Strategic Health TechnologyIncorporation

Binseng Wang, ScD, CCE, fAIMBE, fACCE

November 8, 2012

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¡Gracias por tu invitación!

• It is an honor for me to be here to exchange ideas and experience with you.

• It would be presumptuous of me to teach you anything about technology incorporation because I know you have being doing it for almost a decade (and confirmed by the Discussion Panel on Tuesday).

• I hope to incorporate your experience in the next revision of my book on this subject.

• I also want to apologize for my inability to speak Spanish correctly.

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MOTIVATION

• According to the World Health Organization - WHO*Up to three quarters of these [medical] devices do not function in their new settings and remain unused. Factors contributing to this are: lack of needs assessment, appropriate design, robust infrastructure, spare parts when devices break down, consumables, and a lack of information for procurement and maintenance, as well as trained health-care staff.

*WHO, Medical devices: managing the Mismatch, Geneva 2010THE = total healthcare expenditureMTE = medical technology expenditure

COUNTRY THE/Capita (€) MTE/Capita (€) MTE/THE (%) MTE (€ billion)Europe 2,173 145 6.66% 72.57USA 5,098 330 6.48% 97.96Mexico (estimated) 1,300 117 9.00% 13.45

Now that Mexico is providing universal health coverage for all (Seguro Popular), how will it manage technology in a safe, cost effective manner?

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CONTENTS

• INTRODUCTION• CONCEPTUAL FRAMEWORK• STRATEGIC INCORPORATION PROCESS

– Strategic Planning– Strategic Acquisition

• OUTCOME EVALUATION• DISCUSSION

– Misconceptions– Challenges

• CONCLUSIONS

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Reference

• Binseng WangStrategic Health Technology Incorporation,Morgan and Claypool Publishers, 2009

• Binseng WangMedical Equipment Maintenance: Management and Oversight, Morgan and Claypool Publishers, 2012

NEW

Other Publications

• Wang B, Fedele J, Pridgen B, Rui T, Barnett L, Granade C, Helfrich R, Stephenson B, Lesueur D, Huffman T, Wakefield JR, Hertzler LW & Poplin B. Evidence-Based Maintenance: I - Measuring maintenance effectiveness with failure codes, J Clin Eng, July-Sept 2010, 35:132-144.

• Wang et al. Evidence-Based Maintenance: II - Comparing maintenance strategies using failure codes, J. Clin. Eng., Oct-Dec 2010, 35:223-230

• Wang et al. Evidence-Based Maintenance: III - Enhancing patient safety using failure code analysis, J. Clin. Eng., Apr-June 2011, 36:72-84

• Wang et al. Evidence-Based Maintenance: IV – Comparing maintenance procedures using failure codes, in preparation

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Patients

Doctors

Political Leaders

Health LeadersVendors

Regulat

ors

Competitors

Nurses

Payers

INTRODUCTION

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8

Health Technology Costs

• Equipment costs (depreciation, maintenance, etc.) is actually the lowest of all health technologies

0%

5%

10%

15%

Drugs Implants Other Supplies Clin Eng

Me

an

Per

Dis

ch

arg

e C

ost

(%T

ota

l Ho

sp

pe

r D

isc

harg

e C

ost)

• Wang et al., Financial Impact of Medical Technology, IEEE Eng Med Biol magazine, 27(4):80-85, Jul/Aug 2008.

• Maeda et al., What Hospital Inpatient Services Contributed the Most to the 2001-2006 Growth in the Cost per Case? Health Serv Res, 47:1814–1835, 2012

Strategic Health Technology

Incorporation Process

Technology Incorporation

Plan

Patients’ Needs

Doctors

&

Nurses’

Preferences

Global Mission& Goals

MarketPressure

Financial

Constraints Regulati

ons

& St

andards

Technology

Evolution

Strategic Health Technology Incorporation

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Needs +Benefits• clinical• operational• financial

Impacts• patients• users• infrastructure• costs

Health Technology

CONCEPTUAL FRAMEWORK

• Health technology is nothing but a tool. It has little intrinsic value but can be invaluable in providing high-quality care in a cost-effective way if used by the right person(s) at the right time and in the right manner.

