No matter the industry, deferring maintenance on capital is risky — but few industries face a bigger risk by deferring maintenance than healthcare.

Deferring routine work can lead to potentially costly and critical systems and equipment failures. That includes work on boilers and HVAC systems, water systems, roofing replacement, electric systems, emergency generators, medical diagnostic equipment and IT equipment.

A malfunctioning boiler will affect a hospital’s heat and water supplies; a failed operating room air handler will delay surgeries. Staff schedules are thrown into chaos. Revenue is lost. Higher insurance premiums inevitably follow.

Over the last three years, 35% of hospitals have done emergency repairs after deferring maintenance. The cost averaged 18% more than routine maintenance. Nationwide, the additional cost of deferred maintenance nationwide is approximately $243 billion.1

Rural hospitals have been particularly hard hit. Even before the COVID-19 pandemic, revenue issues were forcing rural hospital into closing. The money issues intensified with COVID-19, and in cutting costs to stay afloat, deferring maintenance became necessary.

However, underwriters do not look on deferred maintenance kindly. Not only does deferred maintenance portend claims with the physical plant but indicates an institution may be on shaky financial footing.

Addressing deferred maintenance

Reversing the trend takes a strategy built around the institution’s priorities, first in terms of its needs, but also in terms of asset management: Which projects best reflect the biggest needs and money that will be spent correctly?

Here are four best practices to manage the risk:

  1. Prevent problems with predictive maintenance. Predictive technology is invaluable for maintenance of high-risk assets. For example, knowing that an anesthesia machine is failing long before it breaks down can make a big difference in repair costs and budgeting. Software and sensors that monitor equipment performance like vibration and oil levels, while thermal imaging can signal needed maintenance. At the same time, computerized maintenance management software can automate the process.
  1. Digital solutions help cure inventory and asset management ills. Hospitals cannot function with chronic shortages of spare parts — equipment that breaks down often needs immediate repair for patient safety. Inventory management software can help offset materials outages and minimize waste. Registering and tracking assets is essential to reducing theft and duplicate purchasing.
  1. Prioritize patient-critical assets. Standard hospital equipment ranges from wheelchairs to electric generators to infant incubators to anesthesia machines. But they are not equally important in terms of patient care. Hospitals should establish a guide as to which assets are most valuable and, along with original equipment manufacturer (OEM) recommendations, use this guide to establish testing and inspection protocols.
  1. Audit and assess maintenance performance. Maintenance audits reinforce a culture that supports maintenance and provide tracking performance measurements — which can help satisfy hospital inspectors and underwriters’ need for reliable data.

HUB International’s team of healthcare specialists can help assess organizational risk and ensure that your medical malpractice coverage is sufficient for the litigiousness that characterizes today’s medical industry.

1 Health Facilities Management, “2022 Hospital Construction Survey,” March 31, 2022.