Strategic Health Technology Incorporation

1. Strategic Health Technology Incorporation Binseng Wang, ScD, CCE, fAIMBE, fACCE November 8, 2012

2. ¡Gracias portuinvitación! • It is an honor for me to be here to exchange ideas and experience with you. • It would be presumptuous of me to teach you anything about technology incorporation because I know you have being doing it for almost a decade (and confirmed by the Discussion Panel on Tuesday). • I hope to incorporate your experience in the next revision of my book on this subject. • I also want to apologize for my inability to speak Spanish correctly.

3. MOTIVATION • According to the World Health Organization - WHO* Up to three quarters of these [medical] devices do not function in their new settings and remain unused. Factors contributing to this are: lack of needs assessment, appropriate design, robust infrastructure, spare parts when devices break down, consumables, and a lack of information for procurement and maintenance, as well as trained health-care staff. Now that Mexico is providing universal health coverage for all (Seguro Popular), how will it manage technology in a safe, cost effective manner? *WHO, Medical devices: managing the Mismatch, Geneva 2010 THE = total healthcare expenditure MTE = medical technology expenditure

4. CONTENTS • INTRODUCTION • CONCEPTUAL FRAMEWORK • STRATEGIC INCORPORATION PROCESS • Strategic Planning • Strategic Acquisition • OUTCOME EVALUATION • DISCUSSION • Misconceptions • Challenges • CONCLUSIONS

5. Reference • Binseng WangStrategic Health Technology Incorporation,Morgan and Claypool Publishers, 2009 • Binseng WangMedical Equipment Maintenance: Management and Oversight, Morgan and Claypool Publishers, 2012 NEW

6. Other Publications • Wang B, Fedele J, Pridgen B, Rui T, Barnett L, Granade C, Helfrich R, Stephenson B, Lesueur D, Huffman T, Wakefield JR, Hertzler LW & Poplin B. Evidence-Based Maintenance: I - Measuring maintenance effectiveness with failure codes, J Clin Eng, July-Sept 2010, 35:132-144. • Wang et al. Evidence-Based Maintenance: II - Comparing maintenance strategies using failure codes, J. Clin. Eng., Oct-Dec 2010, 35:223-230 • Wang et al. Evidence-Based Maintenance: III - Enhancing patient safety using failure code analysis, J. Clin. Eng., Apr-June 2011, 36:72-84 • Wang et al. Evidence-Based Maintenance: IV – Comparing maintenance procedures using failure codes, in preparation

7. INTRODUCTION Political Leaders Payers Doctors Health Leaders Patients Vendors Nurses Regulators Competitors

8. Health Technology Costs • Equipment costs (depreciation, maintenance, etc.) is actually the lowest of all health technologies • Wang et al., Financial Impact of Medical Technology, IEEE Eng Med Biol magazine, 27(4):80-85, Jul/Aug 2008. • Maeda et al., What Hospital Inpatient Services Contributed the Most to the 2001-2006 Growth in the Cost per Case? Health Serv Res, 47:1814–1835, 2012

9. Strategic Health Technology Incorporation TechnologyEvolution Global Mission& Goals Doctors & Nurses’ Preferences Strategic Health Technology Incorporation Process Technology IncorporationPlan Patients’ Needs FinancialConstraints Regulations & Standards MarketPressure

10. CONCEPTUAL FRAMEWORK • Health technology is nothing but a tool. It has little intrinsic value but can be invaluable in providing high-quality care in a cost-effective way if used by the right person(s) at the right time and in the right manner. Health Technology • Needs + • Benefits • clinical • operational • financial • Impacts • patients • users • infrastructure • costs

11. Technology Lifecycle from Different Perspectives USER’S PERSPECTIVE obsolescence clinical trials early adoption mass adoption possible loss high revenue low revenue products produced Regulatory approval time (years) PRODUCER’S PERSPECTIVE Marketing & Distribution R&D investment high profit medium profit low profit

12. Health Policy Cycle ETHICS Evaluation Problem Definition POLITICS Implementation Diagnosis Political Decision Policy Development Adapted from Hsiao et al., Getting Health Reform Right, Harvard Univ./World Bank Inst., 2000

13. Technology Assessment Regulations & Standards Market Competition Financial Constraints Epidemiological Data Technology Management Lifecycle Health Policy (Mission & Vision) feedback StrategicPlanning Architects Manufacturers & Distributors Acquisition Service Suppliers Installation/Acceptance Information Technology Clinical Use Utilization Standards Maintenance & Management Quality Improvement & Risk Management Facilities Management Material Management Retirement

14. Initial Investment • Equipment price • Accessories • Shipping, insurance & customs • Installation • < 20% of Total Cost of Ownership (TCO) • Invisible Costs • - Operations • - Maintenance • - Administrative • User learning • > 80% of TCO Total Cost of Ownership (TCO)

