A Case for Personal Property Asset Management in Hospitals

Direct experience with hospital personal property asset management has resulted in many benefits for University Health, including increased revenue, better use of resources, reduction in risk, and increased staff satisfaction. The nature of following a structured approach to asset management, such as the ISO 55000 asset management series, indicates that other hospitals can realize the same benefits, and more.

In 2014, the International Standards Organization (ISO) published the ISO 55000 series of standards for Asset Management. These standards apply to any type of asset. Since 2014, the standards are gaining traction internationally with 326 organizations currently obtaining the benefits of certification worldwide. These organizations range in industry from engineering to waste water. Unfortunately, only three healthcare services related organizations are on the list. University Health in San Antonio, Texas is the first hospital in the world to achieve ISO 55001 Certification for its Personal Property Asset Management System.

If you work in a hospital, or any large organization, you cannot do your job without personal property. There are three basic characteristics common to hospitals, and all large organizations: building, people, and the tools that people need to do their jobs, otherwise known as, personal property, which can be affectionately called “stuff”.

In general, we do a good job at managing the building and people, but not such a good job managing all the stuff within the building that people use. One good reason for focused attention and management on the building and the people is due to the amount of the investments made in them by the organization. It might surprise you to know that next to human resources, most companies claim property as their next largest expense.

Property has two components: real property that constitutes the building and infrastructure and personal property that constitutes the furniture, fixtures, and equipment. Again, we do a good job managing the real property, but half of that property investment goes undermanaged.

According to the United States Census Bureau’s 2022 capital spending report, organizations spend more capital on equipment than they do on structures. For hospitals, the ratio is more like 55/45 in favor of structures. This almost even capital spending split between structures and equipment makes sense when you think about it. Buildings last for decades and the majority of capital spent is on the initial construction. However, personal property replacement occurs periodically due to obsolescence or damage, which can result in a total replacement of furniture, fixtures, and equipment several times in the life of a building. This is Capital Spending only, and does not include Operational Spending.

Taking a closer look at the way hospitals manage buildings and people will help you understand why it is important to manage personal property with the same vigilance as managing facilities and people.

Usually there is a facilities department to manage the building. This department may consist of a plumbing department, electrical department, carpenters, painters, and so on. all of these sub-departments serve under the umbrella of facilities. A human resources department may consist of several sub-departments as well, such as benefits, recruiting, compensation, employee relations, volunteer services, and performance development.

Imagine for a moment all the sub-departments existing without the umbrella of the facilities and human resources departments. Obtaining critical information about the building and employees would become exponentially more difficult, putting the organization and its leaders at risk. This is exactly what happens without an asset management department to serve as a conduit to ensure the greatest value from personal property asset investments.

Benefits of Personal Property Asset Management

Gaining the benefits of asset management for personal property may be as simple as creating a department to centralize all personal property activity. A communications hub, if you will, for departments like information technology, biomedical engineering, planning design and construction, accounting, and hospital administration to coordinate and report on activities for efficiency, tracking, and reporting purposes.

Some of the measurable benefits University Health has experienced since formalizing a commitment to asset management:

• Saving clinic staff time on average 600 hours per year that can be used to focus on patient care,

• Increased revenue from sales of unneeded assets - (approximately $160,000 in revenue per year), 

• Saving money by making assets available for reutilization -  (approximately $150,000 savings per year),

• Metal and electronics recycling – on average 90,000 pounds per year reported to the State of Texas positively effects the environment by reducing landfill waste,

• Recycling electronics reduces information management risks,• Manage limited space more efficiently,

• Updated Corporate Policy with committed leadership support for continuous improvement,

• Asset Management Governance Committee formed to meet stakeholder needs  and expectations about personal property,

• More than 300 departments actively participate in the Asset Management Advocate Program,

• Communicating in a formal manner about personal property improved communication across departments on critical issues, leading to innovations and unplanned improvements, and,

• Demonstrated Employee Satisfaction improvements.

Other hospitals can achieve similar resultswhen their leaders make the decision to manage Personal Property with the same importance as Real Property and Human Resources.

A Simple Test

There is a simple test to determine if there is a need for an asset management department in your hospital. Hospital leadership should review the fixed asset register and determine if it accurately reflects the actual physical personal property in the hospital. Keep in mind that the fixed asset register is a recording of the capital assets reported on the financial statements that leadership attests to for financial auditing purposes. Leaders must also review the accuracy of the inventory listing of purchased assets under the operational budget for information technology, biomedical engineering, and other personal property asset intensive departments to get a clearer picture for the need to improve the management of personal property investments.       

Most hospitals will learn that their fixed asset register does not come close to representing all the personal property it owns, operates, manages, repairs, and otherwise uses on a daily basis.

Hospital personal property is generally made-up of 30 percent medical equipment, 30 percent computer equipment, 30 percent furniture & fixtures, and 10 percent miscellaneous other categories like vehicles, kitchen equipment, and environmental services equipment. Establishing an asset management department to track and report on the movement of personal property can start by forming an asset management governance committee consisting of a department head from each of these departments, primarily biomedical engineering, information services, and hospital administration. Committee members can decide how to help the organization achieve its goals by working together, establish metrics, and report results to hospital leadership. Doing so is a low-cost, high-reward, and endeavor.

University Health is an organizational member of the non-profit Asset Leadership Network, which provides free educational content and Executive Briefings to help leaders understand what is possible with personal property asset management. As an ALN Senior Fellow you can reach out to me to learn how to take steps to increase a hospital’s mission success on a personal property asset management journey.