The 5 Key Components of Total Cost of Ownership (TCO) – Part 1
In a highly competitive healthcare industry, organizations and facilities continually search for creative ways to lower their operating costs. According to Modern Healthcare, some of the biggest expenses include equipment spending. It is estimated that hospitals spend roughly $93 billion per year on medical equipment life-cycle costs. Knowing that equipment spending is unavoidable, managing the Total Cost of Ownership or (TCO) of all equipment can positively impact the bottom line and assist a facility in turning profits. TCO is the financial evaluation of the life-cycle of a capital purchase such as an MRI or CT Scanner. Direct and indirect costs in addition to environmental and social costs are taken in account when outlining the TCO. In this blog, we will consider the five key components when determining the Total Cost of Ownership for your medical or lab equipment.
- Acquisition – Acquisition costs begin from the start of researching the product, to the cost of the purchase order, shipping and warehousing, delivery and setup and the final clean-up. These costs can increase tremendously when considering additional space and weight support that may be needed to house the new equipment. Ventilation or additional electrical supply may also need to be added. Lastly and depending on the equipment, software and IT support will be needed driving up the overall acquisition costs.
- Operation – The operation costs for a piece of equipment includes expenses for electrical and labor costs associated with the operator of the equipment. It is important to note that this cost will also increase over time as labor costs consistently rise year after year. Other operation expenses include environmental impact costs including medical waste disposal and clean up, for certain pieces of equipment. Healthcare organizations may also be subject to charges for “environmental compliance” reporting.
- Maintenance – The annual medical equipment maintenance and management spend is estimated to be about 1% of a hospitals total annual budget. That can be a significant expense just to maintain equipment to ensure quality of care is delivered to patients every single day. Organizations can reduce their TCO and uncover hidden savings with an Equipment Maintenance Management Program (EMMP). Original Equipment Manufacturer (OEM) traditionally offer a higher cost option for equipment maintenance.
However, with Remi, you get the following benefits:
- Consolidation. Multiple equipment maintenance agreements are consolidated into one agreement with one number to call for service.
- Savings. Organizations can save up to 25% over traditional maintenance costs.
- Budgeting. Organizations can budget annually for equipment maintenance and easily project equipment maintenance costs making estimating total cost of ownership even easier.
- Customer Support. With Remi as a partner, you also get an organization devoted to customer-centricity where 9 out of 10 customers prefer Remi for their equipment maintenance management and agree they had a positive experience during a service delivery call.