SELF-STUDY SERIES Functional Obsolescence
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Table 1: Questions to ask during an obsolescence risk assessment Obsolescence Type
Questions to consider
• Has the cost of service, repairs, parts, and/or necessary consumables significantly increased? What is the annual cost? • Has a manufacturer discontinuation notice been issued for it or its necessary parts or consumables? • Does the equipment meet the needs of current or anticipated instrument processing parameters/instructions for use? • Does the equipment meet the productivity needs of the department?
Technological Obsolescence • Can the equipment’s software and hardware communicate with necessary devices? • Does the device meet the facility’s carbon footprint or green initiatives? Is there a need to improve upon these? • Can the system meet the processing parameters necessary for new instrument models? • Is the equipment’s software supported?
Legal Obsolescence
• Have legal or regulatory changes impacted the cost to operate the equipment? • Is there an increased safety risk when using the equipment? • Have components or consumables used in conjunction with the equipment been reclassified as hazardous? • Is there a recall notice for this device model? • Is there security risk if the equipment’s software is no longer supported?
Style/Aesthetic Obsolescence
Economic Obsolescence
• How often is the equipment used? • Do technicians favor the use of other equipment?
• Has the equipment reached its depreciation limit?
facturer, which presents a high risk to the department. When assessing equipment obsolescence risk, consider each type of obsolescence (see Table 1). Include an accounting department member as part of the risk assessment team because they can provide insight on the economic obsolescence risks associated with each piece of equipment. The combination of impact to the department and probability of obsolescence will help you determine low-risk and high-risk obsoles- cence conditions for each system.
Work with the depreciation schedule Once the current equipment conditions have been assessed, it’s time to determine the depreciation timeframe for all equip- ment. In general, it is better to maintain equipment that provides depreciation. Equipment that is obsolete for whatever reason can provide a depreciation advan- tage when it’s replaced. When planning equipment replacements, try to optimize the depreciation schedule for the depart- ment.
Build a technology roadmap The final consideration when planning for obsolescence is the technology road map. As mentioned earlier, today’s rapid technological advances often outpace the useful life of equipment. To prepare for this, department supervisors should have a technology map that anticipates the department’s needs for software, hardware, equipment connectivity, and higher productivity, each of which may require more advanced equipment. It’s also important to keep track of manufac- turers’ newest useful features, capacities and capabilities, in case they can fulfill a need for your department.
Establish the plan The planning process identifies solutions for high-risk and obsolete equipment. In the case of high-risk equipment, this may include sourcing consumables, repair organizations, and replacement parts. Manufacturers often supply a timeline for discontinuation of services and parts, so SPD managers should plan to stock up before the deadline. If it’s not possible to obtain new equipment within this time- frame, buying key components and a large quantity of consumables near the deadline as a “last time buy” can help extend the use of the department’s equipment until a new system is purchased.
Department managers should plan a replacement schedule that considers the risk assessment, equipment deprecia- tion schedules, and technology plan for the department. This plan may cover many years and becomes the basis for justifying and budgeting for replacement equipment. As with any plan, situations can change and affect the plan, so the equipment assessment, depreciation schedules and technology road map should be maintained and updated peri- odically. The frequency depends on an individual department’s situation. At a minimum, these planning elements should be reviewed prior to the facility’s strategic and budgetary planning events. How- ever, it’s also important to review them whenever new equipment is installed, sig- nificant technology advancement occurs in the industry, and whenever new legal or regulatory requirements affect the status of equipment in the department.
Prepare for obsolescence Sterile processing equipment will become obsolete – that is inevitable. However, the
36 January 2022 • HEALTHCARE PURCHASING NEWS •
hpnonline.com
negative impact to a sterile processing department and its surgical “clients” can be minimized if department leaders plan proactively to anticipate the risks, break- downs, avoidable financial consequences, and potential downtime that obsolescence can cause. Planning for equipment replace- ment also has the potential to provide direct and indirect benefits to the depart- ment and the healthcare system’s finances. In the end, it’s well worth the effort. HPN
References:
1. Hayes, A. (2021, July 16) Functional Obsolescence. Investo- pedia.
https://www.investopedia.com/terms/f/functional-
obsolescence.asp.
2. Monash University Technological Obsolescence retrieved November 11, 2021 from (
https://www.monash.edu/ business/marketing/marketing-dictionary/t/technological- obsolescence#:~:text=When%20a%20technical%20product%20 or,%2B1%20%2D1.
3. Asset Insights (2010-2013) Legal Obsolescence. Asset
Insights.com. (
https://assetinsights.net/Glossary/G_Legal_Ob-
solescence.html#:~:text=Home%20About%20Contact-,Legal%20 Obsolescence,Attributes.
4. Mickle, J. and Sapnas, C. (2020, October 8) Economic Ob- solescence: Discover loss of value caused by external factors. VRC.
https://www.valuationresearch.com/pure-perspectives/ economic-obsolescence-determining-loss-value-caused-external- factors/.
5. Rueff, K. No more trouble with outdated devices: The ABC of obsolescence management. Netilion Endress + Hauser. Retrieved November 11, 2021 from (
https://netilion.endress.com/blog/ obsolescence-management/
6. Wilkins, J. (2020, May 16) Seven steps to obsolescence management in Industry 4.0. Manufacturing. https://manufac-
turingglobal.com/technology/seven-steps-obsolescence-manage- ment-industry-40
Heide Ames, BS, CCSVP, CSPDT is a product manager with 28 years of healthcare and/or laboratory experience in various roles, including as a researcher, author, instruc- tor, tutor, and presenter. Her
areas of expertise include biology, microbiology, sterilization validations, medical device pro- cessing, sterility assurance uses and applica- tions, and process failure investigations.
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