Equipment Maintenance: Know when to scrap it

Q. How do I know when it's time to retire equipment?

A. Given the high initial cost, combined with high maintenance costs of respiratory equipment, the decision to repair or retire a specific asset can have a large impact on a company's bottom line.

Here are some of the key items to consider when making that decision:

1. Age of the equipment: This speaks to both its useful life (in terms of years and operating hours), as well as the depreciation value. With five-year depreciation schedules, the book value of the asset may be near $0, and you have earned a nice return on that asset. In this case, the decision to scrap it is an easy one if the repair cost is high.

2. Overall condition: Is the unit bug infested or smoke damaged? Water damaged? What type of environment has it been used? Often a bug or smoke unit is UTR (uneconomical to repair) and is therefore scrapped.

3. Replacement cost: Comparing replacement cost with the repair costs makes the decision easier, especially if you know the units past reliability. If it has been a reliable unit and the repair cost is 50%-60% of the replacement, it often makes sense to repair it.

4. Service history: Like automobiles “of-old,” some units are just “lemons,” requiring constant service and driving up on-call costs, as well. If it's a lemon and has run a useful life, scrap it for a newer one.

5. Newest technology: Has the manufacturer introduced new models with improved technology and lifespan? This is especially true for ventilators that are expensive to replace, but newer models may yield more referrals based on their new features.

6. Your budget: Sometimes it just comes down to what you can afford at the time given other business expenses.

Ultimately, the decision to “retire or repair” is a combination of all the above. Like your automobile, regular preventative maintenance will give your assets years of trouble-free revenue.

Jim Worrell is chief commercial officer at Quality Biomedical. Reach him at jworrell@qualitybiomedical.com.