Why it pays to plan your equipment replacement

By Jonathan Wickens, Commercial Director at Lifecycle Management Group

With a huge equipment deficit, there is never enough capital to meet the demand to refresh equipment. Departments are forced to sweat their assets beyond their planned life and make do and mend is the order of the day. Against this backdrop, and the unlikely event that the equipment you aspire to will be delivered, some in the NHS may question the wisdom of spending time and effort on developing and maintaining an equipment replacement plan.

There is no doubt that sticking to a fixed medium or long-term plan, however well thought through, is nigh on impossible in the NHS, there is simply too much ongoing change.  But adopting an effective and dynamic plan is the vital first step towards bridging the equipment deficit, squeezing more from your budgets and even getting to the front of the queue for capital to refresh your equipment.  Trying to maximise resources without a plan is like setting out for a remote destination without the help of a map.

Joined-up decisions

For NHS Trusts, effective replacement planning allows joined-up decisions which can have a really significant impact on costs:

Value. It’s a simple fact that planned decisions deliver better value. Without formal planning, you’re just responding to events. Imagine a piece of equipment fails on Monday and you need it replaced before the clinic on Friday.  Having visibility of all the costs that you control enables you to make a quicker, better-informed decision as to how to fund the replacement taking account of all your competing priorities which can then be adjusted accordingly.

Standardisation. Standardisation of medical devices across hospital sites is on the agenda for many Trusts. It can reduce costs, provide flexibility and maximise equipment capacity. It will also improve the likelihood that users are competent on a specific model and reduces the cost of training as well as consumables and parts. It’s little wonder EBME managers are so enthusiastic about the approach. However, any attempt at standardisation requires a robust approach to replacement planning, not just at a department level, but right across the organisation.

Scale. Just as replacement planning facilitates standardisation, it also facilitates scale. Knowing what you need and when you need it allows you to order at scale, even if assets are delivered over a period of time. And scale is what the vendors want; if negotiated effectively this can lead to significantly discounted equipment and even running costs.

More persuasive business cases

If equipment managers had one wish, it might be that their business cases were more effective in securing capital. An effective business plan can make the difference. A clear quantification of the benefits and risks alongside the whole-life costs of each option makes it easier for decision-makers to make the right decisions. And a dynamic plan enables departments to provide a detailed early warning of their need for capital funds and, if done properly, this should include up-to-date market data which can then support the rationale for investment.  The result is that your business case is better informed, more persuasive and stands a greater chance of approval.

Real visibility of whole-life costs

It’s easy to focus on the day one cost, particularly if you’re pitching for capital from a limited pot. But the best investment decisions take account, not only of day one costs, but of the whole-life costs, including maintenance, finance and consumables. Not only will effective replacement planning give you visibility of whole-life costs, it can change the decisions you make. The best deal today is not necessarily going to be the best deal tomorrow.

Oversight of equipment-related spend.

Not all departments are able to report on the whole-life cost of their equipment, perhaps because costs may be distributed among different budgets or because they are simply not collated in a meaningful way. Developing a robust and dynamic replacement plan creates invaluable oversight and insight of current whole-life costs. This enables departments (and entire Trusts) to compare current total spending with forecast spend on refreshed equipment. This is invaluable in making an effective business case, particularly if updating equipment can deliver whole-life economies.

Allocating funds in the most effective way

Capital, it seems, is destined always to be a scarce resource in the NHS, leading to inevitable gaps between the equipment you need and the funds available. Limited capital means Trusts are faced with investment choices – do we invest in this equipment or that? Proper replacement planning enables Trusts to make smart decisions to ensure the best return on those investments. Given that certain types of equipment are better suited to different types of financing, effective planning enables Trusts to match appropriate financing to each type of equipment – and lower whole-life costs.

So, while replacement planning may not appear to be worthy of great attention in the NHS, nothing could be further from the truth. Effective replacement planning is vital in making better informed decisions, delivering more persuasive business cases and ultimately, achieving more with less.

Lifecycle offers a range of replacement planning options for individual departments and entire Trusts, each supported by a dynamic online planning system. Our Replacement Planning service is available from £500 per annum. We’ll work with you to identify current costs, understand your challenges and aspirations and provide on-line access to all this populated with up-to-date market data and forecasts.

James Drury

James Drury is an Associate Director at Lifecycle Management Group. Contact him on j.Drury@lifecycle.co.uk or call him on 01865 340 800.

Jonathan Elsmore-Wickens

Jonathan Elsmore-Wickens is our Commercial Director at Lifecycle Management Group. Contact him on j.wickens@lifecycle.co.uk or call him on 01865 340 800.

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