If you’re looking to get CFO buy-in to invest in a real-time location system (RTLS) for your hospital, then you need to be prepared to explain how you expect to see a financial return on that investment – and how quickly. In this post, you’ll learn how to answer both parts of that important question.
The most important thing is to ensure you’re speaking to your CFO in hard-dollar terms. Yes, increased productivity and improved employee satisfaction are important benefits – but if you want your CFO to choose your project over others, you need to prove how an RTLS will impact the hospital’s bottom line.
The best way to achieve this is to focus on how RTLS technology can provide efficiencies when it comes to purchasing, renting, and supporting your current inventory of equipment.
Here are three key areas to focus on:
Eliminating unnecessary equipment purchasing
A widely cited study by GE Healthcare showed that the average hospital has “about 25 percent more devices than they can actually use based on patient volume and case mix.”
There are many reasons for that overcompensation. Hospitals are mazes of rooms and hallways, mobile equipment is naturally hard to pin down, and the mobile assets are too large to manage manually – so it’s understandable that nurses and doctors may feel like they don’t have the equipment they need. Most hospitals rely on anecdotal feedback from their staff to determine equipment levels, and this dynamic often leads to the purchase of new equipment – in essence, wasted spending.
RTLS technology can give you visibility into your fleet that results in hard data. As a simplified example, let’s say your hospital has 1,000 pieces of equipment. Using the GE Healthcare study’s estimation, 250 pieces of equipment are sitting idle at any given point in time.
Each year, hospitals purchase replacement equipment for missing and/or no longer serviceable assets, and they often do this without access to the true utilization data. However, if your data shows that you only need 750 pieces, then you know your hospital will be just fine with your current inventory levels.
At the end of the day, you don’t need to purchase more equipment – which means your hospital saves a significant sum of money.
Reducing equipment loss
American hospitals lose millions of dollars each year because of lost or misplaced equipment. Many types of medical equipment are very small – but very expensive – and can easily be discarded in soiled linen or the trash.
RTLS technology can help reduce this by monitoring the trash collection and soiled linen storage areas of the hospital and immediately alerting staff whenever a tagged piece of equipment finds its way into those flows. Staff are then able to recover the equipment before its processed or a third-party vendor comes to haul the trash and linens away.
Patients also contribute to equipment loss, as they occasionally leave the hospital with items after a visit. With RTLS technology, you can trace the history of a piece of mobile equipment, pinpoint it to a room, then cross-reference that room with your hospital’s records. A quick and easy phone call to inquire about the item in many cases results in its return to the hospital.
In both loss scenarios, the RTLS leads to cost savings for your hospital by eliminating unnecessary loss and the need to purchase replacement equipment.
Managing rental equipment
Hospitals generally rent equipment for two primary reasons: when they can’t find equipment they own, and when they need equipment they can’t or don’t want to own.
The first instance arises when – as outlined above – staff can’t find the equipment they need and the hospital rents equipment to ‘manage’ the perceived shortage. Renting may also be used to avoid new purchases. But if you have clear visibility into your fleet of owned equipment, you’ll know where those pieces are located and where clean equipment is sitting idle, negating the need for rentals.
In the second instance, hospitals sometimes rent large or prohibitively expensive equipment for short periods of time. If you place an RTLS tag on this equipment after it arrives, you can see how – or if – it’s being used. If, for example, you have a piece of equipment that’s been rented for 10 days, but your RTLS indicates it hasn’t been used since day five, you can return the item early. In both cases, increased visibility into your fleet will reduce your rental spend.
How fast can an RTLS ROI be realized?
The hard dollar ROI for a RTLS deployment can be quickly realized for a proficiently installed solution, but the degree to which the savings we’ve discussed here can be achieved will depend heavily on a fourth factor: the cost of entry.
Many RTLS products on the market can do everything described in this post – but with extensive infrastructure requirements that incur massive up-front costs. For these systems, a true ROI on the RTLS will not be achieved for several years precisely because of the system’s expensive and difficult technology architecture.
This is where Cognosos has a distinct advantage. Our RTLS technology has an ultra-lightweight footprint, meaning it’s quick to implement with significantly lower up-front costs while providing the room (including hallway, stairwell, bay) level accuracy required to maximize the delivered value. A typical Cognosos ROI is delivered well within 12 months.
Learn more about how modern RTLS solutions are far superior than their predecessors by downloading our eBook “5 Myths About Hospital RTLS That Cost Time, Resources, and Money”
