HTM Guide 2

How to plan and budget your

Healthcare Technology
Anna Worm
For Engineering World Health
Oct 24, 2012
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 Review Chapter 1

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This presentation accompanies the book:
How to Plan and Budget, How to Manage Vol 2,
Lenel et. al., (Ziken International: 2005).

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 1.2

Why is there a need for equipment

planning and budgeting?

1. Helps to control the direction of technology

development in your country – e.g. standardization
2. Balance between budget and needs
3. Make most of assets

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 Some facts

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 p12

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 In guide 2 we answer the
following questions:
• What is my current equipment status- starting point-
baseline data
• What are my future plans for equipment
• How do I make budget calculations for capital expenditure
• How do I make budget calculations for recurrent
expenditure
• How do I develop the plans and budget for my equipment
in the long-term and short-term
• How do I review my plans and budget and monitor
progress

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 p14

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 Who does what?
• Sub groups of the HTM working Group, because the
HTM WG needs to advice the management:
– Planning sub group
– Stock sub group
– Training sub group
– Specification writing sub group
– Commissioning sub group
– Tender sub group

Who takes place in these sub groups? discuss

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 Chapter 2.1

• Describes everything we covered in Guide 1:

– Regulatory role of government
– Establishing standards
– Policy issues
– Importance of introducing HTM Service
– Managing change

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 Chapter 2.2

• You need to understand your local authorities and

adopted guidelines
– Follow financing and management authorities
– Are there central plans for health service?
– Is there a model equipment list (which level should
deliver which level of care) Guide 4!
– purchasing and donation, disposal policies
– Availability of management skills, maybe on central
level, coz a lack of skills in districts
– Economies of scale, difficult in decentralized system
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 Chapter 3 planning tools I

3.1 keeping an up to date Equipment inventory

3.2 knowing the value of your stock of
equipment
3.3 budget lines for equipment expenditure
3.4 consumable use estimations

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 3.1 equipment inventory

You can do this 

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 3.2 stock values estimates

• Many calculations make use of a percentage

of “equipment stock value” e.g. for calculating
maintenance cost for equipment, you take an
internationally recognized percentage of you
equipment stock value (5-6%)

• Use up-to-date and current prices

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 How?

• Take equipment inventory

• A reference price list

• You should develop a reference price list, or

work together in an association?
• start with recent purchases and extend the
list
• Annex 3 gives expected life times
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 See example p56

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 3.3 budget lines for
equipment expenditures
• To plan the finances of your equipment correctly you
need:
– A clear idea of what you currently spend
– A realistic estimate of what you need

• By introducing Budget Lines for Equipment

expenditures you can record and monitor the many
different ways in which money is spent on equipment

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 Iceberg, or……

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 The hippo model!
Purchase and lifecycle cost

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 Budget lines

• To be able to keep track of expenses (and be

able to budget for next year) you need to
make budget lines

• Minimal: capital funds and recurrent funds

• Example: Anna’s expense report

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 Example: Anna’s expense
report

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 3.4 usage rates of
consumables
• You need to plan for these things to be in stock:
– Equipment consumables (electrodes, gels)
– Replacement accessories (probes, hand pieces)
– Spare parts (filters, o-rings, bearings)
– Maintenance materials (pipes, paper, glue)
– Cleaning materials (desinfectant)
– Safety materials (protective clothing)
– Energy supplies (fuel, gas, electricity)

• Calculate usage rates, and you can base your recurrent

budgets on actual lifetime costs
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 Good exercise on p 63

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 The end!

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 HTM Guide 2
Chapter 4 – planning tools II

Anna Worm
Oct 31, 2012
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4.1 access to information and reference
materials
4.2 vision
4.3 model equipment list
4.4 purchasing, donations, replacement and
disposal policies
4.5 generic equipment specifications

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 4.1 reference materials

They means:
A library

Collect manuals (service, operator), brochures, model

equipment lists of other countries, text books,
journals

Can you think of other reference materials to collect?

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 library

How should this be organised between

central and district levels?

