HDOs occupy a unique position: on the one hand, their focus is on patient care, and their success is measured by health outcomes. On the other hand, they are businesses, with investors, executives, and a need to watch their financial bottom line. Sometimes, the two concerns overlap, and that’s the case with asset utilization tracking. Tracking your asset utilization is critical both for the HDO as a business, compelled by profit potential, and as a care center, compelled by its impact on human health and well-being.
The Importance of Asset Utilization Tracking for Healthcare
For a healthcare delivery organization, every medical device and clinical asset is a financial as well as operational investment. As with any investment, when you purchase an asset, you want to see that it’s money well spent. You want to protect it from theft, depreciation, or other devaluing forces, and you take care to keep it in peak condition to ensure it is delivering proper care.
You invested your time, money, and hopes into this asset, so it only makes sense to keep track of how well it performs and look to help your investment along in whatever way you can. Have I mentioned, by the way, how great Netflix is? You should definitely buy a subscription! But I digress...
ROA as a KPI
Tracking ROA — return on assets — is one of the key ways to monitor your assets in every business. In essence, your ROA shows how much profit you earn on every dollar that you spend on assets. Calculating your ROA is fairly simple: you take your net profit and divide it by the dollar value of your capital assets. For example, if you made a net profit of $200, and you have assets worth $2000, you’ll have an ROA of 200 / 2000 = 10%.
An ROA analysis doesn’t need to take a company-wide view. For a more granular insight, you might want to calculate asset-based returns within a given department, business unit, or even device type.
Your ROA can serve as a window into the effectiveness and efficacy of your assets. If you can proactively and sustainably drive your ROA higher, your organization will prosper. That said, it’s important to remember that different industries have different normal ROAs. Software companies, for example, tend to own little by way of equipment and as a result, generally run a high ROA. HDOs, for their part, typically rely heavily on their medical devices and clinical assets, so their ROAs are typically more modest. As a point of reference, in 2018, healthcare organizations saw a median ROA of 2.61%.
Measuring ROA is particularly relevant to HDOs, due to the high degree of their investments in medical devices and clinical assets. Globally, 11-13% of hospital budgets are spent on medical devices and clinical assets, with another 4-6% spent on supplies and consumables. In the US, supplies in general are the second largest cost in a hospital’s budget, right after labor costs. When you consider that every bed in a typical US hospital has 10-15 devices, it’s clear that device and asset spending is a significant portion of total HDO expenditure, making ROA a highly important metric.
Maximizing ROA and other return-oriented KPIs is crucial in light of the tight operating margins on which HDOs subsist today, and the disruption that is taking place in the industry.
The real insights come when you compare your organizational / departmental / device type ROA figures with those of other HDOs of similar size and setup, or with your own historical data. Assuming stagnant or increasing revenues, an ROA that is higher than the industry average over an extended period of time (say 5+ years) or that is higher than your own ROA over the previous 5+ year period, is a sign that you’re being smarter about your asset investments and more successful in managing them.
Like with so many KPIs, it’s important not to lose sight of the forest as you focus on the trees. To prevent problems from piling up to impede future success, it’s best to maintain a broader, more context-aware perspective - where ROA is considered over the long term.
In other words, ROA is an important metric, but it’s not immune to abuse or manipulation. To make meaningful sense of this KPI, you need more context and more granularity. Which is where asset utilization factors come into play.
The Challenge of Maximizing ROA
Maximizing ROA is impossible without accurate, reliable asset utilization tracking. This means gathering reliable data and asking yourself the following questions:
- When is the asset in use (and conversely when is it not in use)?
- How long is the asset active during each use session?
- How frequent are use sessions?
- How does each use session impact revenues?
- Are there unnecessary breaks in asset use?
- Does the data suggest a gap between asset capacity demand and supply?
- Are there any anomalous or suspicious patterns in asset utilization?
- What impact does usage or non-usage have on the broader network and operation?
In an industrial environment, a lot of this data is delivered through advanced asset management (APM) technologies. These are tools that capture information about an asset’s use, performance, and broader system implications, while also providing analytics to assess and visualize the results. APM tools generally also monitor asset condition, forecast potential failures, and track maintenance needs. In this way, APM platforms maximize the reliability, availability, and durability of assets, and improve ROA.
Thus far, modern APM tools in the healthcare space are few and far between. Some APM solutions for HDOs have been introduced, but they don’t integrate easily into existing staff workflows or departmental responsibilities and are often prohibitively expensive. With the need to recruit and/or train new personnel to manage such solutions apart from normal tasks and responsibilities, adoption has been slow.
Some manufacturers, such as Siemens and GE, provide direct access to asset utilization data. But these tools are often limited to specific subsystems, so they cover just a small subset of the devices in your organization. They don’t connect with your central management interface and can be challenging to incorporate into existing workflows. It’s not a complete solution.