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R&D Marketing & Distribution

investment high profit medium profit low profit

prod

ucts

pro

duce

d

time (years)

PRODUCER’S PERSPECTIVE

Reg

ulat

ory

appr

oval

clinical trials early adoption mass adoption obsolescence

possible loss high revenue low revenue

USER’S PERSPECTIVE

Technology Lifecycle from Different Perspectives

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Health Policy Cycle

ETHICS

POLITICS Problem Definition

Diagnosis

Policy DevelopmentPolitical Decision

Implementation

Evaluation

Adapted from Hsiao et al., Getting Health Reform Right, Harvard Univ./World Bank Inst., 2000

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feedback

Health Policy(Mission & Vision)

StrategicPlanning

Acquisition

Maintenance &Management

Installation/Acceptance

Clinical Use

Retirement

Quality Improvement & Risk Management

Utilization Standards

Technology AssessmentRegulations & Standards

Market CompetitionFinancial Constraints

Epidemiological Data

Service Suppliers

Manufacturers& Distributors

Facilities Management

Information Technology

Material Management

Architects

Technology Management Lifecycle

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Initial Investment- Equipment price - Accessories- Shipping, insurance

& customs- Installation< 20% of Total Cost of

Ownership (TCO)

Invisible Costs- Operations- Maintenance- Administrative- User learning> 80% of TCO

Total Cost of Ownership (TCO)

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CONTENTS

• INTRODUCTION• CONCEPTUAL FRAMEWORK• STRATEGIC INCORPORATION PROCESS

– Strategic Planning– Strategic Acquisition

• OUTCOME EVALUATION• DISCUSSION

– Misconceptions– Challenges

• CONCLUSIONS

Technology Planning

Technology Audit

Technology Evaluation

Evaluation Consolidation

Technology Plan

InstallationAcceptance

Technology ManagementTechnology Acquisition

ProductSelection

Procurement

Alternatives to Purchasing

STRATEGIC INCORPORATION PROCESS

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Other Suppliers

Manufacturers

Architects

Facilities Mgmt

Information Technology

Material Mgmt

ClinicalEngineering

Technology AssessmentRegulations & Standards

Market CompetitionFinancial Constraints

Epidemiological Data

Information SourcesTechnology

Incorporation Committee

Task Force 1

Task Force 2

Task Force 3

Health Policy(mission, vision, strategies, etc.

Admin Support

Technical Support

Organization Board or CEO

Chief Medical Officer

Chief Nursing Officer

Chief Operations

Officer

Chief Finance Officer

Resources for Technology Incorporation

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Technology Planning

• Technology Audit – Inventory– Condition– Distribution

• Technology Evaluation– Need assessment– Impact assessment– Costs assessment– Benefits assessment

• Evaluation Consolidation• Technology Plan

Technology PlanningTechnology Audit

Technology Evaluation

Evaluation Consolidation

Technology Plan

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Strategic Considerations

• Included in the Benefits Assessment as “indirect” benefits

• Examples:– Maternal-child care emphasis => OBGY & neonatal

technologies– Disease prevention => cold chain for vaccine storage &

distribution– Surgical revenue => improvement in diagnostic technologies– Market competitiveness => surgical robots

• In other words, “strategic” means to look beyond immediate needs and consider broader and longer vision

