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Making a Baseline Asset Replacement Plan

Turning Aging Equipment Insights Into a Baseline Plan

By using a useful life assumption we will turn the aging equipment assessment into a baseline plan that will recommend when these assets will need to be replaced. In order to do this, we will need to define an assumed useful life for each asset or asset type. Many different things could affect the actual useful life of an asset including repair parts availability, vendor support, cybersecurity vulnerabilities, utilization, fixed system vs mobile, and how well it’s being treated by users. The useful life assumption is used to incorporate all these variables into a single number.

Determining the useful life of assets is more of an art than a science, improve your insights over time.

There are some resources you can use for understanding what type of useful life benchmark you can define for your fleet. One resource is American Heart Association’s (AHA’s) 2018 Estimated Useful Lives of Depreciable Hospital Assets. This is updated periodically, but at the time of writing 2018 is the latest version. They sell either PDF or excel versions of the document, and if you purchase the excel document, you get access to the PDF version. One thing to note about this resource is that it’s the gold standard of how to depreciate an asset, but that doesn’t usually equate to how long a hospital will typically keep an asset in service. Equipment is expensive to replace and to replace an asset there typically needs to be a compelling reason to do so. On average, I’m finding that a more reasonable estimation for equipment serviceable life is about double what is being published by their guidance. Looking at your aging equipment assessment you can see when you’ve replaced assets, but it might be useful to track this overtime to continually improve your planning. 

Use your assumed useful live's to calculate when each asset should be replaced.

By doing this, we have successfully created a baseline plan that you can start to review in detail. You should also way in vendors end of life or end of support dates to reduce the amount of risk of maintaining an asset beyond these dates. Vendors have a fairly average model replacement time, just as we know that Apple will release a new iPhone every year, we can anticipate other manufacturers replacement/support timelines. Visualize your assets by replacement year to start having a look at this first pass of recommendations. In our next post, we will look to how to optimize this plan.

One Comment

  • Optimizing a Baseline Plan to Ensure It’s Operational – Chris Lavrich
    at 1 year ago

    […] our baseline plan created, we can see the initial recommendations. If this is your first time putting together an asset plan […]

    Reply

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