CAPITAL STRATEGY INSIGHTS: Reimagining the Process #023

/in , , , , ,


June 20, 2024

#023 Rational Redeployment

The last two posts discussed existing equipment that was coming to end of life and had become surplus. Let’s continue the topic of existing equipment and look at re-use or redeployment.

Henry Ford said, “Thinking is the hardest work there is, which is probably the reason why so few engage in it.” When considering the redeployment of an asset, rational thought is the beginning of the process. I want to give you some food for thought on this process, to encourage the reader to think and analyze asset redeployment, and to avoid acting quickly without considering the costs.

Why do you want to redeploy the asset? Clearly different reasons can exist. You are expanding and/or renovating, and you need this type of equipment to be in the new space. There is a need at another site in your network that needs this modality. I’m sure there are other good reasons, but keep in mind that a good reason is not the only criteria for redeployment.

Should you redeploy this asset? Not so easy to answer. Consider the costs; let me give you several:

  • Cost of de-installation, transfer, and re-installation – An infusion pump is not too big of a deal. How about a C-Arm? Takes a couple of people to move it to a dock or to a loading area. Might need a lift truck – got one? The unit will need to be secured inside the truck – prepared to do that? How far will to the destination? What is type of dock or receiving area there? A couple of people needed to deliver it. Don’t forget to have it recertified for use.
  • Remaining useful life of the device – I hate to say how many times I’ve seen good money spent in the effort to squeak out more utilization of a unit only to have it die shortly after redeployment.
  • Remaining value of the device – I worked with a health system wanting to redeploy a CT Scanner to a lower acuity location, and we decided not to do so as the equity in the device would not withstand the costs of relocation. They would have been seriously upside-down post move. Everyone decided to wait a year and then replace the units rather than redeploy.
  • Administrative Costs – If you are managing assets, there will be a cost here. Finance/Property Accounting has got to keep their ledgers accurate.
  • Training – Hopefully the device is standardized throughout the network and there won’t be training costs for end-users; however, if not, there is user training to conduct.
  • Consumables and Accessories – It is possible there will be a one-time cost to add the consumables at the new location, and hopefully the accessories are still in good share for reuse.
  • Maintenance and Repair – BioMed, the vendor, or a third party may have to maintain and repair the unit, and manage the maintenance records, requiring additional workload and expenditures.

Once again, treat this course of action as a financial transaction. Understanding the value, remaining useful life, and the activation costs are vital to making the correct and cost-effective decision for the organization. If it makes financial sense then go for it, knowing you have extended the life of an asset and benefited care at a new location. If the financial case is weak, look for other cost appropriate options. And clearly, the more expensive fixed assets warrant the greatest consideration. It is very easy to overspend.

Thanks again for reading these posts. Until next time, be well and continue to think strategically about your capital assets. Please feel free to comment when we post it on LinkedIn or at info@medicalequipmentconsultants.com.