Friday, October 24, 2014
It was through BBC News, May 2014, that I first saw reports on the current Ebola outbreak. That led me to track the outbreak through Doctors Without Borders/Médecins Sans Frontières, the World Health Organization, and the Centers for Disease Control and Prevention (CDC). One could follow the spread toward population centers and the estimated deaths. After a lack of media coverage and a lack of a much broader international response to theirs calls for help, my first social media post of the Ebola outbreak went up late June 2014.
Also, BBC and CDC websites led me to a list of infectious diseases categorized the same as Ebola. All had personal protective equipment (PPE) requirements the same as the initial CDC guidance for Ebola. I wondered if that PPE was sufficient for anything on the list. Please provide feedback on:
- Do you believe the U.S Ebola cases points to weaknesses with PPE and protocols for all infectious diseases?
- What is your view on whether we really know how well nurses are protected from hospital acquired infections?
I appreciate your response.
Wednesday, October 22, 2014
A pithy pitch flawed by pitfalls
Non-Capital equipment purchases bundled with supply quotas are a problem. Finance departments may not know that some of these agreements are capital leases. Second, the cost of the debt can be far more than a healthcare facility’s borrowing rate or a lease through a finance company.
Non-capital equipment programs, no-cap as they are sometimes called, are equipment purchases or rentals tied to quotas written into a supply contract. Vendors offer healthcare customers non-capital programs to help with their own sales and to fill a need for cash-strapped customers. Anything from glaucoma removal kits to catheters have been used to get needed equipment. Just because each party gets what it wants does not mean that each party wins. In general, there are a couple of different versions of non-capital programs. One results in a lease; the other results in a straight rental.
Vendor marketing may package the program with branding that appears lightweight and easy to carry; however, if a finance fee is added to each unit of purchase, and ownership transfers to the buyer upon meeting a quota, the non-capital purchase is actually a capital lease. And yes, some hospitals get audited annually without a finding even though the lease liabilities aren’t captured in financial reporting. Also, these types of transactions can circumvent the equipment acquisition processes as written in the Environment of Care and never get caught in The Joint Commission surveys.
No findings on an audit, no findings from The Joint Commission, so, what’s the problem, Al? The problem is… there are these vendor letters that float from department to department, looking to be managed by someone. There can be dozens even for 250-500 bed hospitals. Accounts payable doesn’t want these letters. The letters are not invoices. Credit memo isn’t written in any of the text. Clinical departments send the letters off to contract managers because the letters don’t have anything to do with patient care. Contract coordinators call finance and the circle starts over. The vendors that send the letters do not expect any action on the part of the buyer. So, people just stop bothering.
Those letters are notices of balances on debts though the vendor is not requesting money. The letters are a reminder that those debts have a bite when the buyer just stops bothering. Don’t meet the quota over a given period – Accounts Payable will get an actual invoice. Move to another vendor before the debt is paid in full – Accounts Payable gets an invoice. One response I hear often goes something like this explanation, Oh! When we get one, we don’t know what it’s for. So, we send the letters to purchasing. When they figure it out, they blame the account executive and negotiate out of the bill. We have that sort of market power. Just hold that thought for one paragraph and a double-space.
The Asset Ledger Manager may never know the equipment exits let alone track the capital lease or bring the equipment onto the asset ledger. Even if he or she becomes aware, tracking is a pain. Payments toward the lease fluctuate because the fixed finance charges are tied to supply orders. Purchasing Departments order supplies based on demand and demand fluctuates over time. Monthly finance charges may add up to $2,500 one month, $1,750 the next, $3,000 the month that follows. Thus, the statement looks nothing like an amortization schedule. Tracking all those letters for all those assets can take up most of a person’s time. That is an added expense.
Now, let’s go back those pithy negotiation tactics to get out debt. Normally, with these types of non-capital programs, the buyer never sees a tax bill. Early terminate and take possession of the equipment, the tax men cometh, city and county property taxes. Depending on what transfers and the quantity, the tax men could put a dent in the hospital savings from the negotiations. After the tax men leave, the insurance man shows up.
