data, which is both a tiny slice of the most relevant, actionable data and almost always fails to capture the truly best prices available in the market. A deeper, more nuanced well of information is the pricing data and insights hospitals need to know the right price. 

Get the Right Price
Knowing the right price doesn’t mean much if you can’t actually get that price from a supplier. First-generation solutions don’t provide information and support services across the entire lifecycle that are critical to actually realizing the best possible price. This is one of the most important and unique aspects of the Benchmarking 2.0® methodology - combining accurate and comprehensive pricing data with expert and specialized services required to get the results you need. When your benchmarking provider also helps with acquisition, finding service options, and donating and recycling equipment, they go beyond being just a pricing resource. Their myriad connections across the marketplace mean easier access to the most qualified suppliers, unbiased expert negotiation support, and experienced insights into purchasing strategies, service contract management and disposition solutions that you may not have access to.

Friday, March 24, 2017

March Madness and the Power of Information

It’s March again and our NCAA bracket office-pool reminded me about an article I read about “sharps” and “squares.”  Huh?  What on earth could this have to do with making decisions about medical equipment costs? Let me explain.

In betting parlance, “sharps” are the successful bettors and “squares” are the majority of casual bettors.  The article went on to say that most people think that sharps are people with inside information, foolproof systems or more knowledge than most.  It just isn’t true.  The major difference between a sharp and a square is the amount of time and effort sharps put into their decisions.  Casual bettors – like me – look at a couple of stats, read an article and pick the team they like better.  But the sharps make a commitment to do work that allows them to understand what really matters and get the right information to know what to do and what not to do.

For example, while casual bettors are concerned about who they think is going to win, sharps couldn’t care less about this.  What they care about is value – the price they can make the bet on that gets them the most return (like betting against what they have analyzed to be a bad spread).

When it comes to healthcare equipment buying decisions, I’m surprised at how many people I know exhibit “square” behavior.  Significant amounts of dollars are spent “betting” on decisions with very limited and often unreliable information.  No wonder everybody complains about how difficult it is to negotiate with equipment manufacturers and how they end up paying more than they think they should.

But it doesn’t have to be so.  Sharp buyers can find the right information in all those numbers. The right information can level the playing field when negotiating.  It provides transparency to all stakeholders, curtails inefficiency, and - perhaps most importantly in these uncertain times - reveals previously undiscovered value and savings.   Just like sharps, one just has to be committed to finding value and the right information.

This blog is about getting the right information to be a “sharper” healthcare executive when it comes to equipment spending.  We’ll be inviting guest authors and many readers like you to share your perspectives and participate in the dialogue.  We hope you visit here every Monday so we can share our adventures together.

Meanwhile, as a Northwestern alum, I was excited about their first round win... Based on all the information I’ve seen, I’m still betting on UNC to win the whole thing!

Monday, June 13, 2016

3 Proven Ways to Save on Capital Equipment by Creating Competition With Your Suppliers – Educational Webinar

Do you ever feel like you don’t have much negotiation leverage with capital equipment suppliers? There are factors that can make it difficult for hospitals to create a genuine competitive environment, including the rush to get equipment bought, enterprise-wide initiatives to standardize equipment fleets (or software platforms) to one manufacturer, and physician preference, among others. If any of this sounds familiar, this webinar can help.

Miga's free 30-minute educational webinar will highlight three key proven strategies for creating competition with your capital equipment suppliers and increasing your leverage at the negotiating table. A missed opportunity to create competition with suppliers simply means you’ll pay 12-16% more than necessary.  

This is the latest installment in Miga's monthly educational webinar series showcasing proven savings strategies for lowering costs across the medical equipment lifecycle.

Miga has more than ten years of experience helping leading hospitals drive 12-16% incremental savings across their entire medical equipment lifecycle through our Benchmarking 2.0® solution, EquipmentValue Management System® (EVMS). We look forward to sharing our knowledge with you and answering your questions.

Don't miss out on learning about three proven strategies for creating competition with your capital equipment suppliers that will save you money and make your negotiations most effective. Reserve your spot at this free webinar now by clicking on below. Please feel free to contact us at 866-511-MIGA (6442) if you have any questions.


We hope you can join us.