A Synopsis of Findings from Four Selected Active Equipment Management (AEM) Projects

Active Equipment Management:
A Case Study

A synopsis of findings from four selected Active Equipment Management (AEM) projects

Active Equipment Management is a set of financial engineering and lean process techniques that holistically transforms the way a Trust plans for, funds, acquires, uses, decontaminates and replaces its portable medical equipment. This paper describes four projects carried out in healthcare service delivery organisations in the UK over the past few months.

Each of the organisations – which were typical acute Trusts – was able to identify significant and recurrent savings:

Study Outcomes
Trust A / Trust B / Trust C / Trust D
Identified annual cost reductions / £1.6 million / £1.2 million / £1.1 million / £0.6 million
Initial solution costs / £275,000 / £200,000 / £260,000 / £320,000
Annual running costs / £360,000 / £350,000 / £200,000 / £260,000
Annual net recurrent savings / £1.24 million / £850,000 / £900,000 / £340,000

In each case, the savings arise from the identification and elimination of waste across the whole spectrum of a Trust’s equipment-related activities.

Each Trustis quite different in terms of its location, size and activity.

Acute Trust Profiles
Trust A / Trust B / Trust C / Trust D
Beds / 700 / 600 / 400 / 200
Location / Medium sized industrial town in the Midlands / Medium sized commercial town in the Southeast / Small Northern mixed industrial/rural town / Island community
Items of portable medical equipment / 6,000 / 8,000 / 5,000 / 5,000
Equipment Value / £21 million / £20 million / £15 million / £14 million
Av. equipment age / 7 years / 6 years / 10 years / 6 years
Annual replacement expenditure / £2.5 million / £1.7 million / £0.6 million / £1 million
Av. bed occupancy / 80% / 80% / 70% / 50%

The table above demonstrates that the annual savings are very roughly proportional to bed capacity. As described above, those savings are realised by eliminating waste, manifesting primarily as surplus equipment capacity. The following table illustrates how each Trust was operating a very substantial surplus of equipment, much of it standing idle in wards and corridors for most of the time.

Equipment Performance Ratios
Trust A / Trust B / Trust C / Trust D
Items per patient / 11 / 17 / 18 / 50
Equipment value per patient / £38,000 / £42,000 / £54,000 / £140,000
Equipment utilisation rate / 28% / 38% / 39% / 20%

The conclusions outlined above were arrived at as a result of an exhaustive process, sponsored at executive level (e.g. Nursing Director, Finance Director), which involved:

• Analysis of Trust data (e.g. activity, inventory, expenditure, SUI)
• Interviews with around eighty key staff who were either users of equipment or had equipment-related roles
• Survey of equipment utilisation (regular observations in all areas using equipment over five days)

In addition to the very substantial tangible financial benefits described above, the organisations concerned also benefitted from risk reductions and service quality improvements:

• Risk reductions included the reduction of the risk of infection carried by contaminated equipment to both staff and patients and the risk of accidents caused by cluttered patient and public areas.
• Service quality improvements included the improvement in patient experience delivered by an increase in patient contact time on the part of clinicians and by a reduction in cluttered patient areas.

AEM achieves the above outcomes by rationalising the way clinical teams access portable medical equipment. Current practices throughout the NHS build inefficiencies into the system which inevitably depress utilisation thereby inflating costs. AEM is able to deliver service quality improvements, risk reductions and cost reductions simply by eradicating wasteful duplication.

As you might expect, AEM is not a quick or easy solution since it requires revision of more than 20 business processes impacting upon multiple functions and departments. To be successful it requires investment, executive sponsorship, specialised skills,and purpose-designed techniques and technology. Fortunately, Pentagon Healthcare Limited has already done most of the really hard work. You can benefit from our investment and experience over the past 3 years simply by inviting us in to do it for you. The best news of all is that you can do it at zero net cost to your organisation. Email or call him on 07868 435883.

Active Equipment Management improves service quality, lowers risk and reduces costsPage 1

© Pentagon Healthcare Limited 2009