Whether you are a technician or in management, keeping the financial bottom line in mind in everyday business is an important part of creating a superior or great biomedical program. It doesn’t make a difference if you are an in-house group or working for a third-party vendor. In today’s health care environment, every dollar counts and can make or break a biomed program.
The days of being the “fix it” people hidden in the basement of the facility have long left us. The age of “what have you done for me lately” is in and we in biomed must step up to the plate to prove we are true partners with our hospitals or customers. In my career, I have heard it said on numerous occasions, “… not sure how much biomed is costing me, but I know it’s too much!” Nobody wants to be told that, so the importance of being partners who understand the financial picture increases drastically, while keeping our patient always in mind.
It is important to understand that every action we take in biomed can have an affect not only on the program we are part of, but also how it is perceived outside. For most of us in biomed, our budget is viewed simply as an expense on an income statement, not the “revenue” generator it can be. In our world, for every dollar we save, those savings fall right to the bottom line on the financials. You might think saving $10 over here and maybe a couple of hundred over there are nothing, but those are hard savings or cost avoidances that strengthen not only the financials for the facility/customer, but lower the overall expenses for your program.
So what is the value of a dollar saved? For every dollar saved, it will negate the hospital from going to get roughly $34 in gross revenue. To illustrate this in action, let’s look at it as simply as we can. Your facility is a 500-bed hospital with an operating margin of 3 percent. You have a cost-to-value ratio (the measure of your program expenses, to your total inventory value) of 8 percent and want to get to 5 percent. This 3 percent reduction in the cost-to-value produces $3 million dollars in savings. If you are able to achieve this $3 million in reduction, it translates into $100 million in revenue the facility doesn’t need to capture. Pretty powerful stuff when you look at it through those lenses.
Everyone in the biomed group can help drive the financial awareness. When sourcing parts, do you always go the OEM or do you take the time and source it from a minimum of three vendors to get the best service and best price? A couple of extra minutes on the phone could translate in money to the bottom line. Does your facility always need those 24×7, 365-day quadruple platinum level agreements, just to be safe, or do they allow you to explore lower levels of coverage, as technicians are trained and more risk is palatable? Contract expense is probably one of the highest in the biomed budget and/or purview. By working with the clinicians and ensuring them that the service you provide will and should be equal or better than the vendor, the biomed group can begin to effect the bottom line in a positive way also.
It has been said the greater the risk, the greater the reward. This is the case in biomed. Going out of the comfort zone will give you the greatest reward, but it can be scary. By becoming a partner with your facility or customer, it will show them not only do they have a true partner in the biomed group, but also people who share their financial concerns. They see a biomed group that is not selfish and will do what is needed to not only be successful for them, but also improve the financial performance of their facility or customer.
It is important to self-market the biomed program to the people who control the finances and look to you for additional savings or cost-cutting measures. One thing I always recommend is to meet regularly with your direct supervisor or the CFO when at all possible. Present them with what you have done lately for them, so they are looking and seeing you and not just a single line on an income statement that seems high to them. This will give leadership the confidence in their program, that biomed is doing the right thing, and are in fact, financially minded. In the end, doing what is needed to deliver quality patient care, while keeping in mind the bottom line.
Overall, it is important for the biomed team to know where they stand financially, how they affect the bottom line and what can be done to become a strong partner. Too many times, leadership or administrators will simply look at a financial statement and say, “We spend how much on fixing equipment? Really?” They don’t understand what is behind the number.
It is our duty to become more visible and vocal when it comes to financial understanding and what it means for our programs. By showing what you are doing as a partner and as a team, administrators will understand and hopefully appreciate what they have. Biomeds are notorious for not tooting our own horns and going about doing what it is we love, fixing equipment. However, with a strong financial awareness and understanding of the bottom line, you become a powerful partner, one who can walk the walk and talk the talk. A program that knows what needs to be done, and at what price. And that is the bottom line.
Jeffery Niederhausen is the Chief Financial Officer of Tech Knowledge Associates, a clinical technology management provider that was formed to bring unique value to its clients by guaranteeing savings, capping their expenses and protecting them from catastrophic failures. For more information, contact TKA at email@example.com or visit ii-techknow.com.