Capital and Asset Management in Maldivian Health Services

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Situation Analysis on medical equipment in
Maldives
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MINISTRY OF HEALTH AND FAMILY
MALE’, MALDIVES
[2012]
[Situation Analysis on
medical equipment in
Maldives]
[Capital and Asset Management in Maldivian Health Services]
Author: Dr. Shoeb Ahmed Ilyas.
B.Sc. (Biotechnology), BDS, PGDHM, M.Sc. (Biotechnology), MHRM, M.Sc. (Psy), EMSRHS (Public
Health), M.Phil (Hospital & Health Systems Management).
Health Technology Assessment (HTA) Consultant
Report presented to: Health Information, Project Monitoring and
Coordination Section, Ministry of Health and Family (MoHF).
Date: 29-03-2012.
[ S O S U N M A G U , M A L E ’ 2 0 3 7 9 , M A L D I V E S ]

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Contents
List of abbreviations..................................................................................................................................5
Background of the Caritas Project ................................................................................................................6
Objective of the consultation ...................................................................................................................6
Methodology.............................................................................................................................................7
Acknowledgements...................................................................................................................................8
1. Introduction ..........................................................................................................................................9
2. Situation Analysis................................................................................................................................10
2.1Country general profile..................................................................................................................10
2.2 Capital and asset management in maldivian health services.......................................................10
2.3 Capital planning ............................................................................................................................11
2.4 Asset registers...............................................................................................................................11
2.5 Priotization of business case.........................................................................................................12
2.6 Finance allocation .........................................................................................................................12
2.7 Capital budget and decision making process................................................................................13
2.8 Major influencing factors in capital request prioritization...........................................................13
2.9 Capital budgeting and prioritization .............................................................................................14
3.0 The major problems with existing biomedical equipment at IGMH: ...........................................14
3.1Factors driving major capital expenditure in terms of priority ..........................................................15
3.2 Policies and procedures for biomedical equipment asset management ............................................15
3.3Data availability.................................................................................................................................15
3.4 Current priority issues for IGMH......................................................................................................16
3.5 Procurement section, MoHF status ..............................................................................................16
3.6 Supply section, MoHF status ........................................................................................................16

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3.7 Indira Gandhi Memorial Hospital (IGMH) status.........................................................................17
3.8 Import Regulations for Medical devices.......................................................................................18
3.9 Maldives Food and Drug Administration (MFDA) status ............................................................18
4.0 Overview and Context of capital expenditure of medical equipments in Maldives. ........................19
4.2 Key principles for funding biomedical devices..............................................................................19
5.0 Recommendation for Health service Corporation........................................................................24
6.0 Recommendations for procurement department........................................................................25
7.0 Recommendations for supply department...................................................................................25
8.0 Recommendations on development of delivery and commissioning tracking system ................27
9. Recommendations for strengthening the inventory management system....................................28
10. Recommendations on Import regulation of medical devices.......................................................28
11. Recommendations for Ministry of Health and Family (MOHF) ....................................................29
12. Proposed logical framework for strengthening of biomedical equipment management system 29
13.0 Appendices..................................................................................................................................32
Appendix 1: Asset registration form...................................................................................................32
Appendix 2: Asset registration list......................................................................................................32
Appendix 3: Adverse event reporting form for medical devices. .......................................................32
Appendix 4: Policy on Initial Testing and Evaluation of Biomedical Equipments. ...........................32
Appendix 5: Procurement policy ........................................................................................................32
Appendix 6: Policy on maintenance and repair of Medical equipments.............................................32
Appendix 7: Policy on disposal of medical equipments. ....................................................................32
Appendix 8: Policy on donation of biomedical Equipments. .............................................................32
Appendix 9: Risk rating for biomedical equipments. .........................................................................32
Appendix 10: Proposed Guidelines for medical classification of medical devices. ...........................32
Appendix 11: Sample of medical devices to be registered with MFDA.............................................32

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Appendix 12: Training Manual on Health Technology Assessment, Capital Utilization and Database
Management of biomedical devices....................................................................................................32
Appendix 13: Specifications of biomedical equipments.....................................................................32
Appendix 14: Capital and Asset Management Questionnaire. ...........................................................32
Appendix 15: Guidelines on calculating depreciation, total equipment stock values, usage rates…etc.
............................................................................................................................................................32

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List of abbreviations
D & CTS : Delivery & Commissioning Tracing System
HSC : Health Service Corporations
IGMH
IVD
LMIS
LSU
: Indira Gandhi Memorial Hospital
: In Vitro Diagnostic
: Logistic Management Information System
: Logistic Support Unit.
MoHF : Ministry of Health and Family
MoFT
MPS
NABMD
: Ministry of Finance and Treasury
: Mandatory Performance Standards
: National Advisory Board on Medical Devices
PCB : Printed Circuit Board
PEMEB : Public Enterprises Monitoring and Evaluation Board
PPM
PO
ROI
SEL
: Planned Preventive Maintenance.
: Purchase Order
: Return on Investment.
: Standard Equipment List
SOP
SoR
: Standard Operating Procedure.
: Schedule of Requirement
TCO
ToR
: Total Cost of Ownership
: Terms of Reference
TGA
TQM
: Therapeutic Goods Administration
: Total Quality Management
UNOPS : Unites Nations office for project services
WHO : World Health Organization

