A 15-year agreement with equipment vendor is proving beneficial to provider, vendor and patients
When you’re investing thousands – millions – of dollars on capital equipment for your IDN, you have to ask yourself: Who can I trust?
The equipment OEM or distributor? If so, you hope he or she is telling you the whole story, is looking out for your best interests, and will be quick to answer the phone when you call with a problem after your purchase.
Your department heads? Isn’t it true they can develop a case of tunnel vision once they set their eyes – and hearts – on a new piece of equipment they saw at a show?
How about your CFO? Sometimes it seems like she never wants to replace a single piece of equipment again.
Your marketing people? They know what’s hot and what’s not technology-wise, and they know what your competitors are doing. How much should your IDN invest in technology that may enhance market share … but may not?
AU Health – formerly Georgia Regents Medical Center – in Augusta, Ga., asked itself these questions a few years back. Then, administrators determined that they needed the expert assistance of equipment manufacturers in the capital equipment planning and acquisition process. But they also decided that traditional transactional relationships with such vendors wouldn’t necessarily yield the best effects long-term.
So they decided to go long. In June 2013, the IDN – a public academic health center which includes a medical center, children’s hospital, cancer center and outpatient facilities – signed a 15-year agreement with Royal Philips. Worth approximately $300 million, the agreement would offer the IDN advanced medical technologies, consulting services, and planning and maintenance services at a predetermined monthly fee.
Three years later, that agreement is still working. And, according to Nancy Hannan, who is the Philips relationship liaison for AU Health, the fun stuff is just beginning.
Strategic approach
Hannan, who has been with AU Health for 21 years, assumed the role of Philips relationship director two and a half years ago. “I’m a business person,” she says, having served as administrator for different clinics and service lines in the IDN. When the opportunity came up to serve as relationship director, she grabbed it. “It was a chance to do something different.” The relationships that she had formed over the past 20 years would only help.
“Large capital purchases – planned or unplanned – obviously take a heavy toll on finances,” says Hannan. “This agreement enabled us to strategically map when equipment would be replaced, and smooth payments out over time. And if an emergency comes up, there are methods to push up the timeline for replacements and adjust the payments accordingly.”
In the past, the IDN – like many others – used the “break-fix” approach. A piece of equipment got old, broke down, and either got fixed or (if the dollars were there) replaced. AU Health’s administration envisioned a more strategic approach and found a willing partner in Philips.
Better than transactional
“Philips is here living, breathing and working with us,” says Hannan. “They are part of our team.” That includes her counterpart from Philips, who helps oversee the alliance; a service manager, engineers, consultants and others. In addition, Philips has placed a full-time, onsite educator at AU Health, as well as an onsite innovation director.
“In a transactional relationship, sometimes you’re not sure if the salesperson is helping you make the best choice,” says Hannan. “After the sale, you’ll get a product but you won’t hear from them again until you need something and reach out.
“But Philips helps us make better decisions. They may say, ‘You don’t need this model,’ or ‘you might delay that purchase, because the newest model might not give you a bigger bang for the buck.
“They’re not focused on making a sale, but rather on helping us make the best choices.”
Technology mapping
At the start of the 15-year alliance, Philips completed a “technology mapping plan,” that is, a complete inventory of the IDN’s imaging and monitoring equipment, explains Hannan. For much of Years 1 and 2 of the agreement, Philips and AU Health analyzed equipment, and replaced that which was clearly outdated, and scheduled for future replacement that which was aging, but still functional.
Equipment repair/replacement decisions are a joint process, she says. A Joint Oversight Committee comprises five executives from Philips and five from AU Health. Those representing Philips include key functional leaders from sales, service, finance and managed services; while those representing AU Health are the chief nursing officer, chief medical officer, COO, CIO and CFO. Working under the committee are various work groups, co-led by someone from Philips and someone from AU Health.
“We consider all aspects when planning for new equipment, such as our shared vision of standardization of care and quality and safety, above all else,” says Hannan. “Some of the decisions made based on these common values allowed us to provide a standardized fleet of AED’s/defibs and ventilators across the IDN, which reduces variation of practice, reduces staff educational needs, and improves staff satisfaction and, ultimately, patient care.”
The agreement covers imaging and monitoring equipment, as well as patient-centric lighting systems, such as that found in the Children’s Hospital of Georgia, part of AU Health.
But the agreement encompasses much more than technology. As part of its consulting services, for example, Philips is working with AU Health on issues related to quality, clinical growth and patient throughput.
Technology can play a role in helping AU Health move patients out of the hospital into a more suitable care setting in a timely way, says Hannan. “But there’s probably more to it than that,” she says. Are there bottlenecks in the discharge process? Is the care facilitation team adequately staffed? How are patients processed through the system? The consulting group can help.
Similarly, Philips has worked with AU Health’s chief medical officer and team to improve alarm management. “We have seen a notable decrease in non-urgent alarms,” says Hannan. “And that isn’t really about the technology; it’s about evaluating, testing, checking, and re-evaluating.”
Implementing the Philips Kitten Scanner in the Children’s Hospital has helped reduce kids’ anxiety prior to a CT scan, she adds. The miniature model of a CT scanner allows pediatric patients to put a toy through for imaging, so they can see what it will be like when they go into the real CT machine.
Three years running
Three years into the agreement, Philips and AU Health continue to refine their ways of working and communicating with each other. “And it is running smoothly,” says Hannan, who credits those who worked out the original agreement for that. “They tried to think of everything.”
After a couple of years of work on equipment replacement, “now we are getting more into what I like to call the fun stuff,” she says. “Our innovation team is forming, and we are beginning to see some of the fruits of our labors related to the consulting projects.”
Partnering with Philips has proven that 1 + 1 can be so much more than 2, she adds. “Some Philips employees had never been to a customer site, and some of our team were completely unfamiliar with the private sector. So it is a great learning experience for both sides.” Patients, their families and staff members are feeling the benefits. “The excitement of the staff as they obtain new equipment or receive a comprehensive training program is very rewarding to see.”
In fact, the Philips agreement has worked so well that AU Health is pursuing long-term agreements with other vendors. One year after signing on with Philips, for example, the IDN formed a 14-year alliance with Cerner Corp., the health information technology firm.
“One of the reasons our agreement with Philips has been so successful is that our healthcare visions are similar,” says Hannan. “We wanted to partner together, rethink everything together, and improve the patient experience. That’s the ultimate vision of the partnership.”