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Principals of Purchase of
Medical Equipment
Vendor Selection and Effective Purchase
Policy for Hospitals thus increasing Profits
MEDICON -THE HEALTHCARE CONFERENCE
24-26TH MAY 2019

Sachin Kale
Bsc (Microbiology)MBA (Fin) ,GMPE (IIM-Indore)
Certified Quality Professional
Chief Administrative Officer
Mohak Hi-tech Specialty Hospital
Bhandari Group of Hospitals Indore`
24-26TH MAY 2019

Introduction
• Healthcare Dynamics is changing and it is very important
to have Right technology at Right Place to avail best
patient care and satisfaction.
• Right Medical Equipment Technology & Manpower are
vital for any hospital to have better Patient outcomes.
• When we initiate new projects 40-45 % cost being infused
on Medical Equipment's and its very important to select
the inventory which suits best to your Infrastructure and
depends on your approach towards Market Capitalization
24-26TH MAY 2019

Purchase Options
• Outright Purchase
• Financial Lease
• Operating Lease
• Vendor Financing
• Rental (Pay Per Use)
• Revenue Sharing
• Group Purchase
24-26TH MAY 2019

Purchase Decision
• Buy New Equipment
• Buy Gold seal Equipment
from Company
• Buy Refurbished Equipment
• Placement of Equipment's
by Company on Case
/Workload basis

Total Cost of Ownership
• Its an analysis that places a single
value on the complete lifecycle of a
capital purchase. This value includes
Acquisition, Operation, and the softer
costs of change management that
flows down from acquisition
• Total cost of ownership analysis help
make critical lease vs. buy comparisons.
• By incorporating this into acquisition
process, it directly impacts outcomes in
vendor selection, prioritization of
capital acquisition, and overall
corporate budgeting.
24-26TH MAY 2019

Why to Implement TCO
• Institute a “Best practice" (moving toward a systems
approach)
• Support the assumption that lowest price does not always
realize the best result
• Improve quality, information flow, decision making, and the
business process
• Obtain best value for institution
• Improve competition by understanding what drives cost
• Justify changing suppliers Source: Total Cost Modeling in
Purchasing

Team Players for
Decision Making
• Chief Finance officer
• CEO/COO/MD as per
Hierarchy
• Department Heads
• Purchase Head
• Biomedical Engineer
/Equipment specialist
• Nursing Head/Clinical Team
Member
• Designated Team Receiver
24-26TH MAY 2019

Purchase Matrix
S.No Benefits New Improve Stop
1 Strategic Benefits
How the Medical
Technology will provide a
new Strategic benefit to
the Organization
How the Medical
Technology will provide
improved strategic benefits
How the Medical technology
will stop or reduce
organizational inefficiencies,
wasteful activities
2 Financial Benefits
How we will get Financial
Benefits from the Medical
Technology
How the Medical
improved financial benefits
How the medical technology
will stop or reduce
organizational duplication in
product or supply use
3 Quality Benefits
How the Medical
new patient quality of
care benefits
How the Medical
improved quality of patient
care benefits
How the Medical Technology
will stop or reduce poor
quality of care concerns
4 Safety Benefits
How the Medical
new patients or staff
safety benefits
will provide improved
existing safety measures
will stop or reduce unsafe
activities
5
Regulatory
Benefits
How the Medical
Technology will meet new
regulatory requirements
How the Medical
improved existing
regulatory compliance
How the Medical Technology
will stop or reduce regulatory
non-compliance
24-26TH MAY 2019

Purchase Challenges
 Need Assessment Study
 Feasibility Study
 Market Dynamics
 Vendor Selection
 Inviting Quotes
 Specification Analysis
 Sorting of Sub-standard Product
line / Middle Man /Vendors
 Benchmarking Quality
24-26TH MAY 2019

Purchase Challenges Contd..
 Cost Analysis (Recurring Costs)
 Warranty Clause
 Composite Cost (CIF/FOB/FOR/AMC /CMCs)
 Safety Issues
 Life of Equipment
 Turnkey Installations
 Negotiations
 Procurement at competitive Price
24-26TH MAY 2019

Purchase Challenges ..
Allied Issues
 Technology Obsolences
 Undue Interference & Influences
 Trainings
 Regulatory Aspect
 Value for Money
 Payment Mode
 Performance Guarantee
 Uptime Guarantee
 Penalty Clause
24-26TH MAY 2019

Negotiation
If you are armed with right Information & Proven
Negotiation strategies we can achieve best prices
on product. It Leads to More savings and Low
Total Cost of Ownership
While making negotiations I would suggest to
adopt these strategies :
24-26TH MAY 2019

Create Competition for
Product Line
• A credible competitor must provide a product or
service that meets established technical, financial
and other requirements, and that should be
helpful to our clinical team for analysis.
• When we are finalizing Competitor please ensure
to pick one that offers comparable clinical
performances and market acceptance i.e. credible
installation base
24-26TH MAY 2019

Create Competition for
Product Line
• Clinicians often have strong preferences and there
might be situation when they are in support of a single
product from a specific supplier. However, without
genuine competition from multiple suppliers, You cant
get meaningful Negotiation and price
• In absence of legitimate competition available from a
single supplier, consider sourcing a used version of
same model from a third party supplier or even another
hospital. This helps in creation of Competitive pressure
and we can take lead in negotiations
24-26TH MAY 2019

Continuous Communications
• Before starting negotiation process
it is very important that internal
stakeholders are fully confident of
Configurations or specifications we
have finalized.
• It should be full transparent
representation not only part of
Stakeholders but also vendors . It
gives faith and support to
Negotiation process.
• Whatever we set our expectations it
is important to communicate very
transparently and without any
surprises and unwanted disruptions
of Negotiations
24-26TH MAY 2019

Be Committed to Deal
• It is very important for negotiation to stick to your points or
commitments
• You cant leave the Battle in between the Negotiation and its continuous
process till we end up with deal.
• The purchase order is the prize that cements the supplier’s “win” and
allows them to declare victory to their superiors
• Use the promise to deliver a P.O. promptly as it helps sales people to go
for bargain with their management for any final price discounts .
• Too many hospitals get to the end of a negotiation, and then can’t
deliver the P.O. without weeks of delay. This can leave suppliers anxious
and wondering if the deal is truly solid, or if you are “just shopping” and
may not actually have the approval to move forward.
24-26TH MAY 2019

Conclusion
24-26TH MAY 2019
• Selecting new medical technology for your organization can be daunting task. It is
important to implement a systematic approach in evaluating the new medical
technology starting with clearly articulated need for medical technology
• A systematic approach for acquiring medical technology should include : what
individual or team has responsibility for vetting and presenting project;
documenting upfront as well as up going costs (such as licensing ,maintenance and
repair fees); evaluating life cycle of equipment, assessing better to lease or
purchase, identifying and addressing any barriers and overseeing the
implementation of new medical technology
• Last but not least Purchase deals cannot be closed with any Single thumb rule .
You always need to innovate your Purchase Initiatives.

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