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Background of the Caritas Project
This study was commissioned by the Caritas, Italiana and Ministry of Health and Family
(MoHF), Maldives. One of the objectives of caritas project was to ensure the availability of
appropriate and functional biomedical equipments through health technology assessment,
maintenance and logistic system development and their management by skilled professionals.
Caritas funded this project to design and support the implementation of a policy that must
identify priorities based on systematic analysis of safety, efficacy, and cost effectiveness,
appropriateness according to the level of sophistication of the Maldivian health care system, its
components, social and cultural context. The policy will represent the foundation for MoHF
informed health care technology decisions including evaluation, selection, procurement,
maintenance and replacement of health care equipment and will support alignment of capital
investments with MoHF strategic, clinical and financial goals.
The analysis on which the policy and strategic plan are built will include a comprehensive
classification of current medical technology availability and future needs, identification of
existing processes throughout the technology lifecycle, from evaluation of new technology to
everyday use issues to disposal of obsolete equipment and areas of potential improvement in
particular redundancies and unnecessary expenditures. The health technology strategy will also
include a practical and flexible computerized systems applicable at all levels, from MoHF to
individual hospitals and health centers.
This report presents the results of a study on capital and asset Management of biomedical
equipments in Maldives. The study has been done by Health Technology Assessment Consultant.
Objective of the consultation
The objective of this consultation was to evaluate capital and asset management in Maldivian
Health services, to design and support the implementation of a policy and strategic plan with
projections regarding capital expenditure of medical equipment over the period January 2012 to
March 2012.

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Methodology
The methodology that has been applied in the assessment of current status of capital and asset
management (biomedical equipment) in Maldivian Health services by adapting a quantitative
and qualitative approach.
The quantitative approach adapted questionnaire and designed focusing on service strategy
planning and major capital planning, budget processes and prioritization of capital needs,
procurement and expenditure control, major capital medical equipment reporting and recording,
major capital funding, maintenance of major medical equipment items, risk management.
The questionnaire was distributed to Male Health Service Corporation Limited, Southern Health
Service Corporation Limited, Upper North Health Service Corporation Limited, Northern Health
Service Corporation Limited, Upper South Health Service Corporation Limited, North Central
Health Service Corporation Limited and South Central Health Service Corporation Limited by e-
mail with cover letter to all managing directors with a deadline.
Second deadline was extended to all Health service corporations, only Male Health Service
Corporation Limited replied to the questionnaire and no reply from other six corporations.
Proposal to visit these Health Service Corporation’s was made by consultant but due to
geographic and financial constraints, the proposal was not supported by MoHF.
The questionnaire findings reflect only the status of Male Health Service Corporation Limited
under which Indira Gandhi Memorial Hospital (IGMH) is covered, which is the only public
tertiary care center in Maldives. Henceforth the Male Health Service Corporation Limited is
referred as IGMH in the report.
The qualitative approach adapted was field visit and interviews with purchase and supply
department, Indira Gandhi Memorial Hospital (IGMH), Ministry of Finance and Treasury
(MoFT), National Social Protection Agency (NSPA), State Trade Organization (STO), Maldives
Food and Drug Administration (MFDA), UNOPS, WHO and Quality Assurance and
Improvement Department (QAID) of Ministry of Health and Family (MoHF).

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Acknowledgements
The Consultant is very much indebted to the support received from the Health ministers,
director’s generals and staff members of MoHF, and above listed national and international
organizations. The Consultant gratefully acknowledges the co-operation and support received
from the director, deputy director, assistant director and staff of Health Information, Monitoring
and evaluation section, MoHF.

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1. Introduction
It is a distinguished fact that medical equipment is one of the essential infrastructure elements for
the delivery of health services. Studies conducted by the World Health Organization (WHO)1
and other international agencies2
have shown that 25% to 50% of all health equipment that exists
in developing countries cannot be used for one reason or another, seriously impeding efforts to
improve the delivery of health services to their people. While one of the root causes of the
equipment idleness is the lack of funds, especially for covering recurrent costs, analyses
conducted by international experts indicate that the main root cause is improper management3
.
Access to capital, either through flexible funding or increased government capital investment
funds, is critical to upgrade the ageing infrastructure, replace equipment and invest in capital
works that will improve service delivery, and promote operational efficiencies
and innovation. However, an enormous amount of work is necessary for broad innovation
and reform, and there is little consolidated current data available to support development and
analysis of options in Maldivian Health care system.
Good management of health care equipment increases efficiency in health care services and
enhances health outcomes. The growing demand for more and better health care greatly expands
the role of health care equipment in the delivery of health services. More specifically, the lack of
established policies and procedures for medical equipment planning, evaluation, selection,
acquisition, utilization and maintenance of health equipment which is appropriate, efficient and
safe, have not received the attention they deserve in the transformation of health care services in
the Maldives, hence remains a major challenge to the Maldives’ Health facilities.
However, access to major capital funding remains one of the key areas of concern for Health
facilities. It remains under funded, ad hoc and fragmented in access to funding, not understood
1
World Health Organization (WHO), Interregional Meeting Report: Maintenance and Repair of Health Care Equipment,
WHO/SHS/NHP/87.8, Geneva, 1987.
2
Project HOPE Center for Health Information, “Appropriate Health Care Technology Transfer to Developing Countries”,
Summary of Proceedings, Millwood, Virginia, 1982.
3
WHO, the World Health Report 2000 – Health Systems: Improving Performance, Geneva, 2000.

