Equipment Planning and the Lean Process

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<ul><li><p>8/4/2019 Equipment Planning and the Lean Process</p><p> 1/2</p><p>EQUIPMENT PLANNING AND THE LEAN PROCESS</p><p>The philosophy of lean applications in healthcare and architecture has been a point of increasing interest with</p><p>healthcare systems, hospitals, and design firms to optimize capital utilization and efficiency while minimizing the</p><p>capital budgets.</p><p>The application of a lean approach to equipment planning and procurement is slightly more difficult due to the</p><p>disconnect between vendor and manufacturer goals and the clients goals and expectations.</p><p>This white paper discusses the variability in the process and presents potential solutions as well as barriers to the</p><p>applications of lean principles.</p><p>EQUIPMENT PLANNING</p><p>The equipment planner should become familiar with the work process and demand on equipment and work with</p><p>the end users to develop a lean approach to the placement, quantity, and utilization of equipment. Ultimately, the</p><p>pull system:</p><p>give customers what they want, when they want it, at the highest quality and affordable cost1</p><p>Department to department interactions also play a significant role in terms of required tests, procedures that are</p><p>required the customer (the requesting department). Does the department justify a mobile x-ray located within the</p><p>department versus delivering the unit from radiology for each image request. Does the ED volume for CT or X-ray</p><p> justify intradepartmental equipment or can the equipment be located adjacent to multiple departments to</p><p>optimize utilization and throughput. The placement of capital intensive equipment without thorough investigation</p><p>often leads to high initial capital requirements, lower utilization thereby resulting in decreased margins for the</p><p>hospital.</p><p>In the case of equipment planning, the customer is typically the person utilizing the equipment (i.e. nurses,</p><p>physicians, surgeons, patients). This demand must be balanced with the capital budget and workflow.</p><p>All too often, planners and end users arbitrarily request equipment quantities to cover all potential scenarios. To</p><p>assist the end user in the process, the equipment planner should familiarize him/herself with the operation of the</p><p>department and the associated use of the equipment and the demand for the equipment. For example, if a</p><p>director is requesting a high acuity patient monitor in every medical-surgical room; the planner should discuss the</p><p>capabilities and cost of the monitor and application of the monitor to the patients. It is recommended the planner</p><p>also take the time to observe the existing use tendencies in the department to assist the director in determining</p><p>the current demand; therefore, justifying the capital expense to hospital management and associated capitalbudget.</p><p>It is recommended the planner segregate between capital intense equipment, both individually as well as</p><p>collectively. There are opportunities with regard to large, individual pieces of equipment (i.e. radiology); however,</p><p>opportunities to streamline the process with a larger quantity of equipment that may not be significant</p><p>individually; however, collectively can contribute to the significantly to the capital budget. In short, the quantity of</p><p>trashcans and locations should not be the primary focus of attention.</p><p>This approach can also result in an increase in the capital budget. Patient lifts in every room can significantly</p><p>increase the budget, but the proven decrease in staff injuries related to patient lifting can outweigh the initial</p><p>capital expense of the life of the equipment.</p><p>1The Toyota Way: 14 Management Principles from the Worlds Greatest Manufacturer by Jeffrey K. Liker</p></li><li><p>8/4/2019 Equipment Planning and the Lean Process</p><p> 2/2</p><p>The equipment planner should strive to provide solutions and work with the hospital staff to determine the best</p><p>option versus merely dictating requests.</p><p>EQUIPMENT PROCUREMENT</p><p>This is by far, in my opinion, the most complex barrier to implementing a true lean process:</p><p>The ultimate goal of the procurement of medical equipment: is not to have goods shipped too early or</p><p>too late2</p><p>1. During the purchasing process, indicate payment will not be made to the manufacturer until theequipment is put into use for patient care. This approach will control capital expenditures and place the</p><p>ownership of process improvement on the source (i.e. the manufacturer)</p><p>Manufacturers and vendors are typically compensated when the equipment is either shipped or put into use. This</p><p>inevitably drives the shipment of the material as soon as possible upon receipt of the purchase order. If the</p><p>manufacturer has implemented a lean process this would bode well to the goal of receiving the equipment just in</p><p>time. However, a majority of the time the equipment is manufactured and shipped upon completion whether the</p><p>project is need of the equipment or not.</p><p>Lead times vary with equipment demands and the variance in lead time for manufacturing can swing by weeks or</p><p>even months.</p><p>Manufacturers typically sell through sales representatives or vendors who have quarterly or annual sales goals may</p><p>lead to misinformation to the procurement team in terms of equipment availability and lead time to entice early</p><p>purchases in order for the sales representative to meet sales goals.</p><p>The priority disconnects in combination with the need to have equipment to provide care to the patient typically</p><p>drive the procurement team/hospital to issue purchase orders earlier then necessary to ensure the equipment is</p><p>not late. This leads to the release of funds earlier in the process and can have other effects (i.e. warranties).</p><p>Larger hospital systems in conjunction with group purchasing organization, equipment planners have the</p><p>purchasing power to force change in the system and help implement a more profitable process for all of those</p><p>involved.</p><p>There are two viable options to assist the implementation of a leaner process.</p><p>2. Rental or lease agreements at times can prove beneficial to organizations for equipment which has ahigher variability in demand (i.e. bariatric beds, infusion pumps). These agreements again put the risk of</p><p>demand and just in time delivery on the leasing company. Hospitals have in the past reached a hybrid</p><p>agreement which there is a base number of units that are purchased and the balance is leased to</p><p>minimize exposure and larger initial capital expenditures.</p><p>As hospital reimbursements tighten, margins shrink, and capital budgets are decreased, the importance of</p><p>optimizing medical equipment will be of the utmost importance.</p><p>Daniel Kromis</p><p>COO &amp; Managing Director</p><p>2From a speech given at the completion of the Toyota Koromo plant </p></li></ul>


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