The Triple Aim
As health care organizations pursue the Triple Aim vision, they need to explore every facet of their care delivery systems. Reliance on technology, the vehicle for reform, requires organizations to take a fresh look at how they view technology assets. This paper briefly explores a new paradigm for technology acquisition and lifecycle management that aligns with improving patient care, reducing health delivery costs, and improving population health.
An old strategy in a new environment
Historically, most health care organizations viewed technology like an emerging nuisance–with reluctant providers preferring pen and paper. Technology equipment was not regarded with the same esteem as equipment used to deliver direct patient care, nor could a direct line be drawn to the bottom line. Therefore, in many health care organizations, an efficient and cost-effective strategy was never developed to acquire and manage the lifecycle of technology, resulting in costly maintenance and repairs over time.
What has changed?
HITECH and the PPACA have created an environment where technology is critical in improving patient care, enhancing the patient experience, and reducing health delivery costs. Electronic Health Records (EHR) utilization incentives and penalties are directly tied to an organization’s financial performance. New regulations and new technology require new strategies. While holding on to outdated technology may have been an option in the past, employing this strategy today will hinder performance, competitiveness and the bottom line.
What makes this so different?
2014 is a pivotal year in health care: + Decreases in reimbursements + Technology incentives drying-up + Introduction of insurance exchanges + Unpredictable government regulations (ex: ICD-10) These changes are decreasing cash flow, aging accounts receivables, and challenging even the largest and strongest institutions. This is the new normal; health care organizations are trying to become comfortable with being uncomfortable.
It is time to rethink the paradigm
A strategic commitment to keeping technology current is essential for health care organizations to achieve the Triple Aim, remain competitive and, ultimately, to survive. Embracing a routine refresh cycle utilizing lease financing enables you to: + Lower acquisition costs: low, fixed payments made over the lease term will cost less than purchasing the equipment outright + Reduce indirect costs: technology is a rapidly changing commodity with a short useful life; aligning term with useful life and maintenance coverage will significantly reduce support and out-of-warranty maintenance costs + Stay current and flexible: as technology changes, health care organizations can easily refresh equipment to keep pace with innovations in technology Leasing is not a decision based on whether or not you use your cash. It is a strategic financing method organizations use to manage the life cycle of their equipment.
Total Cost of IT Ownership Breakdown 
Total Cost of Computer Purchase 
The data presented in these graphs is based on a 2009 study1 sponsored by Intel corporation.
Untapped Savings
Unlike traditional for-profit businesses, non-profit hospitals do not experience the tax savings created by the depreciation of assets (a tax-shield). Leasing is the only tool that will allow hospitals to experience savings from the tax-shield. In a true lease, the leasing organization is able to depreciate the equipment, resulting in tax savings that will pass through to the health care organization.
Conclusion
Budgeting for technology in this era involves a new paradigm for how we acquire and maintain equipment. The solution to technology management challenges facing health care today starts with rethinking the way we view technology and its increasing importance in our pursuit of the Triple Aim. Organizations must make a strategic commitment to technology and create an environment that is able to adapt to change.
Works Cited
1Timothy Morey and Roopa Nambiar, “Using total cost of ownership to determine optimal PC refresh lifecycles,” Intel, pp. 3-9, May 2009. Available at: http://www.intel.com/content/www/us/en/pc-upgrades/pc-upgrade-industry-study-using-total-cost-of-ownership-to-determine-optimal-pc-refresh-lifecycles-paper.html. [Accessed February 10, 2012].
Written by: Jim Tempio
http://www.fahf.com
Related
The Triple Aim
As health care organizations pursue the Triple Aim vision, they need to explore every facet of their care delivery systems. Reliance on technology, the vehicle for reform, requires organizations to take a fresh look at how they view technology assets. This paper briefly explores a new paradigm for technology acquisition and lifecycle management that aligns with improving patient care, reducing health delivery costs, and improving population health.
An old strategy in a new environment
Historically, most health care organizations viewed technology like an emerging nuisance–with reluctant providers preferring pen and paper. Technology equipment was not regarded with the same esteem as equipment used to deliver direct patient care, nor could a direct line be drawn to the bottom line. Therefore, in many health care organizations, an efficient and cost-effective strategy was never developed to acquire and manage the lifecycle of technology, resulting in costly maintenance and repairs over time.
What has changed?
HITECH and the PPACA have created an environment where technology is critical in improving patient care, enhancing the patient experience, and reducing health delivery costs. Electronic Health Records (EHR) utilization incentives and penalties are directly tied to an organization’s financial performance. New regulations and new technology require new strategies. While holding on to outdated technology may have been an option in the past, employing this strategy today will hinder performance, competitiveness and the bottom line.
What makes this so different?
2014 is a pivotal year in health care: + Decreases in reimbursements + Technology incentives drying-up + Introduction of insurance exchanges + Unpredictable government regulations (ex: ICD-10) These changes are decreasing cash flow, aging accounts receivables, and challenging even the largest and strongest institutions. This is the new normal; health care organizations are trying to become comfortable with being uncomfortable.
It is time to rethink the paradigm
A strategic commitment to keeping technology current is essential for health care organizations to achieve the Triple Aim, remain competitive and, ultimately, to survive. Embracing a routine refresh cycle utilizing lease financing enables you to: + Lower acquisition costs: low, fixed payments made over the lease term will cost less than purchasing the equipment outright + Reduce indirect costs: technology is a rapidly changing commodity with a short useful life; aligning term with useful life and maintenance coverage will significantly reduce support and out-of-warranty maintenance costs + Stay current and flexible: as technology changes, health care organizations can easily refresh equipment to keep pace with innovations in technology Leasing is not a decision based on whether or not you use your cash. It is a strategic financing method organizations use to manage the life cycle of their equipment.
Total Cost of IT Ownership Breakdown 
Total Cost of Computer Purchase 
The data presented in these graphs is based on a 2009 study1 sponsored by Intel corporation.
Untapped Savings
Unlike traditional for-profit businesses, non-profit hospitals do not experience the tax savings created by the depreciation of assets (a tax-shield). Leasing is the only tool that will allow hospitals to experience savings from the tax-shield. In a true lease, the leasing organization is able to depreciate the equipment, resulting in tax savings that will pass through to the health care organization.
Conclusion
Budgeting for technology in this era involves a new paradigm for how we acquire and maintain equipment. The solution to technology management challenges facing health care today starts with rethinking the way we view technology and its increasing importance in our pursuit of the Triple Aim. Organizations must make a strategic commitment to technology and create an environment that is able to adapt to change.
Works Cited
1Timothy Morey and Roopa Nambiar, “Using total cost of ownership to determine optimal PC refresh lifecycles,” Intel, pp. 3-9, May 2009. Available at: http://www.intel.com/content/www/us/en/pc-upgrades/pc-upgrade-industry-study-using-total-cost-of-ownership-to-determine-optimal-pc-refresh-lifecycles-paper.html. [Accessed February 10, 2012].
Written by: Jim Tempio
http://www.fahf.com
