In this business profile, Bill Slama and Ken Deakyne of Grant Thornton LLP Business Consulting and Technology and Technology Solutions Services discuss the importance of enterprise asset management. Grant Thornton LLP is a sponsor of the HFMA Large System Controllers Council.

What is enterprise asset management? Why is it important to the healthcare industry?

Bill SlamaEnterprise Asset Management (EAM) is a program that manages the life cycle of physical assets using a systematic process for cost-effectively planning, acquiring, deploying, operating, maintaining, and dispositioning. It involves assessing an organization’s departments, facilities, and business units to standardize management functions and apply global management strategies across the enterprise.a 

With the consolidation of hospitals into larger health systems, organizations are finding their asset management programs don’t align—the policies, processes, and supporting technologies are all different. Disparate programs don’t allow health systems to take advantage of enterprise efficiencies, purchasing power, or best practices. However, by standardizing operations and consolidating data, organizations can optimize their asset management programs. This helps contribute to improved patient care, cost containment, and the identification of operational efficiencies.

A foundational principle when designing an EAM program is standardization. If hospitals follow the same processes and use the same technologies across the enterprise, there is a high degree of predictability, which allows for efficient and cost-effective management of assets. Standardization also lets organizations leverage analytics to provide key insights into asset management, identify improvement opportunities, and enable better decision making. It allows hospitals to define the proper way to execute clinical, financial, and administrative tasks, as well as provide training, and maintain compliance.

What are key indicators of ineffective asset management?

There are several metrics that can reveal a problem or improvement opportunity:
  • Poor utilization of assets: Is the organization getting the most out of its assets?
  • Increased annual spend: If an organization has $3 billion in assets and every year it continues to spend $100 million more, this is a red flag. Organizations should know why they are spending the additional money and have justification for the expense.
  • Excessive overtime: This may indicate staffing inconsistencies or inefficiencies.
  • Inability to locate assets: This may indicate sub-par tracking mechanisms.
  • High total cost of ownership: Does the asset have poor reliability? Is the organization over-maintaining the asset when it should be replaced?
  • Inability to gain useful insights from data: This often happens when there is no single source of truth for asset data. In these cases, disparate data systems lead to uninformed business decisions.

What are the common missteps and areas of opportunity in EAM?

Organizations often fail to understand that an asset has a life cycle, and this life cycle begins with the planning stage, before making any acquisitions. For a major capital spend, this entails analyzing what the best asset is for the entity and why. Unfortunately, too many health systems believe the asset life cycle starts with maintenance. Although this is a key part, it is not the initial step. Figure 1 illustrates the phases that comprise the asset management life cycle.

Ken DeakyneAdditionally, organizations tend to overlook the importance of redeploying assets across the enterprise to avoid new spend altogether. It’s important for organizations to understand that just because an asset no longer adds value at “Hospital A” doesn’t mean it can’t be repurposed and redeployed at “Hospital B.” For example, smaller facilities that may not have the budget to purchase new high-dollar items, such as MRIs, specialty beds, or surgical robots, can often be the beneficiaries of “slightly used” equipment that is still functioning at full capacity, and will provide that hospital with the capabilities to provide care they otherwise would have been unable to deliver.

Organizations also tend to overlook key stakeholders in the asset life cycle. There are many resources involved in planning for, procuring, installing, using, and maintaining an asset. Depending on the item, these can include the human resources department (that ensures employees with proper skill sets are hired); doctors and nurses who use the equipment; clinical engineers who install and service items; and information technology staff who ensure devices are integrated appropriately. To be effective, health systems must understand who has a stake in EAM, involve them in the process, and meet their expectations.

Managing the Asset Life Cycle Reduces Total Cost of Ownership

Exhibit 1

Another common misstep relates to the mismanagement of networked assets that contain protected health information. Assets that are used to treat patients are operated by clinicians and maintained by clinical engineering; critical patches, updates or upgrades to hardware or firmware on those assets should be maintained by Information Services. As self-reporting devices (e.g., devices with the ability to communicate make/model/location data back to the organization through the IoT) begin to emerge, these types of issues can be remedied. However, due to cost and infrastructure constraints, the number of self-reporting devices in present-day facilities makes up only a fraction of the total asset inventory. As a result, oftentimes these networked devices slip through the cracks because an established update procedure does not exist. If they’re not maintained properly, these devices can represent a significant cybersecurity risk to the organization.

Organizations also sometimes fail to look at performance history before replacing an asset. Without engaging in this type of review, the entity might not be purchasing the optimal item. For example, you wouldn’t continue to buy a certain car model if you’ve had repeated problems with that model previously. Similarly, an organization shouldn’t purchase the same MRI if it has experienced significant maintenance issues with that model in the past.

When an asset management program is not appropriately managed, it also can lead to departmental “hoarding.” This stems from a fear the asset will not be available to treat a patient when it’s needed and usually occurs after repeated negative experiences. Unfortunately, when staff hoard equipment and remove it from the management life cycle, the equipment may not receive the proper maintenance or be optimally utilized, which could result in both financial and patient safety problems.

How does Grant Thornton help organizations realize better EAM?

We begin by identifying the stakeholders and understanding who should be involved in improving the asset management life cycle. These individuals or departments are the in-house experts who deal with asset management issues on a day-to-day basis and are in the best position to realize and adopt change. Once we identify these, we assess where the organization is within our asset maturity model (see exhibit below). We perform a detailed risk assessment, looking at financial, operational, and patient safety gaps. We then develop strategies to address risks and close identified gaps. This includes working with stakeholders to gather business requirements, defining strategy, and putting a roadmap together that engages the organization in long-term performance improvement.

Streamline Work Processes

Exhibit 2

What does a successful EAM program look like?

Ultimately, organizations should aim to have the “right asset at the right place at the right time.” This will ensure stakeholders can fully utilize their assets and prevent waste in the ordering and maintenance processes. Health systems also should have established methodologies for mitigating risks and engaging in performance improvement.

There are countless assets in a hospital, including everything from clinical equipment to supplies to real estate. When an organization has the right people, processes, and data in place, it can realize high-functioning asset management, which not only serves the entity financially but supports the delivery of safe and reliable patient care.

About Grant Thornton

Our clients take advantage of our collective knowledge, gained from long experience in and with healthcare organizations. Grant Thornton LLP Health Care professionals across the country personally deliver solutions and operational improvements to meet patient care, compliance, and business needs.

Footnotes

a. Technopedia https://www.techopedia.com/definition/13883/enterprise-asset-management-eam (Accessed October 6, 2017).


Grant ThorntonContent for this Business Profile is supplied by Grant Thornton LLP. This published piece is provided for advertisement purposes. HFMA does not endorse the published material or warrant or guarantee its accuracy. The statements and opinions of those profiled are those of the individual and not those of HFMA. References to commercial manufacturers, vendors, products, or services that appear do not constitute endorsement by HFMA.   

Publication Date: Friday, December 01, 2017