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by most stakeholders and generally falls “under the radar” in Ministry of Health and Family
(MoHF) and also in annual budget discussions in Ministry of Finance and Treasury (MOFT).
2. Situation Analysis
2.1Country General Profile
The Maldives consists of approximately 1,190 coral islands grouped in a double chain of 26
atolls, along the north‐south direction, spread over roughly 90,000 square kilometers. The atolls
of Maldives encompass a territory spread over roughly 90,000 square kilometers, making it one
of the most disparate countries in the world. It features 1,190 islands, of which 164 are inhabited.
Maldives has a population of approximately 300,000 which makes Maldives the smallest Asian
country in both population and area.
Throughout the country there are 6 Regional Hospitals, 13 Atoll Hospitals, 87 Health Centers, 37
Health posts and 51 Family Health Sections. More over in Male’ the capital of Maldives, where
more than one third of the population reside, 2 tertiary level hospital exists one in government
and one in private sector.
2.2 Capital and Asset Management in Maldivian Health Services
The Situation Analysis carried out on capital and asset management in Maldives health services
in 2012, revealed urgent need of systematic planning in the acquisition and maintenance of
medical equipment and devices, particularly during the procurement, commissioning and
operation phases. The fragmented, disorganized and ineffective manner, in which some medical
equipment resources were managed and distributed, resulted in high levels of inappropriate
utilization of medical equipment due to early breakdowns and unnecessary expenditures. There
was lack of appropriate and consistent acquisition strategies, which contributed to a high level of
medical equipment cost, and resulted in lack of equity with respect to patient access and
allocation of the medical equipment.
Most of all, there was no coherent system of regulation and assessment of this medical
equipment. Overall there were also weaknesses on the areas of planning, evaluation, selection,
procurement, operation, maintenance, personnel training, technology assessment, research and
development, resource allocation and local production.

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2.3 Capital Planning
Health Services Corporation was asked whether they were able to produce reasonable forecasts
of asset replacement requirements. Minimum criteria suggested were a combination of reliable
assessment of the useful life of assets together with good asset register software and
controls.
Response:
 IGMH strongly disagree that they could forecast asset replacement requirements.
 IGMH has no plan for managing major capital and has no reliable data on the life span
of equipment or guarantee of funds year to year for biomedical equipment replacement
purposes.
2.4 Asset Registers
The adequate documentation of assets is a critical component of ownership and decision making
in relation to the acquisition, maintenance or replacement of assets. Health Service
corporations were asked to provide information about their asset registers. Asset registers
usually have information on the age, replacement cost and condition of asset

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IGMH believe that there is a need for guidelines or standards for estimation of useful life of
assets so that health service requirements can be presented to funding authorities on a more
objectives and standard basis.
The useful life of each individual medical equipment asset must be based on:
 An assessment at the time of purchase.
 An estimate by the Biomedical Engineer.
 Suppliers’ recommendation of useful life of given biomedical equipment.
Recommendation: IGMH must develop a medical equipment status report and 3-5 year
recommended replacement and acquisition plan. This then forms the reference for funding
the majority of medical equipment replacement.
2.5 Priotization of business case
Presently in Maldivian healthcare system, there is no standard practice of preparing a
prioritization business case template which includes cost- benefit analysis, risk assessment,
and lifecycle costing to simple justification for purchase or asset acquisition forms. Presently,
a standard proforma's are used for capital request, which do not have any justification as in
case of business case template. Required items are usually prioritized and costed. The priority
list is then compared to available sources of funds.
Recommendation: Use of standardized b u s i n e s s c a s e t e m p l a t e s b y Health
service corporations will ensure decisions are based on adequate information, and will assist
them in subm issi on -based processes with proper justification for requested funding.
2.6 Finance Allocation
Ministry of Finance and Treasury (MoFT) is allocating the annual capital budget to Health
service corporations mainly based on historic capital expenditure levels. Major capital
medical equipments are not managed on a program basis. Public Enterprises Monitoring and
Evaluation Board (PEMEB), as a section under the Ministry of Finance and Treasury, monitors
and evaluates the financial and overall performance of Health service corporations expenditure
within and outside budget allocations and give recommendations to improve performance and
increase return on Investments (ROI). PEMEB ensure that all Health service corporations operate
in an efficient manner, comply with the corporate governance requirements.
IGMH indicated that they only had developed partial capital plans; they were not

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developed by asset class. IGMH medical equipment replacement and upgrade plans are
prepared in consultation with technical and financial boards. A budget is set, with all requests
prioritized against the available budget.
Recommendation: IGMH must develop capital plans. Detailed planning must address a minimum
12- month period. Planning horizons often differ between asset categories, and hence, the
focus of the detail must normally be at a 1-year horizon.
2.7 Capital budget and Decision making process
Health Services corporations were asked questions about how they develop their capital budgets
and their decision-making processes for prioritizing needs.
Response: IGMH reviewed their capital budgets annually as part of their annual budgetary
processes and timelines. For IGMH, capital expenditure is influenced by funds made available
through donations and fundraising activities. IGMH is developing risk management plan to
prioritize replacement of medical equipment assets.
Recommendation: Budgeting and prioritization are risk based; hence, available funds must be
used for the highest risk items.
2.8 Major Influencing Factors in Capital request Prioritization
Health Services corporations were asked to rate and prioritize issues according to the
degree of importance in terms of influencing capital request priorities, i.e. “what is likely to
influence the relative priority of one asset purchase over another”.
Response: IGMH ranked Patient Safety and Clinical Risk as the highest priorities in
influencing capital requests, followed by regulatory requirements, equipment
breakdown and Occupational health and safety. Other factors considered
important were age of equipment, new technology and treatments. IGMH believe the
distinction between replacement of existing assets (biomedical equipments) and additional
assets is crucial, and additional assets, by their nature, need to pass a more rigorous
investment analysis.
Note: The rankings represent only response, but not a clear policy position. Ranking and
weighting may vary among different hospitals in Maldives depending on the type
of equipment, its use, maintenance and location.

