Why Hospitals Are Buying $400,000 Coat Racks

As a co-founder of the Cohealo team, I’ve spent a lot of time inside of an array of hospitals and healthcare organizations over the years, observing how they use medical equipment. What I’ve found is that while the need for financial prudence drives scrutiny down to the smallest details (think bed sheet purchases), massive items such as medical equipment lurk largely off their radar. Every surgical services team has its stories. Some real examples:

• A $400,000 surgical laser used once and then relegated to the back of an equipment supply room, under a tarp, where clinicians forgot it was even there
• A state-of-the-art surgical table sitting in plain view, but unused, moved back and forth between the hallway and an equipment storage room of a major hospital’s surgical suite … for more than a year
• A storage room full of unused, but perfectly serviceable, medical equipment referred to by the local surgical services staff as “the rusty dusties”

How does this happen?

Take a step back and it may seem that these health systems are picking up pennies while stepping over medical equipment dollars. But, as always in healthcare, the reality is much more complex. No one sets out to make wasteful purchases. Here’s what usually happens:

1) New equipment is purchased, but physicians either prefer the older version or don’t learn how to use the new one

Equipment within specific service lines is updated by purchasing newer models and/or versions. Physicians well acquainted and well versed with the older equipment may fear becoming less efficient and less productive while getting used to the next generation. While time for training and practice is always needed, sometimes the preference for the old equipment can stick.

2) Equipment is purchased for a specific physician, who then leaves

Equipment is sometimes purchased to support procedures that individual physicians bring to a hospital. I’ve seen those physicians subsequently take their cases to competing hospitals, either one-off (part of the time), or full time when their employment circumstances change. The hospital then finds itself with surplus equipment for procedures it can no longer deliver.

3) Over-purchasing to support demand that does not materialize as expected.

Service line and procedure demand is a tough bullseye to hit in our ever-changing and competitive healthcare market. In anticipation of patient needs, hospitals may purchase a redundant equipment item so they can avoid long turnaround times between cases and procedures. To strike the right balance of owned equipment vs. rental, following trending data on demand is helpful, but what happens to equipment when that demand declines or drops off? Despite demand possibly existing at facilities nearby, the equipment lives on at a fraction of its capacity.

Avoiding the coat rack syndrome: balancing supply and demand

There are three steps that health systems and hospitals can take today in order to avoid filling supply closets with millions in unused equipment:

• Involve clinicians in equipment decisions early and often. Change management around new equipment acquisitions is hardest when sprung on OR teams late in the game.
• Avoid acquiring equipment based on individual preferences alone – infuse decisions with standards. Gravitating toward preferred manufacturers or technologies on a system level ensures, for example, that your Jackson table will be utilized by other clinicians if a new superstar surgeon moves on.
• Share underused equipment with peer facilities that need it. The rise of the so-called “sharing economy” has resulted in new tools for making medical equipment transparent and available across all health system sites.