Recapping the non-capital program resulting in a capital lease: the lease is not visible because it is part of a supply contract. Not meeting quotas for one reason or the other results in a bill for the debt owed on the capital. It is nearly impossible to accurately project when the lease will be paid in full. Negotiating out of early termination result in tax and insurance issues.
Cost is an issue for both types of non-capital programs. In both cases, understanding the payout over the term specific to the equipment is important. Rental programs tend to be the far worst proposal. Rental programs take ownership off the table if the buyer does not lose the asset. Rental programs can still have taxes. Rental programs tend to be easier to track because there are usually purchase orders and matching invoices. Yet, I have seen rental costs over the term of a supply agreement equivalent to 145% over the purchase price. Upon renewal, the buyer has basically the same units plus a few upgrades. Supply agreements containing supply cabinets can have fall into this category.
Non-Capital Purchase programs can be helpful for getting needed equipment. Meeting each challenge requires knowing where to look in a supply contract, how to approach alternative financing , and great understanding of the asset life-cycle.
Want to talk more, contact me over linkedin, https://www.linkedin.com/in/alhardy or send an email to firstname.lastname@example.org
Tuesday, October 7, 2014
In Part 1: Dr. Andrey Ostrovsky (CEO of Care atHand) described Care Coordination as, “improving the communication between the care team members with an emphasis on patient cleanliness and insuring that things don’t fall through the cracks.” This helps keep people where they want to be - at home. And it reduces admissions into skilled nursing facilities or hospitals.
He considers himself a social entrepreneur. We talked about the definition. Simply put, a social entrepreneur often sees success as both:
- a resolution of a “social” issue in a way that benefits the targeted populations
- the solution will still render good returns for investors
In Part 2: We followed Dr. Ostrovsky’s extraordinary path through college, his work at the World Health Organization, the Doris Duke Foundation, and the reason he became the CEO of Care atHand. The company became one of the top startups and was mentioned as such in Time Magazine, April 2013.
Part 3 of 3
I asked Dr. Ostrovsky how he felt about Care atHand’s mention in Time Magazine.
“It is a double-edged sword. Sometimes the really meaningful work isn’t the most sexy work that the media wants to pay attention to. We happened to be one of the top startup incubators. GE is one of our investors. There are all these big names; so, Time Magazine picked it up. The article had to do with ObamaCare. There were a lot of trendy things all referenced in one place. Where I am the most proud is when we are published by local blogs. Like the fact that we were picked up by a local blog when Congresswoman Katherine Clark, on behalf of the state of Massachusetts, awarded us for helping community nursing. Those are the things I am most proud of-- that mean something. Care atHand is going to change the way care is delivered. Care atHand does this by leveraging big data outside the hospital environment with the low paid workforce currently hired by the industry. That’s not sexy. Those are not the thing media cares about but Care atHand is going to change the way a low income workforce uses technology to deliver really high quality work.”
“About your application, what’s your philosophy on outsourcing and crowd sourcing building an application?” I asked.
“If you are going to call yourself a software company you have to own it. You have to control the quality of your products and services. You have to have a hustler who sells and learns from the customer. You need the hacker to build. What you are building has to reflect the core competences of the founders of the company.
“Essentially we concentrate on community organizations philosophically and on a business case perspective. I think community organizations are the future of healthcare. They are our customers: area agencies on aging, quality improvement organizations, managed care organizations. Care atHand is expanding. We can work with skilled nursing facilities that want to create their own care transition program. We have four area agencies on aging in Massachusetts and one in Kansas City. In New York, we have a managed care agency. We have two national contracts, including one with a software company. Everyone can do or should be doing care transition. The challenge is linking non-clinical people and the community health worker with the clinical nurse supervisor. Without our technology, the link is incomplete.”
“Are there any parting words on either social entrepreneurs or Care atHand?”
“I don’t think becoming a social entrepreneur is for everyone. There are a lot of really talented people who can bring some lessons to bear. I welcome them to the new frontier of innovation, community based well-care, and not sick care. And as far as Care atHand, the data will speak for itself.”
Click Here to Visit Care atHand's Website
Click Here to Read Population Health and Andrey Ostrovsky
Click Here to Visit Care atHand's Website
Click Here to Read Population Health and Andrey Ostrovsky