The current economy has forced health organizations to seek money-saving tools nationwide. As a result, a number of organizations are investigating the maintenance costs of healthcare records. In the past, it was a common practice for healthcare organizations to purchase their original equipment manufacturing (OEM) service contracts for all their healthcare systems to patient monitoring to sophisticated diagnostic imaging systems. However, OEM service agreements are often quite expensive, service options limited, and reports on financial cost-benefit analysis, salesmanships, or equipment performance are seldom available.
As a tool to reduce maintenance costs and maintenance budget, many healthcare organizations challenge the increasing cost of OEM service agreements by building in-house service capacity, purchasing multi-threaded service programs, and collaborating with custom-engineer maintenance management programs. Many health care organizations have found that a hybrid solution that combines household doctors with a purchase of an Equipment Management Program (EMMP) and the required OEM service agreements offers the best long-term and cost-effective solution. This approach provides the highest level of control, manufacturer flexibility and cost savings for handling extensive equipment used by healthcare organizations.
Over the past few years, insurance agents have provided an insurance solution to support healthcare cost-spending – the Self-Determined Retention (SIR) program. Under insurance terms, this product is called a deductible program. While the SIR program is currently offered by a handful of insurance companies, the aggressive insurance broker of the product has raised interest, questions and confusion in healthcare.
The SIR Program is described in detail below. It is important to note that the potential financial benefit of the SIR program relies on a number of variables and the insurance intermediary can overestimate if it relies on unreasonably low maintenance cost assumptions. In order to evaluate the potential benefits of the proposed SIR program, all the factors described below must be taken into account:
What is the SIR program?
SIR indicates self-preservation, an insurance policy that uses an aggregate deductible structure as a means to limit the overall maintenance costs of insurance equipment. Contrary to the typical personal insurance experience that a homeowner's policy may include a "per event" deductible limit, the SIR program may be deducted. This means that the insured has to pay for the maintenance of their equipment and the insurance policy does not provide financial protection until the policy limit on the bond is met. At this point, the start of the deductible policy works like a conventional insurance policy, and future maintenance costs, "losses", may be eligible for reimbursement.
The SIR program replaces OEM service agreements with an insurance vehicle to limit maintenance costs. The health care organization identifies special equipment to be provided, terminates OEM service agreements and enters the SIR program to reduce maintenance costs for the equipment. The insured (health organization) covers the insurance premium for coverage and charges an administrative fee for account keeping and commission brokers' commissions. Insurance coverage becomes relevant only if the client has met the deductible bonds. The insurer determines unilaterally what maintenance costs will be used for the deductible cost. The customer is responsible for completing the maintenance costs of the covered equipment until the insurer agrees that the maintenance costs are both eligible for the contract coverage and the deductible amount.
first example: $ 100,000 in OEM service contract
SIR Premium Plus administration cost $ 25,000
Insurance policy worth $ 60,000
Total Cost $ 85,000
Suggested Savings $ 15,000 (15%)
Insurance brokers often submit proposals that will provide customers with additional savings if actual maintenance costs are lower than the deductible. $ 100,000 OEM Service Contract
SIR Premium Plus Administration Cost $ 25,000
Insurance policy can be deducted from $ 60,000
Actual maintenance costs paid by the customer are $ 30,000
Maintenance costs repaid by the insurance policy are $ 0
Customers' net maintenance costs are $ 30,000
Total Program Cost ($ 25,000 + $ 30,000) $ 55,000
Illustrated Savings / Loss $ 45,000 (45%)
In this example, the insurance broker argues that potential savings are at least 15% 45% based on the above). Unfortunately, the more complicated than described above, and like any insurance deductible program, the devil is in the details. The insurance contract determines which types of maintenance events can be covered by the policy. It is of utmost importance that the coverage of the SIR policy is matched to the coverage of the service contract or that there are coverage gaps that will result in unexpectedly higher costs for the customer. It is possible that certain maintenance events will not qualify as a cover for the policyholder for covering the insurance policies. In addition, the insured (healthcare organization) is responsible for tracking all maintenance activities, collecting all maintenance documentation required by the insurance company and timely submitting the information and documentation to the insurer in order to enforce the claim against the deductible penalty (or refund as soon as the deductible amount is met). Unless the healthcare organization has systems, personnel, and processes that handle all the additional administrative work, there is a good chance that potentially covered maintenance events can not be deducted from the deductible amount or can ultimately be refunded under the insurance contract.
