Taking this long-term view of equipment is a critical step to mitigating financial risks and ensuring profitability. In some ways, the sticker price is one of the least important factors when it comes to making a decision. But calculating the total cost of ownership can be complicated and labor-intensive.
How to Calculate Total Cost of Ownership For Medical Equipment
1. Gather Equipment Specs
The total cost of ownership is generally unique to each piece of equipment. First, go directly to the supplier or manufacturer you’re considering purchasing a product from to gather all of the equipment specifications. These specs should include the basic purchase price, installation costs, warranty length, maintenance requirements, cost of replacement parts, and life expectancy of the product. If possible, use a product catalog to streamline your search process.
If possible, try to collect even more detailed information, such as average energy consumption, special training requirements, and other factors related to day-to-day operations. Check in with stakeholders as well for other related equipment expenses that might not be tracked by manufacturers.
2. Add Up Acquisition Costs
Any funding spent before you can use a piece of equipment in your practice is an acquisition cost. Beyond the initial price tag, add up sales taxes, shipping costs, and labor from installation. If you have to make any structural changes to your facility to accommodate new equipment, include the costs of materials, engineering, and remodeling.
3. Analyze Operating Costs
Operating costs cover expenses such as routine maintenance over the course of a product’s lifespan, and have a major impact on maintenance teams’ operating budgets and contracts. For example, if it’s recommended you replace a component in a bi-plane system every other year, divide the total expected lifespan of the machine by three, and multiply it by the cost of the replacement part to paint a picture of how much you’ll need to budget for maintenance over the coming years. Remember to factor in savings for repairs done under warranty.
As internet connectivity becomes more important for medical devices, software licenses or subscription fees are becoming increasingly important considerations. If the manufacturer requires a service agreement, that would also fall under this category.
4. Estimate Resourcing Costs
This category encompasses the labor associated with maintenance and operation. Your organization may have to pay an hourly rate to maintenance workers every other year to replace bi-plane system tubes. Estimate the salary for any specialists you’ll need on staff to operate the machinery, as well. Adhering to standards during initial planning can help support maintenance teams’ existing efforts to streamline training and maintenance costs.
Now, how do you find the TCO of each product? Add all of those numbers together and you’ll have a comprehensive estimate of how much a purchase will cost you over its total lifespan.
Simplify TCO Calculations With Revalize
You only have to worry about these complex calculations if you’re still using spreadsheets and other manual processes for medical equipment planning. Software like Revalize can streamline every aspect of your work so you can make better planning decisions with greater efficiency and confidence. Compiling all equipment information in one source of truth, Revalize ensures an easy hand-off between staff for better communication, minimizes change orders, and sets your organization up for financial success from the start.