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2.9 Capital Budgeting and Prioritization
In general, capital planning in an resource restricted environment, where there is no
funding for depreciation, where technology moves at a significant rate, and where previous
reviews have identify significant and material needs produces an environment
where immediate and urgent needs are addressed, but more strategic planning does not
always occur.
There is significant variability and levels of sophistication in the way Health Services
corporations budget and prioritize capital expenditure and needs in Maldives. Health
Service corporations work very much in isolation in developing risk management and
prioritization tools, and in formulating processes and documentation to support
replacement, maintenance or upgrade of infrastructure and medical equipment. The
challenge for most Health Service corporations in Maldives is their limited capacity to
allocate sufficient resources to meet the identified requirements and the difficulty in setting
centralized evaluation criteria that satisfy the conflicting interests and demands within the
Health Service corporations.
The lack of available capital, limits the capacity of IGMH to effectively set budgets for
more than 1 year, hence, prioritization is limited to identifying the highest risks. At present
there are no funds available for purchasing of new biomedical equipments.
3.0 The major problems with existing biomedical equipment at IGMH:
A. Shortage of biomedical equipments.
b. Major biomedical equipments are not functioning.
c. Insufficient system for maintenance and repair.
IGMH lack required expertise in considering cost-effectiveness for different healthcare
technology; they feel it is joint responsibility of MoHF and IGMH to decide the cost-
effectiveness.
Presently, IGMH has no forecast plan to tell how much capital is required to be invested in
medical equipments over next 3 years, because of failure in drafting asset management policies
and procedures and in reviewing time frames to cover capital budgets.
IGMH agree with principle “A strategic plan for an organization future success should drive its
capital planning and spending”.

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3.1Factors driving major capital expenditure in terms of priority
1. Compliance with changing regulatory requirements.
2. Changes in clinical practice.
3. Backlog of equipment due for replacement.
4. Age of infrastructure.
5. The need to acquire additional biomedical equipment.
3.2 Policies and procedures for biomedical equipment asset management
In IGMH there are no policies and procedures for biomedical equipment asset management in
following areas-
1. Procurement, standardization, maintenance and rehabilitation, disposal of medical
equipment, asset transfer and appropriateness of the technology.
2. Staff access to policies and procedures.
3. Donated medical equipments
4. Repairs and maintenance expenditure analysis and their forecast.
5. Core technology equipment plan.
6. No Health infrastructure division in relation with biomedical equipments.
3.3Data availability
Presently, no data available on following aspects:
 Percentage of equipment stock value set aside each year for replacement of medical
equipment.
 Massive capital investment program for bulk replacement of medical equipment.
 Value of maintenance budgets.
 Cost of actual consumables requirements and usage rates.
 Funding of site preparation, installation, and lifetime costs and training cost.
 Training courses on healthcare technology management, use and maintenance.
 Consumables /medical equipment running costs.
 Allocated budget lines for replacing equipment at the end of its life.
 There are no appropriate retention terms in tender documents on issues of delays in
supply and to ensure proper installation and training on biomedical equipments.

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3.4 Current priority issues for IGMH
Based on priority, following issues are currently important for IGMH
1. To develop effective asset management policies and procedures.
2. To develop risk management plan incorporating key asset plans.
3. To develop comprehensive asset replacement plan.
4. To improve the allocation of capital funds and process used to allocate capitals funds by
Ministry of Finance and Treasury.
5. To improve the access of alternative capital funding resources.
3.5 Procurement Section, MoHF status
1. Economies of scale are not achieved to the maximum extent due to individual
procurements by Health service corporations.
2. Lack of acknowledgment for procurement as a professional activity.
3. Lack of professional procurement skills.
4. Decision making processes are complicated and protracted.
5. Preparation of functional specifications of Terms of Reference (ToR) needs attention.
6. Lead-time of procurement cycles need to be addressed.
3.6 Supply section, MoHF status
The majority of the medical equipment stored in supply section is without accessories and
operating manual. There is no mechanism of initial testing and acceptance and long storage, the
majority of the biomedical equipment is not in working condition. A good number of medical
equipment needs precision fine tuning and calibration; hence need repair and further
calibration. New equipment reaching to the supply section is without Purchase Orders (PO) and
distribution list. The head of the supply section is not able to send the medical equipment to the
designated hospitals due to limitations in human resources, insufficient funds and logistic
support.
The suppliers instead of sending equipments to designated health facility send medical
equipment to the supply section. Supply section has no technical staff to evaluate the received
medical equipment and to check the compliance with the specifications mentioned in the bid/
Purchase Order (PO) and to check availability of spare parts, and operation or service manual of
the equipment. As medical equipment reaches the designated hospital, there is no support from

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the supplier in commissioning and testing of medical equipments and not able to support user
training and carry out appropriate preventive maintenance of the new medical equipment. It is
the responsibility of the supplier to carry out warranty maintenance of the equipment during
warranty period and get certified from user, but purchase and supply section failed to implement
warranty clause mentioned in the Terms of Reference (ToR) and conditions of the purchase
order. Supply section is not recording medical equipments which are leaving supply section to
the designated hospital in their database.
Many medical equipments like centrifuges, microscopes, defibrillators, infusion pumps, dialysis
machines are kept idle in humid environment for many months to years, developed fungal
growth on Printed circuit boards (PCBs), the battery backup in the machines started leaking
which may have spoiled the Printed circuit boards (PCBs) and malfunctioning of the machine.
3.7 Indira Gandhi Memorial Hospital (IGMH) status
Presently in IGMH, there are technical and financial boards, who evaluates medical equipment
purchase based on recommended technical specifications of biomedical department. The central
store of IGMH manages the inventory of assets. They are yet to adapt asset registration or
tagging of medical equipment. Biomedical department is not doing electrical safety testing and
performance/ functional test for new and old medical equipments. In IGMH, medical equipment
is installed by in-house biomedical engineers, which is supposed to be done by supplier engineer.
Suppliers are not doing preventive /general maintenance for warranted medical equipment.
There is no response time fixed for break down call. Clinical departments is not keeping backlog
registers, hence no scheduled plan for planned preventive maintenance. IGMH need to plan
calibration of lab equipments, every 3 to 6 months with the help of supplier. Radiation safety test
for imaging equipment is not planned and implemented. Failure rate of ventilator is very high
due to the absence of centralized medical gas supply; inbuilt compressor system is presently
used, which is not efficient. Filing and library system needs improvement. There is no system in
place to track medical equipments and standard operating procedures to change the location of
medical equipments in the clinical wards. There is no system of incident reporting/ adverse event
reporting on failure of medical equipments during use on patients.