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 4.2 vision

• A vision indicates the direction of healthcare

delivery (which interventions and procedures do
you want to do, and next step is what equipment
do you need for that)
• Be reasonable and realistic

• It’s better to have a national vision, and then

make district visions for harmonization.
• Central  district  health center level
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 How to develop vision

• Management team should organise meetings

with a cross section of staff
• Ask:
– The direction of the service
– Sort of care that should be provided in the future
– Sort of interventions and procedures
– Type of technology required to do that

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 p. 70 Think about

• Heathcare trends
• Demographic data
• Epidemiological data
• Priority health problems
• Etc
• etc

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 4.3 Model Equipment List

• After vision creation you have a direction for

service delivery.
• Next step:
– Human Resources and training needs
– Space requirements
– Equipment requirements 
Model Equipment List

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 Model Equipment List

• So you have defined what interventions and

procedures you want to do.
• For example we take a children’s hospital
– We want to do check ups of pregnant ladies
– We want to be able to deliver (twins)
– Neonatal ICU

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• Next we see what kind of equipment we need to
be able to do this.
• Also include furniture, and other infrastructure
requirements

• Can we sustain this level of technology

– Enough skilled staff
– Enough space
– Enough budget to buy consumables, spare parts ect
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 Ask questions like:

• Hydraulic operating table or electrical

• Computerized laundry system or electro
mechanical machines
• Disposable syringes or re-usable/sterilizable

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 Ask yourself as well:

• Does this fit the rooms and space (look at

building norms that define room sizes)
• Necessary utilities; power, water
• Can be operated by current staff (quantity and
quality)

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 use

• Put your Model Equipment List next to your

Inventory and you will be able to determine
what is missing

• Now you know:

– What’s necessary
– What’s surplus

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 Who should make this list?

• It can be difficult to do this on district level,

therefore the central level should consider
developing Model Equipment Lists in
collaboration with staff from each level of the
service

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 How to make this list?

• HTM Working Group should organize staff

meetings
– Don’t look at your space and fill it
– Look at which diseases are present in region
– What interventions/procedures you need
– What equipment you need to provide these
– quantities

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• Maybe there are Model Equipment lists
available in other countries?
• It’s not easy to get started

At central level
use special
Software

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 4.4 policies

• Obtain equipment through procurement or

donations
• When planning you should consider cost of
replacement and disposal.
• Look at Purchasing, Donations, Replacement,
and Disposal Policies
• Should be created by MoH

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 4.4.2 purchasing and
donations policies
• When to purchase
• What to purchase

When (box 17 p81)

• To replace depreciated equipment
• To obtain additional items that ware missing

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 Chapter 7 and 8 will describe equipment
development planning process and annual
development plans

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 What to purchase
• Buy only equipment that is appropriate to your needs
– Appropriate to setting
– Of assured quality and safety
– Affordable and cost-effective
– Easily used and maintained
– Conform to existing policies

Go through box 18 together p82-84

And think of standardization 

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 4.4.3 Replacement and
disposal Policies
• Majority of equipment acquisitions should be
carried out to replace existing stocks as they reach
end of life time

• If you wait too long:

– Uneven standard of reliability
– General deterioration

When is end of lifetime?

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 disposal
• What happens to old equipment and furniture in
Rwanda?
• And in Kenya, Uganda, Tanzania?

Normally there are policies to oversee disposal:

• How to dispose
• How to dispose quickly
• Environmentally friendly way of disposal
• How to strip useful parts
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• I5mIqOwZT68/s1600/DSC_0501.JPG

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 4.5 specifications

• With Model Equipment List and

Purchase/Replacement policies we’re ready to
start acquisition process
• Via tenders or quotations (Guide 3)
– Item information
• Equipment specifications, quantities, technical and
environmental data
– Order information
• qualification, delivery and payment terms

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 Generic Equipment
Specifications
• Detailed description of the equipment
• Package of input needed to keep equipment
going through it’s life time
– Consumables, installation, training, after-dales
support
• Specification is most important document for
purchaser and supplier

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• It describes what the equipment will be
required to do (function!)
• It enables any supplier to offer any product
which will perform that function
• It does not limit the product only to one brand
name or make a product

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 Same function not same
product!