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Sample Evaluation Summary

Infr

astr

uctu

re

Use

rs

Mai

nten

ance

Inve

stm

ent

Rec

urre

nt

Use

rs

Clin

ical

Fina

ncia

l

Indi

rect

1 Video-endoscopy for lower GI 3.5 0.0 -1.5 -2.0 -1.0 -1.0 -2.0 3.0 5.0 3.0 1.7 $20,000 $20,0002 YAG surgical laser 3.0 0.0 2.0 -1.5 -2.5 -2.0 -2.0 2.0 4.0 3.0 1.4 $65,000 $85,0003 Cardiac ultrasound system 3.0 0.0 -3.0 -1.5 -3.0 -1.5 -2.0 3.0 2.0 4.0 1.1 $60,000 $145,0004 Endoscope washer and disinfection 4.5 -0.5 -1.0 -1.0 -1.0 -2.0 -2.0 2.0 2.0 1.0 1.1 $12,000 $157,0005 Automated chemistry analyzer 2.5 -2.0 -1.5 -3.0 -3.0 -3.0 -2.0 5.0 3.0 2.0 0.9 $250,000 $407,0006 Surgical light 2.5 -1.0 1.0 -1.0 -2.0 0.0 0.0 2.0 1.0 0.0 0.7 $25,000 $432,0007 intra-aortic balloon pump 3.0 -1.0 -1.0 -2.5 -2.0 -2.0 -1.0 3.0 1.5 1.0 0.7 $50,000 $482,0008 250 general purpose infusion pumps 2.5 0.0 2.0 -1.0 -3.5 -2.0 -2.0 3.0 1.0 0.0 0.6 $750,000 $1,232,0009 Video-endoscopy for upper GI 1.5 0.0 -1.0 -1.5 -1.0 -1.0 -2.0 1.0 1.0 2.0 0.4 $20,000 $1,252,000

10 Second CT scanner (64 slice) 2.0 -4.0 -3.0 -4.0 -5.0 -3.5 -3.0 4.0 2.0 5.0 0.4 $1,000,000 $2,252,00011 Phaco-emulsifier for eye surgery -2.0 0.0 -2.0 -2.0 -1.0 -1.0 -3.0 2.0 2.0 3.0 -0.1 $55,000 $2,307,00012 Surgical table -1.0 -1.0 0.0 0.0 -2.0 0.0 0.0 1.0 1.0 0.0 -0.1 $35,000 $2,342,000

TOTAL SCORE

INVESTMENT COST (US$)

CUMULATIVE COST (US$)

ITEM EQUIPMENT BEING EVALUATED NEED EVALUA

TION

IMPACT EVALUATION COSTS EVAUATION BENEFITS EVALUATION

The 2nd CT could be a strategic initiative but also could be something that will not

provide good return on investment (ROI)

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STRATEGIC TECHNOLOGY ACQUISITION

• Product Selection– Technical considerations– Regulatory considerations– Financial considerations– Supplier considerations

• Procurement– Isolated Purchasing– Group Purchasing

• Alternatives to Purchasing– Lease– Rental (short term lease)– Consumable-purchase agreement– Revenue-sharing agreement– Donation

Technology Acquisition

ProductSelection

Procurement

Alternatives to Purchasing

prod

ucts

pro

duce

d

time (years)Product A

Product B

Reg

ulat

ory

appr

oval

clinical trials early adoption mass adoption obsolescence

possible loss high revenue low revenue

USER’S PERSPECTIVE

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CONTENTS

• INTRODUCTION• CONCEPTUAL FRAMEWORK• STRATEGIC INCORPORATION PROCESS

– Strategic Planning– Strategic Acquisition

• OUTCOME EVALUATION• DISCUSSION

– Misconceptions– Challenges

• CONCLUSIONS

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OUTCOME EVALUATION

• For health policy– Population health status– Population satisfaction– Financial risk protection

FINANCING PROVIDER PAYMENT

MECHANISMS

ORGANIZATION REGULATION CHANGING INDIVIDUAL BEHAVIOR

INTERMEDIATE OUTCOMES• Access• Quality• Equity• Efficiency

FINAL OUTCOMES• Health Status• Satisfaction• Financial Risk Protection

Adapted from Hsiao et al., Getting Health Reform Right, Harvard Univ./World Bank Inst., 2000

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OUTCOME EVALUATION (Evidence-Based Technology Incorporation)

• For health technology– Technology “health status”

• % of technology in use• Global failure rate for equipment• Uptime for mission critical equipment

– Technology impact• Mortality & morbidity reductions• Length of stay reductions• Patient incident reductions

– Clinical user satisfaction– Financial impact

• Reduction of unnecessary replacements & new capital investments• Reduction of maintenance costs

