By  Al Brander, VP of Clinical Services

Hospitals and health systems face numerous financial challenges, but one often overlooked area for potential savings lies in managing explanted medical device warranty credits. SpendMend’s Explanted Medical Device Warranty Credit Tracking Solution (MDWT), a game-changer in the realm of financial management for healthcare institutions, explores the following financial benefits offered by this innovative solution:

1. Cost Avoidance: Protecting Against Penalties

Non-compliance with regulatory standards can spell disaster for hospitals, leading to severe fines and penalties. CMS and the OIG mandate adherence to the Prudent Buyer Standard, requiring hospitals to pursue and report warranty credits equivalent to or exceeding 50% of the replacement device’s cost. Failure to comply can result in dire consequences, including:

• Repayment of three times the warranty credit amount, regardless of whether the credit was received.
• Additional fines ranging from $13,508 to $27,018 per instance.
• Full legal and financial responsibility borne by the explanting hospital, potentially leading to exclusion from Medicare or facing legal repercussions for gross negligence.

Consider the financial impact of a single missed warranty credit:

• Average AICD warranty credit: $12,000
• Failure to report leading to a 3x penalty: $36,000
• Per-instance fines: $13,000 – $27,000
• Total potential loss from one mistake: $61,000 – $75,000

2. Maximizing Warranty Credits: Boosting Revenue Streams

The MDWT solution empowers hospitals to optimize their warranty credit processes, resulting in significant financial gains:

• Hospitals can retain 25% more warranty credit dollars, potentially increasing further if they currently do not pursue devices explanted in surgical procedural areas.
• Approximately 80% of all warranty credits fall below the 50% overpayment reporting threshold, allowing hospitals to reinforce their bottom line by retaining this revenue.
• OIG Mock Audit results reveal that hospitals utilizing manual processes miss out on $50,000 to $200,000 in lost revenue due to inconsistent returns of explants eligible for warranty or recall.
• Implementation of MDWT leads to a 75% decrease in labor expenses, as SpendMend’s audit team manages the process, enabling hospital staff to focus on patient care and core responsibilities.
• The solution entails no integration costs, ensuring a smooth and cost-effective implementation process.

Your Results: Demonstrating Tangible ROI

The MDWT solution delivers tangible financial benefits, as evidenced by the experience of a 250-bed community hospital:

• Warranty Credit Amount Received: $188,350
• Due to Payer: $153,900
• Retained: $34,450

With SpendMend’s MDWT solution, hospitals can expect a positive annual ROI, with retained credits surpassing the cost of the annual hospital subscription. This not only safeguards hospitals against penalties but also unlocks new revenue streams, ultimately contributing to enhanced financial stability and improved patient care. Invest in the future of your institution with SpendMend’s MDWT solution and pave the way for financial success in healthcare.