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• Central library of equipment specifications
helps to write new ones –Library

For example of specification, let’s look at

Annex 4

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 Technical and environment
information
• Technical and environmental data are
important for suppliers to know
– Electricity
– Water
– Environment (altitude, humidity, temperature)
– Language

Good idea to have one standard sheet for your

country. See annex 5
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 HTM Guide 2
Chapter 5 – budgeting tools I

Anna Worm
Oct 31, 2012
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• With chapter 3 and 4 we discussed how to
identify what you need, but only introduce
changes if you can afford them!

• Capital budget
• Recurrent budget

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5.1 replacing equipment
5.2 purchasing new equipment
5.3 pre-installation work
5.4 support activities
5.5 large scale major rehabilitation projects

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• Rough estimates
– For long term plans, business purposes and bulk
purchasing. Often used at central level
• and exact detailed estimates
– Used for annual requirements and specific
purchases. Often used at district level

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 5.1 replacing equipment

• End of lifetime and life expectancy (annex3)

• Depends on:
– Rate of use
– Now many back up units
– How it is handled
– How well it’s cared for and cleaned
– How well maintained and how often
– Initial quality
– Climate and environment
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 How to budget for
replacement
• We know how to calculate Equipment Stock
Value
• We know equipment lifetime
• this gives us replacement budget required
each year
• 3 ways to do it. See box 22 p103

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• This is a lot of money!! Not many healthcare
providers in Africa plan this kind of budget.
Often depend on development projects with
external funders
• Start somewhere, maybe with a smaller
percentage, but start saving!

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 5.2 purchasing new
equipment
• When buying new equipment need to budget
more than just the machine:
– Cost of total package of inputs
• Maintenance, training, consumables,
– Cost of getting equipment to your facility

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 Total Package of inputs

• Package of material inputs

– Accessories, manuals, consumables, spare parts
• Package of support inputs
– Installation, commissioning, training

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 5.3 pre installation cost

• You need to budget for this!

– Make sure enough space
– Water supply
– Electricity supply
– A flat floor
– Door that is big enough
– Removal of old equipment
– Hiring lifting equipment

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 Rough estimates

• P 113-114

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 5.4 support activities, who’s
paying?
• Acceptance process (guide 3)
– Receiving on site
– Unpacking
– Installation
– Commissioning
– Official acceptance
– Initial training
– Entering stocks into stores and records
– Payment
– complaints
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 Installation and
commissioning costs
• Address this is tender document!
• Who will take responsibility for this? And who will
pay?

• HTM team and commissioning team are

responsible

• Also if it’s done by supplier you should be present

to learn and to check if it’s done properly
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• They will give just enough consumables to do
initial training. All that you need after that,
you need to include in tender or order
yourself!
• And budget for this….

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 5.4.2 initial training cost

• For operators and technicians.

• On site or centralised?
• Or at the factory?
• Bring equipment to school
• Or users to equipment
• How many people will you train?

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 5.5 Large scale
rehabilitation projects
• Maybe you have equipment that not has been
working well, or buildings that need to be
brought back in working condition.
• Always the question; do we invest I repair or
do we buy/build new?
• Need separate capital budget for this.
Normally more than just available

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 The end!

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 HTM Guide 2
Chapter 6 – budgeting tools II

Anna Worm
Nov 8, 2012
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 Chapter 6 budgeting
recurrent budget
6.1 Maintenance Cost
6.2 Consumable operating cost
6.3 Administrative Cost
6.4 Ongoing training cost

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 6.1 Maintenance Cost

• Calculations made by Maintenance staff!