• For health policy– Population health status– Population satisfaction– Financial risk protection

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Medical Equipment Maintenance & Mgmt in USA

• Maintenance Costs (efficiency)

• Reliability (effectiveness)

100

1,000

10,000

100,000

100 1,000 10,000 100,000

To

tal #

rep

air

WO

s

#Capital devices maintained

r = .80p < .0001

Major teaching

Minor teaching

Non-teaching

Unknown

Questionable

0.75 line

$10

$100

$1,000

$10,000

$100,000

$10 $100 $1,000 $10,000T

ota

l CE

exp

ense

($k

)

Total operating expenses ($M)

r = .85p < .0000001

Major teaching

Minor teaching

Non-teaching

Unknown

Questionable

1% line

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man

agem

ent Clinical Use

Health Policy(Mission & Vision)

StrategicPlanning

Acquisition

Maintenance &Management

Installation/Acceptance

Retirement

Quality Improvement & Risk Management

Utilization Standards

Technology AssessmentRegulations & Standards

Market CompetitionFinancial Constraints

Epidemiological Data

Service Suppliers

Manufacturers& Distributors

Facilities Management

Information Technology

Material Management

Architects

Technology Must Be Well Managed After Incorporation

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feedback

Evidence-Based Maintenance - EBM

A continual improvement process that analyzes the effectiveness of maintenance resources deployed in comparison to outcomes achieved previously or elsewhere and makes necessary adjustments to maintenance planning and implementation.

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Fishing = Process Catching = Outcome

EBM Strategy & Frequency Comparison

0%

20%

40%

60%

80%

100%

No Fail UPF ACC BATT USE EF NET SIF HF PF PPF

Estim

ated

Ann

ual F

ailu

re P

roba

bilit

y (A

FP) Pulse Oximeter

(#units: F12 = 522 ,R/R = 351, Samp = 251) F12R/RSamp

0%

5%

10%

SIF HF PF PPF

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F12 = annual inspectionR/R = repair or replaceSamp = statistical sampling

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EBM Procedure Comparison

0%

20%

40%

60%

80%

100%

No Fail UPF ACC BATT USE EF NET SIF HF PF PPF

Esti

mat

ed A

nnua

l Fai

lure

Pro

babi

lity

(AFP

)

Multi-parameter Patient Monitor(#units: OEM = 338, Hospital = 920)

OEM

Hospital

OEM = manufacturer recommended procedureHospital = hospital developed procedure

EBM Cause-Code Grouping Analyses Results

No Failure61%Future

9%

Indirect28%

Direct2%

Battery-Powered Mon/Pace/Defibrillator

No Failure35%

Future16%

Indirect47%

Direct2%

Vital Signs Monitors

No Failure71%

Future6%

Indirect22%

Direct1%

Pulse Oximeters

No Failure17%

Future24%

Indirect56%

Direct3%

Single-Channel Infusion Pumps

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No failure = no problem found in SM or repairFuture = unpreventable failureIndirect = use, peripheral, evident failureDirect = hidden, preventable, predictable, service-induced

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DISCUSSION: Misconceptions1

• Equipment life expectancy (aka “lifetime” or “usable life”)– Replace equipment before “end of life expectancy?”– How is reliability affected by life expectancy?– Besides the average life expectancy, shouldn’t you look at

the standard deviations and individual cases?

0%

20%

40%

60%

80%

100%

0 5 10 15

Esti

mat

ed

Re

liab

ility

years after installation

binary

linear

exponential

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DISCUSSION: Misconceptions2

• “End of Life” notices from manufacturers– Should stop using equipment?– Replace equipment as soon as possible?– Ignore the notice?– Evaluate “return on investment” for continual support and, if

justified, include in the Strategic Equipment Planning?

R&D Marketing & Distributioninvestment high profit medium profit low profit

prod

ucts

pro

duce

d

time (years)

PRODUCER’S PERSPECTIVE

Reg

ulat

ory

appr

oval

END OF LIFE

See, e.g., M.N. Skoufalos, Numbered Days-Examining the true meaning of medical equipment ‘End of Life,’ Medical Dealer, Oct 2012, pp. 57-60.

