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Understanding total cost of ownership

August 28, 2018
HTM Parts And Service
From the August 2018 issue of HealthCare Business News magazine

The survey also goes into more detail about additional factors to consider in the preventive maintenance contract and the warranty. For preventive maintenance, the survey talks about how labor, warranty on work done, parts typically used in preventive maintenance service, and the preventive maintenance kit cost are additional factors to consider. For warranty, the customer needs to look into the coverage, all parts, and the length of the warranty. Also in the survey, the biomedical engineers and the OR managers talked about how it is important to have certified technicians and use the original equipment manufacturer (OEM) parts in a service plan. On the other hand, the CFO/VAC members believed that both those items were not as important as the biomedical engineers and OR managers put it. The focus of the biomedical engineers and the OR managers was on equipment uptime, and that the hospital keeps their products in the best condition possible.

Overall, to simplify the concept of the cost of ownership there are four main criteria:
1. Acquisition
2. Operation
3. Maintenance/repair
4. Disposition

The important things to know about acquisition are the equipment purchase price, financing costs, installation costs, qualification costs, and cost per purchase order. The important things to know about operation are the education and training, accessories, consumables, software upgrades, supplies, operator cost, and mean time between failures. For maintenance, it is important to understand the cost of repairs, cost and frequency of preventive maintenance, service contract cost, on-demand costs (pay-per-use) or service, parts costs, in-house engineer labor costs, and same day fix rate with mean time to repair. The last thing to consider is the factor of disposition, such as the cost of disposal, storage costs, revenue from sale and auction, and write-offs.

It is not unusual for customers to focus on purchase price, however, maintenance, repair, and other costs should be considered when evaluating a product. It is important to consider the total cost of ownership because some equipment can have hidden costs in consumables, parts, and maintenance.

About the author: Rick McDaniel is the marketing manager for Getinge.

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