• Reduce Mean-time between failures (MTBF)
• International standards to make these calculations
– 5-6% of ‘new’ stock value for medical equipment
– 1-2% of construction costs for buildings

Maintenance will not generate cost but save

you money

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 p137

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• So the HTM manager, the HTM WG and the
finance officers (administrators) need to learn
how to budget for maintenance cost

• Talking about spare parts, maintenance

materials, service contracts, calibration of test
equipment, Replacement of tools, Office
materials and Increased maintenance
requirements by new or planned equipment
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• Don’t buy too much! Why not?
– Waste of money sitting on the shelves
– Expiry dates?
• Don’t buy too little! Why not?
– Not enough to keep the hospital running
– Difficult to find the money?
• When should you buy a lot?
– E.g. When the supplier is in Europe

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 Figure 21, p142-143

1. evaluate spare parts and maintenance

materials needed
2. Look up cost of spare parts and maintenance
materials
3. Check on service contracts
4. Look up cost for service contracts

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5. Look up cost for care and repair of workshop
test tools and tools
6. See if any new equipment is planned
7. Plan the cost of those new equipments
8. Review and prioritise all mentioned above
9. Adjust figures if it’s more than the available
budget

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 6.2 Consumable operating
Costs

Calculations are made by

………

Equipment operators often the Heads of

Department

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• More difficult then spare parts;
– Some equipment use many, expensive consumables
– Some use a few cheap

• It depends also on:

– How often is it used
– How well do the operators use, clean and take care?
– etc

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 Example to calculate cost

• Some equipment use many and expensive

consumables. Up to 120% of purchasing cost
per year!
• Box 30 on p 149

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 Contingency budget

You can not plan for everything

What happens if there is a epidemic?

We make a contingency budget for unplanned

work/materials

2 types of budgets:
• Planned budget for planned work
• Contingency budget for unplanned work
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 P 151

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 6.3 administrative cost

• Important elements of equipment operation

and maintenance cost do not fall into your
budget, but in administrational budget. But you
do need that to be able to work!
– Paper
– Phone
– Fuel

Calculations made by administrational staff

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 Guide 6 explains this in
more detail

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 6.4 ongoing training costs

• HTM WG or a training sub group need to make

an annual training plan

– Induction training: new staff, new department

– Refresher training: update and renew skills
throughout working life of staff

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 What do you teach them?

• Good practice with equipment-do’s and

don’t’s
• How to operate
• Correct application
• Care and cleaning
• Safety procedures
• PPM for users
• PPM and repair for technicians
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 Who is teaching

Some examples
• Equipment manufacturers
• Academic or vocational training institutions
• On the job learning
• Self study

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 How does HTM WG
calculate training cost?
1. Annually, evaluate skill development needs
(see C 7.2 and 8.2)
2. Identify the inputs required (sources (7.2)
and resources p157)
3. Make a plan
4. Cost the plan
5. Obtain approval

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 HTM Guide 2
Chapter 7 – long term equipment
plans and budgets
Anna Worm
Nov 8, 2012
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 They understand you.. p161
1. You have a wide range of equipment needs
2. Many items in the hospital are not working
3. Due to age and shortfall of equipment many new
items required
4. Staff is not skilled/trained
5. You don’t have money

Therefore you need equipment planning and

budgeting!
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 Chapter 7

7.1 Equipment Development Plan (EDP)

7.2 Equipment training plan (ETP)
7.3 Equipment budget-financial plans
7.3.1 Core Equipment Expenditure Plan CEEP
7.3.2 Core Equipment Financing Plan CEFP

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 7.1 Equipment
Development plan (EDP)
1. What is an inventory?
2. What is a model equipment list
3. What is an equipment development plan?
4. What is an annual plan?

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 Inventory

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 EDP

• Is a plan that gives a complete overview of:

– Equipment present in hospital
• Status/condition
• Short term actions
– price
• Long term actions (3-5yr)
– price
– Equipment required, which is current absent
• Look at Model Equipment list next to inventory

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• All capital expenditure request should be
covered by the EDP.

So all requests for replacement or new

equipment should only be honoured if
they are part of the long term EDP!

