Many healthcare facilities are using service agreements to inform purchasing decisions and control costs during the purchasing process
Change has defined U.S. healthcare delivery in recent years. Now, after the most unprecedented presidential elections in U.S. history, it looks like it’s poised for even more change. Only time will tell what changes will occur, but one thing we expect to stay constant is an industry-wide effort to reduce costs.
Medical supplies and capital equipment expenditures remain one of the top targets for cost-cutting. As the hunt for savings continues, many facilities are using service agreements to inform their equipment purchasing decisions, control costs and strengthen the value of their capital equipment purchases.
Financial Advantages of Service Contracts
An equipment service contract can provide immense value. Although it is an added upfront investment, a service contract covers a wide range of repairs, part replacement, technology updates and preventive maintenance checks, providing more value than a warranty which only cover repairs resulting from manufacturer error. This not only helps control costs throughout the lifespan of the equipment but also helps ensure equipment is ready to perform.
A well-structured service agreement can help optimize your capital investments. It should contain insights that project your total cost of ownership, such as the frequency of preventive service checks, a timeline of expected technology updates as well as estimated replacement part costs. These factors can help improve spend forecast accuracy and better inform purchase decisions, particularly between similar pieces of equipment.
Like regular car tune-ups, routine equipment monitoring and service can catch trouble areas early, often before a small issue becomes a major one. When caught early, a simple repair can help hospitals avoid thousands of dollars in unexpected replacement costs.
Another fiscal bonus to having a service contract is that fast repairs help keep your facility running at peak efficiency. Everyone knows that when a major piece of equipment is down, it can have a big impact on uptime. With a service contract, repairs can be initiated with one phone call instead of researching repair providers, obtaining quotes and drawing up purchase orders. Some service providers can also provide loaner equipment to keep the facility running when an extended repair is necessary.
Additional Contract Benefits
According to an independent survey commissioned by Stryker, the majority of health systems prefer to purchase capital equipment that contains a service agreement. Controlling costs is the top driver, but there are others too.
Some providers offer hospital staff proper training for equipment care and cleaning. This can help maximize the equipment’s lifespan and bring peace of mind to physicians that the equipment is ready and will function properly when needed. When physicians have confidence in their equipment, they’re able to focus on patient care.
From a patient care perspective, faulty equipment can be a safety risk. On top of that, it can also cause significant procedure delays and cancelations, which may impact patient satisfaction and facility uptime.
Selecting an equipment service agreement at the point of purchase can not only play a role in helping to control costs, it can also help inform purchasing decisions and provide staff and patients confidence that your equipment is ready for the task ahead.
Mark Horvath is the vice president of global customer care for Stryker Corporation’s Instruments Division.