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DISCUSSION: Misconceptions3

• “Maintenance Expenditure Limit” (MEL)US Army Tech Bulletin Med 7 states repairs shall NOT be conducted if the cost of repair exceeds the replacement cost multiplied by the percent of useful life remaining (limited between 10% and 65% for equipment that exceeded its life expectancy and has not exceeded 80%, respectively).

0

10

20

30

40

50

60

70

0% 20% 40% 60% 80% 100%

MEL

(% o

f Rep

lace

men

t Cos

t)

% Useful Like Remaining

While repairs should NOT be conducted at any cost, it should also NOT be constrained rigidly to replacement cost, as capital budget is often separate from operating budget.

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DISCUSSION: Misconceptions4

• Appropriate Technology (Equipment) was characterized by the Office of Technology Assessment (OTA) as:– A technology may be considered appropriate when its development and

use: 1) are in reaction to or in anticipation of defined goals relating to problems or

opportunities in the disability area,2) are compatible with resource constraints and occur in an efficient manner, and 3) result in desirable outcomes with acceptable negative consequences or risks

to parties at interest.

– “Appropriate technology” or “appropriate application of technology” does not require that a technology be simple or that it be inexpensive, only that it be suitable for the intended effects and that it take into account any constraints, such as the resources available.

– The most appropriate technology in a given situation is one that provides the greatest ratio of desirable outcomes to negative effects and resources consumed, providing that outcomes and consequences have been defined and are of sufficient value as judged by appropriate parties at interest.

OTA, Technology and Handicapped People, May 1982

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DISCUSSION: Misconceptions5

• Examples of Appropriate Technology that can be considered strategic in incorporation:– Solar-powered refrigerators for vaccination campaigns– Cellular telephones for rural healthcare– Telemedicine for remote areas and prisons– Water treatment systems for disaster relief (Mexico)

• Better even than appropriate technology is technology (knowledge) transfer

Give a man a fish and you feed him for a day.

Teach him to fish and you feed him for life.

DISCUSSION: Challenges

• Many challenges (opportunities)– Lack of accurate, reliable information (comparative performance,

reliability, support costs, purchase costs, etc.)– Lack of trained purchasing and technical personnel– Many rules, regulations, and restrictions – Inflexible finance restrictions (can only buy equipment but not

parts, only products made in certain countries, etc.)– Many others…

• However, all these are fairly easy to resolve...

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DISCUSSION: Challenges2

• The real challenges (i.e., the root causes) are more difficult– Lack of awareness among decision makers– Emotional involvement:

• Power struggle• Status symbol

– Greed and short-sightedness of some lenders, donation organizations, manufacturers and suppliers

• Hope you have other solutions to share with me

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CONCLUSIONS

• Incorporation is not difficult:– Analyze carefully the need, impacts, costs, risks and benefits of

each technology incorporation– Assess alternative technologies – Compare competitive products available on the market in terms

of quality, specifications, and total cost of ownership– Use a multidisciplinary team to manage the procurement

process to ensure all aspects are covered, as well as transparency

– Analyze possible alternatives to acquisition• But you need to be willing and able to address the challenges

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CONCLUSIONS2

• Technology is evolving extremely fast:– Electronic health records– Telemedicine– Telehomecare– Mobile health– Tissue engineering, nanotechnology,

biomaterials, etc.– Synthetic biology– Organ re-growth and replacement

• The sooner you start managing technology, the easier will be to face the on slaughter of new technologies

Hardware & software

Wetware

But the good news is that you may have >100 years of work time as your life expectancy will be >150 years soon…

THANK YOU! ¡GRACIAS!

• Please contact me if you have any questions or suggestions

– Binseng Wang, ScD, CCE, fAIMBE, fACCE• Vice President, Quality & Regulatory Compliance• ARAMARK Healthcare Technologies (

www.aramarkheatlhcaretechnologies.com)• Telephone: 704-948-5729• Email: wang-binseng@aramark.com

– Member of ACCE’s InternationalCommittee

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