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 p164

• HTM WG and a planning sub group is

responsible for the EDP

• At central level this could be done with

software for BULK planning

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 Ho does this look like p169

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 How to make bulk EDP for
more facilities? p168

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 7.2 Equipment Training Plan
(ETP)
• Is also a long term plan
• E.g. for 5 years 2013-2018
• Update annually
• For more facilities, use software and/or
spreadsheets

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 Example p179

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 7.3 Equipment budget-
financial plans
• Next step after EDP and ETP is identifying and
allocating finances
• You need an Equipment budget
• To have enough recurrent and capital funds
• Two parts:
– Income
– expenditure

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For the income we make a
• Core Equipment Financing Plan
• CEFP

For the expenditure we make a

• Core Equipment Expenditure Plan
• CEEP

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 Core Equipment
Expenditure Plan CEEP
• What is it?
– It’s a financial plan that displays the funds
required to execute EDP & ETP
– Use the same budget lines for capital and
recurrent cost
• Who makes it?
– HTW WG with financial officers

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2 types:
1. General CEEP; basis for your annual budget
2. Strategic Business Plan; for the board, or
some high level people (e.g. PiH). Provides
rough estimations in an overview so they
know how much money they need to raise

Go through p 182-183-184 together

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 CEFP

• What is it?
– With the CEEP you know how much money you
need. The CEFP identifies the sources of funding
to be able to execute the EDP and ETP
• Who makes it?
– HTM WG and Financial officers

• Go through example on p187-188

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 CEFP, p188

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 HTM Guide 2
Chapter 8 – annual planning,
budgeting and monitoring
Anna Worm
Nov 8, 2012
9-03-23 116
• So you have a long term action plan
– . . . & . . .
• And long term financial plans
– . . . . & . . . .

• Next step:
– ………………………………………………….

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 Annual action plan

1. Annual Purchase Activities (APA)

2. Annual Rehabilitation Activities (ARA)
3. Annual Corrective Activities (ACA)
4. Annual Training Activitities (ATA)

All these annual action plan and annual capital

and recurrent expenses combined make the
Annual Equipment Budget (AEB)
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 steps

1. Update your inventory

2. Review EDP
3. Review ETP
4. Cost annual needs
5. Review CEEP and CEFP, prioritize needs and
prepare annual plan
6. Update existing plans with agreed annual
plans and budget
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 P 206

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 8.2 how to monitor
progress …

8.2.1 of annual equipment plans and

budgets
8.2.2 in general

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 8.2.1 monitor progress of
annual plans and budgets
• An annual plan covers 12 months of actions
and expenses
ensure:
that the money is available as in AEB
the equipment of the APA is purchased
corrective actions are taken like in the ACA
training courses are done like in ATA
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 Emergency purchases

• Purchases that you didn’t expect, and didn’t

plan for

• Take steps t adjust annual plan and budget if

this happens!

• If too many emergency purchases take place,

you didn’t plan well
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 Maintenance contingency
• Like emergency purchases, you can also have maintenance
issue that you need to address, which you didn’t plan for in the
ACA

• Maybe there is a flood (inondation) and you have much more

work than you planned for?

• Take steps t adjust annual plan and budget if this happens!

• If too many emergency purchases take place, you didn’t plan

well

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 Consumable contingencies

• Give me an example
• If it happens, what should you do?
• If it happens too often, what does it mean?

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 Monitoring progress in
general
1. Establish the planning and budgeting tools p215

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 Keeping tools up to date &
provide feedback
• Tools up to date
– Reference Equipment Price List
– Equipment stock value
– Annually review usage rates for consumables
– Annually update library of reference materials
• Provide feedback
– To improve procurement and stock control
– To improve training

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 Citations
• How to Organize: How to Manage Vol 1, Lenel et. al.,
(Ziken International: 2005). Retrieved from:
http://library.ewh.org/greenstone/collect/BMETDigit
alLibrary/index/assoc/HASH019f.dir/guide%201%20
How%20to%
20Organize.pdf

• How to Plan and Budget How to Manage Vol 2, Lenel

et. al., (Ziken International: 2005). Retrieved from:
http://library.ewh.org/greenstone/collect/BMETDigit
alLibrary/index/assoc/HASH3e7a.dir/guide%202%20
How%20to%20Plan%20and%
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 The end!

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