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There is no planned in depth functional or application training for clinical staff in necessary areas
like:
 Imaging equipment: enhancing image quality and improving clinical interpretation. E.g.
X-ray, CT or MRI.
 Sterilization equipment: standard operation and execution of solid sterilizing procedures.
 In laboratory equipments like analyzers and microscopes.
 Using minimal invasive operation or diagnostic techniques with the use of scopes;
 Intensive care equipments like ECG, ventilators and baby incubators.
3.8 Import Regulations for Medical devices
Presently in Maldives, there is no regulation on importation of used or refurbished medical
equipments. A medical device can be imported either as new or pre-owned. The pre-owned
medical device is not subjected to additional safety check or required to be registered with
Maldives food and Drug Administration (MFDA). Pre-owned medical device is not subjected to
duties and tariffs. Overall bureaucratic obstruction for importation of used or refurbished medical
equipment is not codified in Import regulation act of Maldives.
3.9 Maldives Food and Drug Administration (MFDA) status
MFDA has pushed Medical Device Act to be passed in parliament. Presently, there are no
regulations in controlling medical device standards, use, registration and device listing,
adulteration provisions, misbranding provisions, notification of repair replacement and refund
provisions, restricted and banned devices, mandatory performance standards, human clinical
trials, post market surveillance requirements, device classification and regulatory controls, IVD
labeling, marketing requirements [like marketing applications, premarket requirements (
labeling, registration and listing) and post market requirements (Quality systems, medical device
reporting)], medical device GMP- quality system regulations (Quality system requirements,
design controls, document controls, purchasing controls, identification and traceability,
production and process controls, acceptance activities, nonconforming product, corrective and
preventive action, labeling and packaging control, handling, distribution and installation,
servicing).

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4.0 State Trading Organization (STO)
The State Trading Organization (STO) was formerly totally government-owned but now is a public-
private partnership with 17% private ownership. STO purchase covers not only medicines but all
medical items and 5 main companies are used for importation, including STO, FTec Solutions,
Mamnoos Maldives, Meditec and Mediquip. STO is also financing IGMH for buying Medical
devices. As STO is pioneer in procurement of drugs and medical devices, they helping IGMH in
procurement. It is not clear whether STO is also able to help and finance other Health service
corporations.
4.0a Overview and Context of capital expenditure of medical equipments in Maldives.
The current funding issues in Maldives are not evidence based and will require a multi-
dimensional approach to create a stable and sustainable capital investment in health system in
Maldives. The complexities and compounding effects of the financing and management of
biomedical devices are not clearly understood by the managers of hospitals. The causes and
solutions lie within a system-wide sustainability framework that includes policy, funding models,
access to capital, appropriate incentives for success, system efficiencies and relative efficiency
levels of health services and service planning.
4.1 Context
It is critical that work should be undertaken to explore issues, options and opportunities, which
link capital investment and operating expenditure, and which will support a sustainable and
productive health system. The delivery of Health Services must need to meet “Affordable and
Quality Health care for All” objectives and commitments requires building, maintaining,
equipping and improving high-quality biomedical equipments which are safe to public health
facilities.
4.2 Key principles for funding biomedical devices
i. Make provision for future medical equipment replacement in a 3-5 year horizon (as the
life cycle of medical equipments are in the range of 7- 10 yrs horizon) and it should take
into consideration age of medical equipment, impact of the availability of equipment on
patient care, patient safety, staff safety, maintenance practices, availability of spare parts,
rate of utilization of medical equipment in the patient care, costs of maintaining and
operating the equipment and technological changes, changes in clinical practices and

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affordability. Analysis of all relevant factors must be incorporated in asset management
plans. Hospitals must also develop systems for monitoring utilization levels of all major
biomedical equipments.
ii. Primarily to prioritize to sustain and then improve the quality of the current biomedical
Equipment asset base in Health care facilities.
iii. Maximize the efficiency and capacity of the current biomedical equipment asset base by
optimizing the efficient use of current health care facilities and biomedical equipments.
iv. Hospitals should proactively send biomedical engineers to the meetings, seminars and
dialog with manufacturers/suppliers to keep abreast of the latest technological advances.
Therapeutic Goods Administration (TGA) and ECRI must be monitored for useful,
supporting information.
v. To prioritize and facilitate innovation in service delivery.
vi. There remains an underlying and historical risk around decision-making failing to
adequately recognize the important distinction between capital investments and costs and
between the issue of funding costs and financing investments in Maldivian Health care
systems.
vii. The way in which much capital investment is financed recognizes none of the costs
associated with the investments. Depreciation is not funded in the pricing of Health
Services, and the accounting for depreciation is not considered or not calculated as
variable, which has leaded Health Service Corporation to inadequately recognize the cost
of depreciation in their internal financial management planning. Not only is this a
problem in regard to the reported cost of services, it also mitigates against best practice of
planning and the provisioning for the replacement of biomedical equipments in the long
term.
viii. Health Services corporations in Maldives have no expression of costs associated with the
financing of the capital investments in biomedical equipments. Therefore there is no
"price signal" to contribute to robust investment decision-making on biomedical
equipments. Financing for both replacing assets at the end of their "useful life" and for
making improvements and innovations has to be available and the process needs to
provide incentives for good practice planning and optimal investment decision-making.
Beyond the need to modernize the biomedical equipment, capital investments are

