IN-HOUSE VS OUT-SOURCED CLINICAL ENGINEERING
1. Common factors that impact degree of success
 Quality and education of the staff
 Resources
 Administrative Support
 “Fix it” shop vs a “Professional Service”
 Either type of program is doomed or failure if the program delivered does not fit the
needs and expectations of the organization
 Neither are free
2. Different between in-house and out-sourced clinical engineering
In-House
Services provided at cost, no mark up
Parts credits contribute to hospital’s
bottom line
Cost of Service Ratio (COSR) on a well-
developed program = 4-5%
Cost savings as a result of parts shopping
and negotiated discounts lower CE
program budget
CE staff committed to one organization
Added value services, such as projects,
done at cost
Software and data owned by hospital
Hospital in charge of cash flow to the
vendors
Concerning the variable portion of
program budget, the hospital only
pays for equipment that actually
gets services (parts and vendor
services)
No conflict of interest
Hospital in control over parts and labor
sources, and can easily switch If
Outsourced
Services provided at cost + margin
Parts credits contribute to vendor’s
bottom line
Cost of Service Ratio (COSR) = 7-15%
Cost savings as a result of parts shopping
and negotiated discounts improve
vendor profit margin
CE staff need to be committed to two
organization
Added value services, such as projects,
may be provided at additional cost
Software and data may be owned by
vendor
Vendor in charge of cash flow to the
vendors
Hospital pays full amount of variable
expense throughout the year,
regardless of when/if device fails.
Vendor makes extra margin of
equipment with low failure rates or
not in use
Potential conflict of interest if the
provider also sells equipment
Provide in control over parts and labor
sources. Hospital have to fight for
 quality becomes an issue
Every $100k in savings offsets need to
collect 100% on $3.3m in patient
charges, if hospitals net operating
margin is 3%
Hospital maintains control over staffing
levels and assignments
Expansion of duties provides endless
opportunities to add value and save
money (i.e. IT Clinical system
systems management)
Hospital fully responsible and liable for
negative outcomes and related
damages, in any
change
Every $100k in savings contributes to
profit margin of the provider
Provider maintains control over staffing
levels and assignments
Expansion of duties provides endless
opportunities for additional revenue
Hospital fully responsible and liable for
negative outcomes and related
damages, if any, but at least now
has someone else to share the
blame

3. Issues of Concern when converting to in-house from outsourced program

 Software CMMS and data conversions

 Test equipment and tools
 Manuals
 Overdue PMs and CMs work in progress credits
 Staffing and ability to hire provides staff
 Contracts and OEM discounts
 Policies and procedures
 Clerical and call center support
 Clinical engineering expertise
 Three to six months lead time
4. How to convert to an in-house model

 Develop a business plan (Three years), based on cost and quality

 Set realistic goals and expectations
 Consolidate all service budgets into one
 Include contract/vendor management services
 Start with general biomedical equipment support
 Plan for expansion into service of ultrasound; sterilization, imaging, Cath lab, clinical lab,
radiation oncology, surgical instrument management
5. Outsource program tips

 Perform bi-annual assessment of equipment actually serviced, PM or CM, and remove

from inventory items never seen, to lower your program contract cost
 Read your contract and verify deliverables are being delivered
 Negotiate the margin, full disclosure of all costs
 If vendor gets credits for parts returned, it should be credited back to the hospital
 Mandate full staffing levels. In not met, get credit
 Mandate credits form PM’s not done on time
 Obtain quarterly downloads (Excel format) of inventory and work histories