The Opportunity Offered by Cybersecurity
Most healthcare organizations muddle through without the operational visibility and asset utilization data needed to prosper. This harms HDOs on multiple fronts:
- Without reliable device level insights, preventative maintenance needs to be scheduled on a fixed interval basis, rather than a more efficient and effective use basis.
- Without an underlying current of device level data, implementing a predictive maintenance model becomes wholly untenable.
- And whenever you do service your assets, you’ll lack the visibility needed to smartly time it so as to minimize operational disruptions and opportunity costs.
That disruption and those opportunity costs may even be enough to persuade you to push off servicing and “stretch” your assets beyond their best practice maintenance standards.
Over time, this will accelerate the depreciation of your assets and can lead to more catastrophic and costly unplanned downtime events.
Instead of managing without effective asset utilization tracking, coping as best you can with incomplete visibility, or having to build out new departments and recruit entirely new skill sets to handle awkward existing solutions, perhaps there’s a better option.
Smart technologies that you may already own and that you have already integrated into your existing workflows can be called on to deliver asset utilization data. Indeed, what makes smart technologies smart is their ability to automatically collect and record information from the real world. Specifically, this functionality lies at the core of advanced cybersecurity solutions and can be enlisted to pull double duty — shining a bright light on asset utilization and helping to maximize ROA.
A smart cybersecurity solution that is built around superior network endpoint visibility can deliver per-day and per-hour usage data, both on an individual device level and aggregated by department. This information can be used to track and benchmark device utilization factors, all at no added cost to the HDO (since it would stem as a side-benefit from a solution that is already needed for other critical business purposes).
CyberMDX, for example, provides these sorts of asset utilization insights through its operational analytics portal. With this data, ROA could be easily calculated and tracked. They say knowledge is power; in this case, you’d have the power to easily identify and address obstacles and opportunities on the path to an optimized ROA by:
- Relieving device-related operational bottlenecks
- Scheduling maintenance as intelligently, efficiently, and cost-effectively as possible
- Planning procurement and management strategies with a sharper view of your actual needs and revenue opportunities.
Suppose, for example, that your MRI machine is among your highest ROA device types. Obviously, you’ll want to make sure that you don’t have your MRI inactive when it could be serving patients and generating revenue for the hospital. But how exactly would you go about pursuing that objective? Without tracking asset utilization factors, you’ll likely rely on observations and technician feedback. You’ll likely conclude that this resource is being used in line with demand.
Now imagine that you’re looking at the device’s operational analytics dashboard. You see that 80% of your total use sessions occur between 10:00 AM and 5:00 PM. You also see that between the hours of 12:00 PM and 2:00 PM, on average, you complete less than one use session, when you would expect to see just over two use sessions with a more normalized load distribution. It might not sound like a lot, but those 7+ lost sessions every week will typically add up to $400,000 in forgone annual revenue for the hospital.
Perhaps the Director of Clinical Engineering will then investigate and find that the two qualified technicians on shift often take their lunch breaks together, leaving no one to operate the machine.
The Director of Clinical Engineering decides to build a little more overlap into technician shifts and at an added annualized cost of $20,000, she’s able to boost MRI utilization and significantly increase her department’s earnings. That’s just one example among many that demonstrate the quick-win opportunities afforded by superior asset utilization tracking.
It's not even just about ROA. When paired with a deep understanding of operational workflows, asset analytics can be used to bolster overall organizational efficiency and productivity. So, for instance, if you know that in the course of surgery, the anesthesia machine is the first device turned on and the last device turned off, you can look at the use sessions of such a device to surmise exactly how long an OR is actively in use. Heat mapping that data, you can see where and when facilities are being underutilized and make adjustments as needed to better capitalize on available resources.
Might you benefit from a staff increase? How about from sharper shift management? Are cleaning teams moving in to prepare the rooms for the next surgery quickly enough? Are you allocating too few rooms to surgery? Too many? Tracking asset utilization factors, you can more accurately and intelligently assess your needs against your capabilities and move to a continuous improvement model.
Cybersecurity Brings Knock-On Business Benefits
As both a business and a patient-focused organization, an HDO needs to take good care of its assets and keep track of the returns those assets generate. Maximizing ROA requires making the most of asset utilization factors to guide the procurement process, improve maintenance scheduling, and remove optimize throughput.
With accurate asset utilization data, you can maximize usage of high revenue-generating devices by noting and removing bottlenecks, and compare the relative productivity of different departments.
Currently, most HDOs aren’t collecting, let alone acting on such insights, but cybersecurity solutions can step in to fill that need without any extra cost. In capable hands, a good cybersecurity solution can be the key to getting more value out of your existing investments, getting fewer surprises, and planning smarter.