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fundamental for achieving operational efficiencies and can alleviate clinical human
resource pressures, improve occupational health and safety, enable integrated health
service delivery and improve overall healthcare outcomes, but these issues are neglected
in Maldivian Health care system.
ix. Investment of capital must able to meet the demand requirements to maintain Health care
facilities at levels that are consistent with the community’s social and technological
expectations as well as the efficient provision of health care services. Almost all the
Health service corporations have no business case for procurement of major biomedical
equipments. Investment in new biomedical equipment acquisitions should have
appropriate financial planning that must reflect in the present and future models of health
care and must promote operational efficiencies (demonstrable within the business case)
and support financing efficiency of the health care system. These issues must need
priority in the financing of biomedical equipments in the Maldivian health care system.
x. In a financially constrained background, it can be more and more difficult for hospitals to
‘tease’ biomedical equipment improvements (capital investments) and to support major
maintenance funds from operational budgets and any remaining capital reserves, which
may pose challenge to maintain right balance between clinical needs and biomedical
equipments.
xi. The Ministry of Finance and Treasury (MoFT) is allocating budget to health service
corporations based on patient volume and projection of operational cost from previous
years, which is not evidence based and the results of such financing may be unpredictable
in terms of health care delivery outcomes.
xii. The current funding arrangements do not demarcate funds required for new capital works
that improves the service capacity with funds for renewals, replacements or upgrading of
medical equipments; hence it is recommended that the present funding model ought to be
re-assessed to ensure depreciation funding is provided to Health Service Corporations to
effectively maintain their existing biomedical equipments.
xiii. The Finance section, MoHF, indicated that, there is variability in accounting practices
and business rules within the general ledger among health service corporations that needs

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to be addressed to enable all health service corporations to follow similar accounting
standards.
xiv. Lack of access to capital can have a financial flow-on effect on recurrent and
maintenance costs of biomedical equipments in many ways. In order to maximize the
value of the limited capital funding, or to assess the alternative use of recurrent or special
purpose funds, board members of health service corporations must priorities capital
works and medical equipment purchases against a background of risk assessment to the
hospitals, patients and clinical staff safety.
xv. Presently there is uncertainty in the right allocation of funds for biomedical equipment
because the capital investment decision-making and governance processes are not
supported by information from asset registers, lack of in-depth analysis of risks related to
compliance and clinical safety of medical devices, and there is no consideration for use of
business cases in the procurement process, where there can be a feasibility to demonstrate
efficiency or recurrent cost avoidance as a result of the proposed investment. Hence,
Health Service Corporation’s need to develop asset registers which can provide
comprehensive information and can guide systematic and transparent decision-making
processes in the acquisition of medical devices and their useful utilization and
maintenance. It is always best practice to assess the known risks and calculate the full
life-cycle cost of the proposed biomedical equipment along with good asset management
and planning of health services to form critical prerequisite for Ministry of finance and
Treasury (MoFT) to transfer requisite funds to health service corporations through fully
or partially funding for medical equipment depreciation.
xvi. Strategic planning and appropriate policies in the area of procurement and management
of technological investments is currently the most challenging task to public health
policymakers and planners in Maldives. Well-managed medical equipment procurement
and maintenance can save both time and money, as a result of the shorter time required to
train operating personnel, proper installation and commissioning of medical equipment,
lower frequency of breakdowns and accompanying inconvenience, shorter equipment
downtime period, smaller expenditure for spare parts and maintenance, and fewer
preventive maintenance requirements.

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xvii. In Maldives, procurement department failed to implement tender clause of post sale
service and some suppliers are just following practice of "sell and run" philosophy, where
they are not forced to provide after-sales back-up services and no legal remedies are
sought to implement the clause “post sales service”.
xviii. Increased use of modular electronic elements in medical equipment will require that
fewer types of replacement parts be stocked for repair and service, compared with the
many individual components now required. Faults in equipment designed using modular
electronic elements can usually be diagnosed more easily and equipment can be repaired
and returned to proper operating conditions more quickly than equipment of traditional
design, hence the proposed National Advisory board on biomedical equipments and
biomedical engineering department should promote use of modular electronics elements
in medical equipments in the future purchases.
xix. Equipment maintenance budgets should be linked to actual medical equipment capital
investment and rate of utilization. Hospitals should not purchase equipment, which their
maintenance budgets cannot support.
xx. The most important consideration on capital investments in health care is the effective,
safe and sustained use of the goods and facilities by the user. The challenges posed in
new capital investments include:
 providing health care technology appropriate to the needs of the country and consistent
with its rational priorities;
 ensuring the cost-effectiveness of the necessities;
 Preventing harm to patients by defective medical devices.
“The key suggestion is to establish quality management systems for the full lifecycle of medical
equipment. An important component in the Total Quality Management is to set up a National
Advisory Board on Medical devices, who must have authority and responsibility for all
components of the medical equipment lifecycle. This board should ideally be involved in the
improvement of medical devices status in Maldives”.

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5.0 Recommendation for Health service Corporation.
It is recommended that hospitals, in consultation with the National advisory board on medical
devices and Department of biomedical engineering:
1. Establish sustainable maintenance systems for medical devices by allocation of adequate
funds for maintenance and repair of medical equipment.
2. Prepare asset management plans for their medical equipment which can incorporate 3
(three) year forecasts of funding requirements.
3. Develop a single asset register, using standard classifications (Asset description must be
based on medical equipment nomenclature system as adapted by Maldives Food and
Drug Authority (MFDA) or nomenclature system devised by ECRI) to describe the
medical equipment and specified details of the equipment, which can be linked to the key
user groups within the hospital.
4. Develop and use guidelines which reflect industry best practice to periodically assess the
life expectancy of medical equipment.
5. Regularly determine the condition of medical equipment using a standardized assessment
system.
6. Consider options to support the introduction of better Central Medical Equipment
Management System (C-MEMS) for the management of medical equipment.
7. Assess the merits of linking a proportion of funding allocations to the quality of the asset
management practices adopted by individual hospitals.
8. Adopt risk-based principles when determining the nature and frequency of preventative
maintenance.
9. Evaluate the costs and benefits of their in-house maintenance department and obtain
external quality accreditation.
10. Regularly monitor the utilization levels of major equipment items. Where utilization is
less than optimal, options of sharing within and between hospitals must be explored.
11. A standard equipment list (SEL) should be compiled for hospitals of different sizes. The
SEL should guide investments on essential equipment.

