Obsolescence Planning

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What does Obsolescence Planning mean for Healthcare Organizations?

In this technologically advanced era, there is a growing demand for more advanced equipment. The obsolescence of existing equipment is a large concern for healthcare organizations. Put simply, equipment obsolescence is inevitable today. Even though some consider obsolescence a costly process, it comes with benefits. Let’s explore in more detail; the technology lifecycle, how a healthcare organization can perform obsolescence planning, and discuss the benefits of obsolescence. 

What is Obsolescence Planning?

Obsolescence planning is the strategic planning of when a certain equipment/component will become useless or out of date. It helps to know beforehand the specific time in which the equipment must be replaced. This enables the organizations to plan ahead with their suppliers and budget accordingly.

When it comes to the healthcare sector, the surety of up-to-date equipment and technologies is critical. Therefore, conducting thorough obsolescence planning is essential to have a clear understanding of equipment, components, or software that need replacement or enhancement in the near future. 

The Technology Lifecycle

There are four phases of the technology life cycle, as follows:

  1. Research and development
  2. Growth
  3. Maturity
  4. Decline

Over the past few years, the technology lifecycle is shrinking aggressively. To help better understand the shirking technology lifecycle, consider smartphones as an example. The replacement cycle of smartphones is 2-3 years because of new software or updates of existing software which are not compatible with aging hardware. Similar trends are also witnessed across other tech products. In fact, Moore’s law better reflects the obsolescence of technology with the passage of time. 

Moore’s Law

Back in 1965, Gordon Moore observed that the transistors’ count on microchips doubles every two years. Moore did not call it Moore’s Law or did not intend to make it a “law”. The observation by Moore was just based on current trends in the chip industry. However, the observation of Moore was worth a lot and eventually became a golden rule. 

As per Moore’s observation, the processing power gets doubled every year or two. This means that major software updates would likely occur within a 2-3 years cycle, such as Microsoft Office 2003/2007/ 2010/2013 versions. The optimization also means that the new update is meant to run on the processing power of the current year. So, if you have software that is 2 or more versions older and you intend to run it on new hardware, then it might not function properly because the new processors might out-perform the software. Similarly, if you run software on hardware two or more generations older, then the software might run slow or not at all. 

So, what can we extract from this? That the average technology lifecycle spans 5 years, i.e., almost two generational periods until it starts to become obsolete. Moreover, the smaller and more portable the equipment is, the shorter its life cycle. 

Benefits of Planned Obsolescence 

Technology obsolescence is an inevitable event. Although it might get delayed by a few years, it will definitely occur. Therefore planning ahead for this is a must. It is essential that one also knows the benefits of planned obsolescence and not just view it as a burden to the organization. The following are some of the key benefits of obsolescence planning:

Increased Productivity

Planned obsolescence gives facilities a chance to install new models that are more efficient and offer more advanced features. So, the improved functionality will result in more productivity and also help in attracting top talent that intend to use modern equipment only.  In the healthcare sector this can apply to medical devices, medical imaging modalities, post-processing software, 3D-capable visualization software, EMRs, VNAs, PACS, and various computer hardware & software.  In nuclear medicine imaging, newer solid state detector hardware can image patients in far less time than a legacy sodium iodide detector.  This saves on staff’s time spent imaging per patient.  Allowing for more patient throughput and overall less wait time for patients.

Reduced Utilities 

New models are mostly targeted to enhance the offerings by consuming fewer utilities, such as electricity, water, etc. This means that an organization can reduce its utility expenses by replacing obsolete equipment.  

Reduced Repair and Maintenance Costs

Other than utility costs, obsolescence also brings many other cost reduction solutions. For example, old equipment requires frequent repair costs along with low-quality results. Compared with purchasing new equipment, the new equipment not just reduces costs, but the efficient performance also reduces downtimes. 

Pushed Research and Development

Planning obsolescence also triggers an environment of research and development in the organization. This helps in exploring new equipment and technologies and adopting them at a much faster pace. 

To sum up, the benefits of planned obsolescence clearly indicate that the purchase and adoption of new equipment bring many fruitful outcomes, which are more rewarding compared to the costs associated with their purchase.

How to Conduct Obsolescence Planning?

The approach behind obsolescence planning can vary from organization to organization and the set of equipment it is using. However, the following are the recommended steps of obsolescence planning:

1. Assess your Equipment Inventory

You should start by assessing your equipment inventory to know the current situation of your equipment and obsolescence risk levels. For example, equipment that is no longer manufactured.  Or equipment where some of its components are obsolete. These are considered high-risk equipment. It would be beneficial to create an inventory list of existing equipment with respective risk levels.

2. Schedule Depreciation Timeframe

After assessing the equipment condition, the next step is to set the depreciation time frame. One should plan the estimated timeframe when the equipment is required to be replaced. 

3. Set Technology Roadmap

New technologies are coming at such a rapid pace it also reduces the useful period of the equipment. Therefore, it is essential that one set up a technology roadmap that lists the needs for advanced hardware and software.  For enhanced operational efficiency. Through this roadmap, an organization will be well-prepared beforehand on what new technologies should be adopted at a faster pace. 

4. Set up the Plan

Once you are done with the above 3 steps, you are in a better position to plan obsolescence.  You can start planning the solutions for obsolete/high-risk equipment. This may include finding new alternative solutions or stocking up the parts before the manufacturer discontinues them. You can also involve a member of the accounts team to set up the plan based on the financial position of the organization.

That’s it!  These are ways an organization can easily set up an effective obsolescence plan that addresses the equipment and technological needs well ahead of time. 

Wrapping Up

Considering the fast-paced technological era, healthcare organizations need effective management of their equipment to avoid loss of productivity and operational efficiency. Therefore, thorough obsolescence planning is highly recommended today. The above-discussed steps of obsolescence planning are the basic ones to start with. So, gather the team and initiate obsolescence planning for your organization right away.

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