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SA Ratio

service cost to acquisition cost (S/A) ratio

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Cost Of Cost Ratio (COSR or Service To Acquistion Cost Ratio) is the ratio of the total cost to deliver a OEM service contract to include parts and labor divided by the acquisition cost of the equipment. When the service contract is performed by a manufacturer or third-party ISO, the service cost is usually the price of a full service contract to include PM and repair. When the service is performed in-house by BMET/CE department, the service cost is calculated from the amount spent on parts plus BMET/CE labor hours [hourly labor rates] multiplied by the "loaded" rate to include person's salary, benefits and other overhead expenses. Generally, services performed by the Original Equipment Manufacturer is the most expensive for a health-care organization. However, service contracts provided by an ISO is 20% less than OEM services. Still in-house service contracts often cost the health-care organization 50% less than the amount of a full-service OEM contract.

The S/A ratio varies according to equipment category. Medical Imaging and laboratory equipment has a higher S/A ratio and is more costly to maintain than general biomedical equipment. For example, some CE departments at teaching institutions in urban locations claim that they have higher overhead rates than rural community hospitals of the same relative size. Likewise, CE departments in hospitals that have negotiated low purchase prices will be penalized with higher S/A ratios.[1]

For example, Hospital A has a $10,000 full-service contract on a laboratory analyzer that has an acquisition cost of $100,000. While Hospital B has a $11,000 full-service contract on a laboratory analyzer and its acquisition cost is $120,000. To calculate Hospital A S/A ratio, we divide 10,000 / 100,00 which equals 10% [.1]. In addition, calculate Hospital B S/A ratio, we divide 11,000 / 120,00 which equals 9% [.092]. Finally, sum the total S/As for all devices on service contact for an overall S/A percentage. Typically, an overall S/As ratio into an average rating that should be less than 5% [good] and less than 2% [outstanding] for clinical engineering departments.[2]

References[]

  1. JONATHAN GAEV. SUCCESSFUL MEASURES: Benchmark clinical engineering performance. https://www.ecri.org/Documents/Successful_Measures_Benchmarking_Clinical_Engineering_Performance.pdf
  2. TechNation. A reliable metric for evaluating the financial performance of an HTM department by Patrick K. Lynch, CBET, CCE, MBA, HIT Pro/PW, CPHIMS. 1 Jul 2013.

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