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Archive September 2018 XIX, No. 9

Business Advisor: Unlock Your Equipment's Hidden Expiration Date

Know years in advance when you'll need to replace big-ticket items.

John Goehle, MBA, CPA, CASC


Jason Meehan
First To Go? Which piece of equipment will be first to break down?

How many more good years does that creaky table in OR 1 have left? When will your anesthesia machines breathe their last and your autoclaves lose their steam? There’s no way to know for sure, of course, how long these big-ticket items will last, but you can certainly plan for when you’ll likely need to replace them. As you’ll see, tapping into the predictive powers of a “5-Year Capital Equipment Plan” lets you project and plan for large capital outlays. It sure beats busting your budget by making a panic purchase when critical OR equipment breaks down.

Don’t worry. There’s not much math involved. You simply forecast the life span of each piece of equipment in your facility and plot the expected expiration dates on a spreadsheet so you can earmark funds to buy a replacement. The key is getting the right input from the right people: those who use the equipment and those who maintain it. Meet with these folks at least once a year so they can update you on the equipment’s status. To help them with that, keep records of each piece of equipment, including purchase date and repair history.

Plotting the numbers

Let’s look at the sample spreadsheet below. List each piece of capital equipment in a row. Your first column, Remaining Life, lists how many useful years you predict each item has left. The next 5 columns are for each year from 2019-2023.

Item Remaining Life 2019 2020 2021 2022 2023
Business Office
Desktop Computers (5) 1 $10,000
Server (Windows) 2 $25,000
Monitors 3 $50,000
Operating Rooms
Anesthesia Machines (4) 4 $300,000
C-Arm 5 $125,000
Central Processing
Autoclave 2 $100,000
Totals $10,000 $125,000 $50,000 $300,000 $125,000
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