15. CONTENTS • INTRODUCTION • CONCEPTUAL FRAMEWORK • STRATEGIC INCORPORATION PROCESS • Strategic Planning • Strategic Acquisition • OUTCOME EVALUATION • DISCUSSION • Misconceptions • Challenges • CONCLUSIONS

16. STRATEGIC INCORPORATION PROCESS Technology Planning Technology Audit Evaluation Consolidation Technology Plan Technology Evaluation Technology Acquisition Technology Management Procurement ProductSelection InstallationAcceptance Alternatives to Purchasing

17. Technology Assessment Regulations & Standards Market Competition Information Sources Financial Constraints Epidemiological Data Architects Manufacturers Other Suppliers Resources for Technology Incorporation Health Policy(mission, vision, strategies, etc. Organization Board or CEO Technology Incorporation Committee Chief Medical Officer Chief Nursing Officer Admin Support Technical Support Chief Finance Officer Chief Operations Officer Task Force 1 Task Force 2 Task Force 3 ClinicalEngineering Facilities Mgmt Information Technology Material Mgmt

18. Technology Planning • Technology Audit • Inventory • Condition • Distribution • Technology Evaluation • Need assessment • Impact assessment • Costs assessment • Benefits assessment • Evaluation Consolidation • Technology Plan Technology Planning Technology Audit Evaluation Consolidation Technology Plan Technology Evaluation

19. Strategic Considerations • Included in the Benefits Assessment as “indirect” benefits • Examples: • Maternal-child care emphasis => OBGY & neonatal technologies • Disease prevention => cold chain for vaccine storage & distribution • Surgical revenue => improvement in diagnostic technologies • Market competitiveness => surgical robots • In other words, “strategic” means to look beyond immediate needs and consider broader and longer vision

20. Sample Evaluation Summary The 2nd CT could be a strategic initiative but also could be something that will not provide good return on investment (ROI)

21. STRATEGIC TECHNOLOGY ACQUISITION USER’S PERSPECTIVE • Product Selection • Technical considerations • Regulatory considerations • Financial considerations • Supplier considerations • Procurement • Isolated Purchasing • Group Purchasing • Alternatives to Purchasing • Lease • Rental (short term lease) • Consumable-purchase agreement • Revenue-sharing agreement • Donation obsolescence clinical trials early adoption mass adoption possible loss high revenue low revenue Technology Acquisition products produced Product B Regulatory approval Procurement ProductSelection Product A Alternatives to Purchasing time (years)

22. CONTENTS • INTRODUCTION • CONCEPTUAL FRAMEWORK • STRATEGIC INCORPORATION PROCESS • Strategic Planning • Strategic Acquisition • OUTCOME EVALUATION • DISCUSSION • Misconceptions • Challenges • CONCLUSIONS

23. PROVIDER PAYMENT MECHANISMS CHANGING INDIVIDUAL BEHAVIOR FINANCING ORGANIZATION REGULATION • Access • Quality • Equity • Efficiency INTERMEDIATE OUTCOMES • Health Status • Satisfaction • Financial Risk Protection FINAL OUTCOMES OUTCOME EVALUATION • For health policy • Population health status • Population satisfaction • Financial risk protection Adapted from Hsiao et al., Getting Health Reform Right, Harvard Univ./World Bank Inst., 2000

24. OUTCOME EVALUATION (Evidence-Based Technology Incorporation) • For health technology • Technology “health status” • % of technology in use • Global failure rate for equipment • Uptime for mission critical equipment • Technology impact • Mortality & morbidity reductions • Length of stay reductions • Patient incident reductions • Clinical user satisfaction • Financial impact • Reduction of unnecessary replacements & new capital investments • Reduction of maintenance costs • For health policy • Population health status • Population satisfaction • Financial risk protection

25. Medical Equipment Maintenance & Mgmt in USA • Maintenance Costs (efficiency) • Reliability (effectiveness) 25

26. Technology Assessment Regulations & Standards Market Competition Financial Constraints Epidemiological Data Technology Must Be Well Managed After Incorporation Health Policy (Mission & Vision) feedback StrategicPlanning Architects Manufacturers & Distributors Acquisition Service Suppliers Installation/Acceptance Information Technology Clinical Use Utilization Standards management Maintenance & Management Quality Improvement & Risk Management Facilities Management Material Management Retirement

27. Evidence-Based Maintenance - EBM A continual improvement process that analyzes the effectiveness of maintenance resources deployed in comparison to outcomes achieved previously or elsewhere and makes necessary adjustments to maintenance planning and implementation. Fishing = Process Catching = Outcome

28. EBM Strategy & Frequency Comparison F12 = annual inspection R/R = repair or replace Samp = statistical sampling

29. EBM Procedure Comparison OEM = manufacturer recommended procedure Hospital = hospital developed procedure

30. EBM Cause-Code Grouping Analyses Results No failure = no problem found in SM or repair Future = unpreventable failure Indirect = use, peripheral, evident failure Direct = hidden, preventable, predictable, service-induced

31. DISCUSSION: Misconceptions1 • Equipment life expectancy (aka “lifetime” or “usable life”) • Replace equipment before “end of life expectancy?” • How is reliability affected by life expectancy? • Besides the average life expectancy, shouldn’t you look at the standard deviations and individual cases?