In the following example, we take into consideration the fact that the maintenance costs incurred are not being met by the directive. The financial impact on the health care organization can significantly increase maintenance costs compared to the original OEM cost base. Please note that the terms of insurance contracts, exclusions and specific coverage levels dictate the level of protection provided by the SIR program. It is imperative that potential buyers of these insurance programs carry out their own individual reviews.
3rd example: $ 100,000 in OEM service contract
SIR Premium Plus administration cost $ 25,000
Insurance policy can be deducted from $ 60,000
Actual maintenance costs paid by the customer are $ 99,000
The maintenance costs repaid by the insurance policy are $ 10,000
Customers' net maintenance cost is $ 89,000
Total Program Cost ($ 25,000 + $ 89,000) $ 114,000
Illustrated Savings / Losses ($ 14,000) (-14%)
Example 3 shows that the SIR program can indeed result in the customer pays more for the original OEM service Cost of the agreement. For diagnostic imaging equipment containing proprietary X-ray diffraction tubes that may cost more than $ 200,000, a maintenance event that is not eligible for coverage or is not applicable to the deductible asset, the cost of this type of insurance program is upside down reverse.
Who can use the SIR program?
Any health organization that currently purchases equipment maintenance contracts on its electronic devices can take advantage of the SIR program.
When is the SIR program worthy for the customer?
The SIR program can be beneficial to the healthcare organization if:
1) have internal systems, personnel and controllers to manage the process of filing claims;
2) the insurance policies and limits contained in the contractual terms of the SIR and comply with the prior service contract; and
3) If actual maintenance costs are favorable (less than generally expected for healthcare equipment)
Typically, each customer is processed for each processing task and tracking all claims. All maintenance events must be promptly paid by the customer with satisfactory documentation and timely proof to the insurer. The insurer reviews the claim, determines the entitlement of the collateral and either denies the claim, requests additional information or applies the claim against the deductible policy. As the SIR program naturally requires a sophisticated insurance contract to ensure the cost of maintenance of medical equipment, it is imperative that the client knows all policy acceptance and exclusion. It is important to note that the maintenance requirements of complex healthcare systems do not always meet the "black and white" terms of the insurance contract.
Where is the sale of the SIR program?
SIR Program is sold at national level by insurance agents in the healthcare market. This type of product, which is primarily an insurance deductible policy, is generally sold to the healthcare organization's risk managers and the CFO.
Why Sell SIR Program?
The SIR program is sold as an insurance instrument to manage financial risks related to equipment maintenance. The insurance premium is paid in advance, the insurance premiums are paid in full and the claim for deduction or repayment is filed with the insurance company after the deductible amount has been met. If the customer's actual maintenance costs are lower than the deductible and everything works in the promised way, then the customer can save money against the baseline of the cost of the original service contract. If maintenance costs are high if the customer does not have an internal employee and process to handle administrative burden if claims for damages are not filed in time or if the insurance company rejects the claims submitted due to coverage limitations or exclusions, it is possible that the customer is in fact pay more than the cost base of the original service contract.
The SIR program is an alternative to the original equipment manufacturer (OEM) service agreement. This type of program is a sophisticated insurance vehicle designed to cover part of the financial risks reserved for the healthcare provider. Like all insurance policies, it is critical that the coverage levels, exclusions, exclusions, and policy conditions are the same (or greater) than OEM service agreements. The SIR Program client must have the tools and resources to track the maintenance activity throughout the year. No matter what accounts were paid, denied and reimbursed. Finally, it is important that the maintenance cost of the actual equipment and the type of maintenance incurred are below the coverage level determined by the insurance policies. The SIR program can provide many financial results based on a number of variables. The healthcare organization would be wise to do a major "screening" and would not rely on the optimistic promises offered by the insurance broker who are not experts in the maintenance of medical equipment. In other words, a warning or "Take care of the buyer".
Source by sbobet