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6 Ways Hospitals Lose Money: Covid-19 & Inaccurate Record Keeping

     During the Covid-19 pandemic, many hospital supply chain professionals are busy keeping up with the demand for PPE and Covid-19 test kits. The different departments don’t have time to track the fixed assets that are being disposed of.

Many hospitals don’t have the staff to focus on this issue. As a result, hospitals lose thousands of dollars that should be accounted for in their yearly budget reports for fixed assets.

1) Paying for maintenance contracts that don’t exist. If equipment is not decommissioned properly and removed from the hospitals fixed asset ledger, the hospital could still be paying a maintenance contract on that piece of equipment. So, it is important to follow the hospital’s protocols for taking a piece of medical equipment out of service when removing any obsolete items from the books.

2) Paying rental fees for equipment that is no longer needed or has been returned to the vendor. If equipment is not properly removed for the fixed asset ledger or rental pool, the rental equipment could continue to be billed by the rental company unless there is documentation to cancel the rental agreement. An equipment rental company will not voluntarily pickup the rental device or stop the billing cycle.

3) Asset tracking. Most hospitals should maintain some type of asset tracking software or RFID tracking. Most hospitals should have a good idea of where most of their high value medical devices are at any given time, especially if that equipment moves from department to department. Hospital supply chain professionals need to keep track of their high value equipment assets’ location to keep an accurate record for the hospital’s management team and annual budget process.

4) Assets never entered into hospitals CMS. Hospitals obtain loaners or medical equipment that is not on their books. Even with an accurate paper trail and inventory locating process, they are not equipped to manage the equipment acquired by these unusual means. Another example might be a fixed asset that was not purchased but leased; this will lead to more items being under the hospital’s fixed asset ledger that were never identified in the system.

5) Excess accumulated equipment depreciation. If medical equipment has been disposed of but not removed from the hospitals fixed asset ledger, it will inflate the hospital’s bottom line because that $100,000 item purchased 7 years ago now has a fair market value of $10,000. This can work against a hospital looking for additional financing or raising capital for expansion.

6) Budgets cut or reallocated to fight Covid-19. With the surge in Covid-19 patients, hospitals have to reallocate funding to keep up with the high demand for PPE and other resources to fight the pandemic. Certain departments who were in charge of maintaining the fixed assets are now more involved with supply chain and inbound supply of PPE. As a result, clinical staff are busy with patient care and don’t have time to investigate if the equipment is still in use.

ZRG Medical is strictly focused on helping hospitals save money through their hospital’s asset disposition program. Let us help your hospital with their inventory process and surplus equipment removal.

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