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12. Improve the generic technical specifications of biomedical equipments and share the
information to all, i.e., who are involved in tender compilation and purchase activities for
medical equipment.
13. The health service corporations must encourage the reporting of sentinel events caused by
a malfunctioning of medical device/ electromedical instruments must be reported to
Quality Assurance and Improvement section of MoHF.
6.0 Recommendations for Procurement department:
1. Procurement section along with Health service corporations pursue opportunities for
improved value-for-money in the procurement of medical equipment. (It is more cost
effective to have centralized procurement of Medical devices, compared to individual
procurement by Health Service Corporations).
2. Collaborate with procurement agencies/ develop contract with UNOPS.
3. Strengthen the existing procurement arrangements.
4. Establish standard framework for bid/ tender contracts.
5. Establish “Logistics Support Unit” (LSU).
6. Introduce Logistics Management Information System (LMIS).
7. Draft standard list of medical equipment specifications.
7.0 Recommendations for supply department
1. All major capital equipments procured and which need incidental services from the
manufacturers / suppliers like installation, maintenance or training must be sent directly
to the designated hospital, with appropriate installation planning.
2. Make provision of payment schedule based on services delivered by supplier.
3. Develop and operationalize Delivery and Commissioning Tracking System (D&CTS) to
trace medical equipment from Tender publication until installation, commissioning and
use of biomedical equipments in the destined hospital.
4. Installation of medical equipment requires detailed planning for delivery, hence, before
approval of a tender, following conditions must be applied directly:
a. For all goods and equipment in need of installation and training, the final destination
should be unambiguous and mentioned in the tender document.

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b. The rooms in the given hospital for equipment in need of installation and training must
be ready before the signing of the contract (pre-installation requirements).
c. All equipment in need of installation and training should be delivered to site and must
be installed by the supplier instead of in-house biomedical engineer or technician.
d. Consumables without a specific destination can be purchased in bulk and stored and
distributed from the supply department.
5. The tender and contract documents must include a set of services incidental to the purchase of
medical equipment. These services must be mentioned in the Schedule of Requirements and may
be requested from the supplier in addition to his delivery of the goods. The services might
involve transportation, installation and commissioning of the medical equipment.
6.0 The nominal conditions in the incidental services for high-tech medical equipment should be
mentioned in the Schedule of requirement and should among others include:
a. The supplier ought to provide within six weeks from awarding, all information necessary for
the pre-installation works such as:
 a list of equipment to be installed;
 detailed drawings (scale 1:20) of all equipment to be installed, showing clearly the pre-
installation requirements and dimensions of equipment and their relation with other
equipment if applicable
b. The supplier must do on-site installation of the supplied medical devices as well as
unloading, furnishing to designated room, unpacking, assembling and connection to main
supplies.
c. Removal of packing materials from site. Connection to main supplies shall be done according
to electric standards of Maldives.
d. The supplier must furnish all materials required for assembly, installation of medical devices
and connection of equipment to main supplies.
e. Check the performance of starting-up and commissioning of the equipment, furnishing of all
required materials such as consumables needed for testing and initial operation of supplied goods
to be part of the final delivery.
f. Carry out training of users on-site in start-up and operation, of supplied equipments. The
successful bidder must provide appropriate in-service training for physicians, nurses, clinical

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staff, laboratory technologists, etc. Training must be provided by qualified clinical instructors but
not sales personnel.
g. Manufacturer / Supplier must provide minimum two sets operation and maintenance manual
for each device unit in English.
7.1 Recommendations on Maintenance
Presently, Health service corporations deficient in establishing standard maintenance structure
for new and existing medical equipment. The appropriate solution to improve the maintenance
situation is to include a maintenance contract in the procurement process particularly for high-
tech equipment; a 3 to 5 year maintenance contract must be included in the tender. The cost of
the maintenance should be regarded as part of the Total Cost of Ownership (TCO).
8. The supplier has to provide repair, Planned Preventive Maintenance (PPM), testing and re-
commissioning of the medical equipment as prescribed in the equipment schedules, at the
hospital site for a defined period.
9. The supplier must also provide the necessary spare parts, training and reports.
10. The preventive maintenance must be in accordance with the manufacturers’ procedure and
interval. The supplier must provide a copy of the preventative maintenance checklist, method
and procedures. The maintenance should include training -on the spot- of hospital equipment
technicians in the repair and maintenance of the equipment.
8.0 Recommendations on development of Delivery and Commissioning Tracking System
To sustain the monitoring of the delivery of medical equipment to its final designated hospital a
D&CTS must be adapted to manage and sustain a delivery process in equipment supply across
the country. Proper reception of medical equipment is very important in the logistic management
with locations scattered all over a country, it is imperative to closely monitor the actual delivery,
installation and commissioning on the given hospital site.
Expected deliverables in the above process are:
 both inland and site distribution needs must be managed,
 all medical items are rightly delivered to the designated hospital,
 pre-installation with satisfactory services and utilities are provided,
 all items are delivered at the right time,
 missing items are successfully managed,

