Jan 10, 2024
By Neal Patel

3 Ways to Boost Savings in Healthcare Capital Spending

Facilities and HTM Capital Planning teams strive to reduce costs and increase efficiency. However, long stakeholder meetings, subjective asset prioritization, and lengthy capital budget approval cycles add time and budget risks. However, with effective capital planning software, your healthcare system can maximize money and time. Savings come in two forms: hard (tangible cost reductions) and soft (productivity improvements). Here are more details on how effective capital planning tools can improve your budgeting process:

1. Hard Savings: Reduce Overbuying Equipment

Capital planning software provides analytics on current equipment inventory, such as utilization rates, condition, and age/useful life. This visibility allows organizations to make data-driven decisions about right-sizing equipment purchases. For example, a health system has 10 MRI machines of various ages and conditions in its radiology department. Its current capital panning system used manually inputted condition data and stakeholder insights to determine it needed to replace 3 MRI machines and repair 7. However, after the budget went through various approval cycles and meetings with department heads and leadership, the health system decided to replace all 10 MRI machines. This decision, based on subjective reasoning, added extra, potentially unnecessary expenses to the annual budget. If the health system leveraged a data-driven capital planning tool, it would easily identify this overcapacity and be able to model savings (using key asset data and automated scoring for prioritization) from reducing MRI purchases from 10 to 8 in the capital budget (20% savings). Reducing capital dollars spent is a direct hard savings benefiting the bottom line.

Another typical example that leads to hard savings with capital planning software is extending the life of existing assets and gauging whether repair or replace is more cost-effective. Capital planning tools analyze maintenance records, lifecycle status, and performance data to identify assets that may not need immediate replacement. For instance, preventative maintenance or minor upgrades could extend the usable life of some assets by 3-5 years. Delaying replacement spending leads to hard savings from reduced capital requests. The advanced analytics in capital planning software enable these optimized lifespan projections.

2. Soft Savings: Improve Staff Productivity

Automating capital planning processes with software tools can lead to significant improvements in productivity and time savings for staff. For example, Clinical Engineers and Facility Managers who still rely on decentralized data tools traditionally spend eight weeks or more extracting data and prioritizing capital needs. Moreover, this data can quickly become outdated, which can lead to skewed information and additional budget risks. Capital planning software can automate these processes and keep the data relevant, resulting in a 20% increase in productivity and saving around 320 hours (two weeks or more) annually. The Facility or HTM Capital Planner can then redirect the saved time to more critical initiatives.

3. Convert Soft Savings into Hard Savings

This 20% productivity gain from the example above generates soft savings that can be quantified and redirected to other initiatives. For instance, investing in training for the in-house team can lead to reduced reliance on external consultants or specialists for tasks such as compliance audits and quality assessments. This upskilling leads to a direct reduction in consulting and vendor fees.

Capital planning software generates hard and soft savings that boost the bottom line and create budget flexibility. These tools’ advanced analytics and automation optimize spending on facilities, equipment, and technology through data-driven decision-making. As healthcare systems deal with tight budgets, capital planning tools are invaluable for identifying and capturing savings opportunities.

Learn more about how Nuvolo’s Capital Planning product can boost your savings in your capital budgets and save your team and stakeholders valuable time during the capital planning lifecycle.