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Cost Plus Delivers Exact Pricing for HTM Services

 

By Dave Francoeur

Do you sometimes wonder with an annual Healthcare Technology Management provider contract if your hospital is spending more than it should?

With TKA’s new Cost Plus model, you pay exactly for the services you use each month, and you’ll have full transparency on the markup we apply for running your program.

Your monthly invoice adds up parts procurement, CMMS support, training, labor for equipment maintenance and repair – we work with our partners to specify everything needed to run an effective HTM program. On top of that total comes our markup, which is negotiated and agreed on upfront. That’s a set percentage of each month’s total program expenses, and we guarantee we’ll beat your existing provider by 20%.

Not only do we give you confidence of knowing to the penny what you’re spending directly on HTM services, but we give you the certainty of knowing TKA’s paycheck for running your program effectively and efficiently.

To me, it’s like buying a car. When you drive your spiffy new vehicle away from the lot, you’re probably thinking you got a great deal. Of course, the dealer tells you that you practically stole that car at that final price, but they wouldn’t sell the vehicle at that specific price if they weren’t making a designated profit margin. Plus you likely don’t know a lot of other factors, such as the manufacturer’s cost or dealer incentives – or even the true value of many features you’re paying for (will you even remember your new car comes with a heated steering wheel?). Wouldn’t you like to know exactly what that car cost – and offer a standard fee to the dealer for the sales effort?

Of course you would, and that’s why upstarts like Carvana and CarGurus are disrupting the market. They’re removing smoke and mirrors to bring greater clarity to the car-buying experience. Why should selecting the right HTM provider be any different?

How Cost Plus works

Every health system wants to know that its HTM provider is proactive in maintaining the thousands of diagnostic and therapeutic devices used for patient care every day – and that the team is getting equipment back in service (with minimal disruptions to patient care and your bottom line) as quickly as possible when it goes down. And, faced with reduced revenues from disruptions to elective procedures and routine care during the pandemic, administrators are looking for cost savings in any part of the organization.

Because HTM one of a health system’s largest expenses, this program is a good place to determine if it’s optimized for the investment. That starts with clarity around your spending, which is where Cost Plus comes in and delivers three primary benefits:

1. Comprehensive Services Covered: We start with a robust inventory of your devices and an assessment of your program operations to determine the true costs to provide HTM services for your hospital. Because some months you’ll need a $10,000 part and other months you won’t, you’ll find variations in what you spend each month, but at the end of the day (and year), you’ll only pay for what you need and use. We open our books so you can see for yourself. We also ensure you know what’s excluded, such as if you are still obligated – and must continue paying separately for – any required OEM service agreements, usually for your newest, most-sophisticated imaging machines for their first few years.

2. Fee for HTM Program Management: You’re the experts in patient care; we’re the experts in medical technology care. Leveraging our experience on the front lines, we determine the level of professional service needed to ensure you meet your mission of quality patient care – and, this is important – in the way that it needs to be serviced. This fee is the cost associated with the negotiated service delivery strategy. This is a set percentage based on each month’s actual costs; that markup becomes our profit margin.

Let’s look at this another way. Say you’re spending $1 million each year with your current HTM provider, and you opt to change to a new partner who will charge you only $900,000. You might celebrate that you’re saving $100,000 annually, but do you know exactly what either provider is truly spending to run your program? It might only take either of them $500,000, which means your initial markup was 50%. (And we haven’t even discussed whether those two providers are pricing on the same slate of services or if you still have related HTM expenses outside that annual contract, further muddling any effort to understand your bottom-line HTM costs.)

3. Controlled Risks: You decide how much risk you want for your healthcare system and the associated costs. If you’re risk-averse, you can expect higher cost, because we’re going to invest in additional service contacts and have extra labor and parts on hand. If you have a little bigger risk appetite, such as being willing to accept a slightly lower response time, you could lower your costs. When you choose TKA as your partner, you’re aligning a critical hospital function with a company that holds industry certification for adopting and adhering to the highest quality standards.

We often say that CFOs don’t like surprises. While there’s some variability from month to month in Cost Plus billing, this approach also gives your financial administrators a true picture of what you’re spending and where.

Find out How Cost Plus Could Benefit Your Health System

Cost Plus is an option within our multi-year contracts. We provide transparency in pricing, because we believe – and built our name this way – in developing relationships grounded in open communication. We encourage you to start by analyzing what you’re spending and where, so you can begin to understand your current needs and how much of what you’re paying is going toward your vendor markup. Our TKA team can walk you through what a Cost Plus agreement would look like for your organization, and we guarantee this approach will save you at least 20%.

Dave Francoeur is TKA’s senior vice president for sales and marketing.

 

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