32. DISCUSSION: Misconceptions2 • “End of Life” notices from manufacturers • Should stop using equipment? • Replace equipment as soon as possible? • Ignore the notice? • Evaluate “return on investment” for continual support and, if justified, include in the Strategic Equipment Planning? END OF LIFE products produced Regulatory approval time (years) See, e.g., M.N. Skoufalos, Numbered Days-Examining the true meaning of medical equipment ‘End of Life,’ Medical Dealer, Oct 2012, pp. 57-60. PRODUCER’S PERSPECTIVE Marketing & Distribution R&D investment high profit medium profit low profit

33. DISCUSSION: Misconceptions3 • “Maintenance Expenditure Limit” (MEL)US Army Tech Bulletin Med 7 states repairs shall NOT be conducted if the cost of repair exceeds the replacement cost multiplied by the percent of useful life remaining (limited between 10% and 65% for equipment that exceeded its life expectancy and has not exceeded 80%, respectively). While repairs should NOT be conducted at any cost, it should also NOT be constrained rigidly to replacement cost, as capital budget is often separate from operating budget.

34. DISCUSSION: Misconceptions4 • Appropriate Technology (Equipment) was characterized by the Office of Technology Assessment (OTA) as: • A technology may be considered appropriate when its development and use: • are in reaction to or in anticipation of defined goals relating to problems or opportunities in the disability area, • are compatible with resource constraints and occur in an efficient manner, and • result in desirable outcomes with acceptable negative consequences or risks to parties at interest. • “Appropriate technology” or “appropriate application of technology” does not require that a technology be simple or that it be inexpensive, only that it be suitable for the intended effects and that it take into account any constraints, such as the resources available. • The most appropriate technology in a given situation is one that provides the greatest ratio of desirable outcomes to negative effects and resources consumed, providing that outcomes and consequences have been defined and are of sufficient value as judged by appropriate parties at interest. OTA, Technology and Handicapped People, May 1982

35. Teach him to fish and you feed him for life. Give a man a fish and you feed him for a day. DISCUSSION: Misconceptions5 • Examples of Appropriate Technology that can be considered strategic in incorporation: • Solar-powered refrigerators for vaccination campaigns • Cellular telephones for rural healthcare • Telemedicine for remote areas and prisons • Water treatment systems for disaster relief (Mexico) • Better even than appropriate technology is technology (knowledge) transfer

36. DISCUSSION: Challenges • Many challenges (opportunities) • Lack of accurate, reliable information (comparative performance, reliability, support costs, purchase costs, etc.) • Lack of trained purchasing and technical personnel • Many rules, regulations, and restrictions • Inflexible finance restrictions (can only buy equipment but not parts, only products made in certain countries, etc.) • Many others… • However, all these are fairly easy to resolve...

37. DISCUSSION: Challenges2 • The real challenges (i.e., the root causes) are more difficult • Lack of awareness among decision makers • Emotional involvement: • Power struggle • Status symbol • Greed and short-sightedness of some lenders, donation organizations, manufacturers and suppliers • Hope you have other solutions to share with me

38. CONCLUSIONS • Incorporation is not difficult: • Analyze carefully the need, impacts, costs, risks and benefits of each technology incorporation • Assess alternative technologies • Compare competitive products available on the market in terms of quality, specifications, and total cost of ownership • Use a multidisciplinary team to manage the procurement process to ensure all aspects are covered, as well as transparency • Analyze possible alternatives to acquisition • But you need to be willing and able to address the challenges

39. CONCLUSIONS2 • Technology is evolving extremely fast: • Electronic health records • Telemedicine • Telehomecare • Mobile health • Tissue engineering, nanotechnology, biomaterials, etc. • Synthetic biology • Organ re-growth and replacement • The sooner you start managing technology, the easier will be to face the on slaughter of new technologies Hardware & software Wetware But the good news is that you may have >100 years of work time as your life expectancy will be >150 years soon…

40. THANK YOU! ¡GRACIAS! • Please contact me if you have any questions or suggestions • Binseng Wang, ScD, CCE, fAIMBE, fACCE • Vice President, Quality & Regulatory Compliance • ARAMARK Healthcare Technologies (www.aramarkheatlhcaretechnologies.com) • Telephone: 704-948-5729 • Email: wang-binseng@aramark.com • Member of ACCE’s InternationalCommittee