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 all spares are provided and can be located,
 adequate training manuals are supplied and can be located,
 adequate training on equipment maintenance has been given,
 effective equipment receipt procedures are in place,
 all items are installed and commissioned.
The D&CTS, must not to be confused with warehouse stock-keeping software, but it is a
different program, on one side the input of the contract details and on the other side the technical
results of the delivery and installation. Combining this information, results in management
information to see the status of the delivery and the acceptance of the equipment. It can provide
sufficient tools to determine the suppliers’ performance and the time of payments. Principally
four components are to be taken care of:
1. Software development
2. Establishing commissioning and acceptance procedures
3. Training of commissioning officers
4. Data processing
9. Recommendations for strengthening the inventory management system
The lack of information on medical equipment concerns MOHF in two key areas:
 the distribution data and information on the commissioning of new equipment;
 the centrally based information on the availability and the status of medical equipment in
all health facilities.
Proposed solution is to register medical equipments in central medical equipment management
system, the database can be used for decision making and resource allocation.
10. Recommendations on Import regulation of medical devices.
1. Introduce ban on devices older than a certain age or beyond a set percentage of estimated
useful life.
2. Introduce taxes on pre-owned medical devices or device over a certain age.
3. Introduce restrictive rights for importation (e.g. Only by responsible holder of registration
or by identified end user, based on safety, efficacy, cost-effectiveness, appropriateness
according to the level of sophistication of health care system, capacity to carry out

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preventive and functional maintenance with availability of spare parts and impact on
social and cultural context.)
4. In case of refurbished device, the imported device must be refurbished by original
manufacturer.
5. Require to have given period of warranty.
6. Required that spare parts and service available.
7. To be registered with MFDA.
11. Recommendations for Ministry of Health and Family (MOHF)
1. Prioritize on institutional strengthening of the equipment management capabilities of the
MOHF.
2. Development of a national policy on management of health care technology. The policy
should give guidance to health technology needs assessment, planning, acquisition,
utilization, maintenance and overall management.
3. Acquire information from hospitals to evaluate their major medical device needs (e.g. life
cycle costs, utilization levels, equipment condition and backlog of patients to be treated).
4. Review the level of equipment funding currently provided to hospitals in the context of
their future equipment replacement and maintenance needs, including the funding of
depreciation costs.
12. Proposed Logical framework for strengthening of biomedical equipment management
system
To strengthen biomedical equipment management system, it is recommended that MoHF must
carry out activities and subsequent outputs to address the following objectives stated in the
proposed logical frame work.
Overall Goal Objectives Activity Output
Strengthening of
biomedical equipment
management system.
1) Identify and
register the available
biomedical
equipment.
Do equipment survey
by using:
Asset Registration
Form.
Database with all
collected data in place
will enhance decision
making and resource
allocation.

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2. Assess current
functional condition
of medical equipment
and quality.
Equipment survey by
using-
Asset condition
appraisal form.
Prepare asset list.
Generate walk
through report.
Data collection
analysis and prepare
report on functional
condition of
equipment.
Define and score
equipment quality.
Brief analysis, report
and recommendations.
3. Assess current
utilization and
efficiency of available
medical equipment.
Equipment survey
data analysis.
E.g. Hour meter
analysis for major
capital equipments.
Analyze, prepare
report and give
recommendations.
4. Assess the
effectiveness of
present preventive and
corrective
maintenance.
Evaluate the tender
documents for the
clause of service
contract from the
manufacturer and its
implementation.
Conduct User
interviews to know
the status on
preventive and
corrective
maintenance.
Analyze the
preventive and
corrective
maintenance log book
Tender documents
should be reviewed;
user experience and
expectations should
be documented.
Analyze and prepare
report with suitable
recommendations.

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and database.
5. Assess the
procurement status
with time frame of
equipment procured
by MoHF and Health
service corporations
and determine their
impact on health
service delivery.
Review policy
documents and
analyze.
Review tender
documents for their
efficiency and present
standards.
Collect data from
purchase and supply
departments and also
from health service
corporations.
Core equipment
acquisition tenders
should be identified
and analyze to
identify gaps.
Planned and actual
distribution data
should be collected
for review.
Assess the equipments
procured through
donations and other
sources.
Evaluate the present
status of medical
equipment and their
impact on health
service delivery, cost-
benefit analysis in
terms of their
maintenance and
consumption of
resources.
Benefits to Health
care system.
Further Improvements
based on data analysis
and recommendations.
Assess overall
economic
effectiveness of
medical equipment
investment made and
proposed for near
future.
Undertake data
analysis planning,
supply and ownership.
Overall economic
impact in terms of
returns on investment,
patient satisfaction,
patient safety and
efficiency of system
and benefits to the

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community and
environment.
13.0 Appendices
Appendix 1: Asset Registration Form
Appendix 2: Asset Registration List
Appendix 3: Adverse Event Reporting Form for Medical Devices.
Appendix 4: Policy on Initial Testing and Evaluation of Biomedical Equipments.
Appendix 5: Procurement Policy of Medical Equipments.
Appendix 6: Policy on Maintenance and Repair of Medical equipments.
Appendix 7: Policy on Disposal of Medical Equipments.
Appendix 8: Policy on Donation of Biomedical Equipments.
Appendix 9: Risk Rating for Biomedical Equipments.
Appendix 10: Proposed Guidelines for Medical Classification of Medical Devices.
Appendix 11: Sample of Medical Devices to be registered with MFDA.
Appendix 12: Training Manual on Health Technology Assessment, Capital Utilization and
Database Management of Biomedical Devices.
Appendix 13: Specifications of Biomedical Equipments.
Appendix 14: Capital and Asset Management Questionnaire.
Appendix 15: Guidelines on Calculating Depreciation, Total Equipment Stock Values, Usage
Rates…etc.

Capital and Asset Management in Maldivian Health Services

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