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1

MINISTRY OF HEALTH AND FAMILY MALE’, MALDIVES

[2012]

[Situation Analysis on

medical equipment in

Maldives]

[Capital and Asset Management in Maldivian Health Services]

Author: Dr. Shoeb Ahmed Ilyas. B.Sc. (Biotechnology), BDS, PGDHM, M.Sc. (Biotechnology), MHRM, M.Sc. (Psy), EMSRHS (Public

Health), M.Phil (Hospital & Health Systems Management).

Health Technology Assessment (HTA) Consultant

Report presented to: Health Information, Project Monitoring and

Coordination Section, Ministry of Health and Family (MoHF).

Date: 29-03-2012.

[ S O S U N M A G U , MA L E ’ 2 0 3 7 9 , M A L D I V E S ]

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Contents List of abbreviations .................................................................................................................................. 5

Background of the Caritas Project ................................................................................................................ 6

Objective of the consultation ................................................................................................................... 6

Methodology ............................................................................................................................................. 7

Acknowledgements ................................................................................................................................... 8

1. Introduction .......................................................................................................................................... 9

2. Situation Analysis ................................................................................................................................ 10

2.1Country general profile .................................................................................................................. 10

2.2 Capital and asset management in maldivian health services ....................................................... 10

2.3 Capital planning ............................................................................................................................ 11

2.4 Asset registers ............................................................................................................................... 11

2.5 Priotization of business case ......................................................................................................... 12

2.6 Finance allocation ......................................................................................................................... 12

2.7 Capital budget and decision making process ................................................................................ 13

2.8 Major influencing factors in capital request prioritization ........................................................... 13

2.9 Capital budgeting and prioritization ............................................................................................. 14

3.0 The major problems with existing biomedical equipment at IGMH: ........................................... 14

3.1Factors driving major capital expenditure in terms of priority .......................................................... 15

3.2 Policies and procedures for biomedical equipment asset management ............................................ 15

3.3Data availability ................................................................................................................................. 15

3.4 Current priority issues for IGMH...................................................................................................... 16

3.5 Procurement section, MoHF status .............................................................................................. 16

3.6 Supply section, MoHF status ........................................................................................................ 16

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3.7 Indira Gandhi Memorial Hospital (IGMH) status ......................................................................... 17

3.8 Import Regulations for Medical devices ....................................................................................... 18

3.9 Maldives Food and Drug Administration (MFDA) status ............................................................ 18

4.0 Overview and Context of capital expenditure of medical equipments in Maldives. ........................ 19

4.2 Key principles for funding biomedical devices .............................................................................. 19

5.0 Recommendation for Health service Corporation. ....................................................................... 24

6.0 Recommendations for procurement department ........................................................................ 25

7.0 Recommendations for supply department ................................................................................... 25

8.0 Recommendations on development of delivery and commissioning tracking system ................ 27

9. Recommendations for strengthening the inventory management system.................................... 28

10. Recommendations on Import regulation of medical devices. ...................................................... 28

11. Recommendations for Ministry of Health and Family (MOHF) .................................................... 29

12. Proposed logical framework for strengthening of biomedical equipment management system 29

13.0 Appendices .................................................................................................................................. 32

Appendix 1: Asset registration form ................................................................................................... 32

Appendix 2: Asset registration list ...................................................................................................... 32

Appendix 3: Adverse event reporting form for medical devices. ....................................................... 32

Appendix 4: Policy on Initial Testing and Evaluation of Biomedical Equipments. ........................... 32

Appendix 5: Procurement policy ........................................................................................................ 32

Appendix 6: Policy on maintenance and repair of Medical equipments. ............................................ 32

Appendix 7: Policy on disposal of medical equipments. .................................................................... 32

Appendix 8: Policy on donation of biomedical Equipments. ............................................................. 32

Appendix 9: Risk rating for biomedical equipments. ......................................................................... 32

Appendix 10: Proposed Guidelines for medical classification of medical devices. ........................... 32

Appendix 11: Sample of medical devices to be registered with MFDA. ............................................ 32

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Appendix 12: Training Manual on Health Technology Assessment, Capital Utilization and Database

Management of biomedical devices. ................................................................................................... 32

Appendix 13: Specifications of biomedical equipments. .................................................................... 32

Appendix 14: Capital and Asset Management Questionnaire. ........................................................... 32

Appendix 15: Guidelines on calculating depreciation, total equipment stock values, usage rates…etc.

............................................................................................................................................................ 32

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List of abbreviations

D & CTS : Delivery & Commissioning Tracing System

HSC : Health Service Corporations

IGMH

IVD

LMIS

LSU

: Indira Gandhi Memorial Hospital

: In Vitro Diagnostic

: Logistic Management Information System

: Logistic Support Unit.

MoHF : Ministry of Health and Family

MoFT

MPS

NABMD

: Ministry of Finance and Treasury

: Mandatory Performance Standards

: National Advisory Board on Medical Devices

PCB : Printed Circuit Board

PEMEB : Public Enterprises Monitoring and Evaluation Board

PPM

PO

ROI

SEL

: Planned Preventive Maintenance.

: Purchase Order

: Return on Investment.

: Standard Equipment List

SOP

SoR

: Standard Operating Procedure.

: Schedule of Requirement

TCO

ToR

: Total Cost of Ownership

: Terms of Reference

TGA

TQM

: Therapeutic Goods Administration

: Total Quality Management

UNOPS : Unites Nations office for project services

WHO : World Health Organization

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Background of the Caritas Project

This study was commissioned by the Caritas, Italiana and Ministry of Health and Family

(MoHF), Maldives. One of the objectives of caritas project was to ensure the availability of

appropriate and functional biomedical equipments through health technology assessment,

maintenance and logistic system development and their management by skilled professionals.

Caritas funded this project to design and support the implementation of a policy that must

identify priorities based on systematic analysis of safety, efficacy, and cost effectiveness,

appropriateness according to the level of sophistication of the Maldivian health care system, its

components, social and cultural context. The policy will represent the foundation for MoHF

informed health care technology decisions including evaluation, selection, procurement,

maintenance and replacement of health care equipment and will support alignment of capital

investments with MoHF strategic, clinical and financial goals.

The analysis on which the policy and strategic plan are built will include a comprehensive

classification of current medical technology availability and future needs, identification of

existing processes throughout the technology lifecycle, from evaluation of new technology to

everyday use issues to disposal of obsolete equipment and areas of potential improvement in

particular redundancies and unnecessary expenditures. The health technology strategy will also

include a practical and flexible computerized systems applicable at all levels, from MoHF to

individual hospitals and health centers.

This report presents the results of a study on capital and asset Management of biomedical

equipments in Maldives. The study has been done by Health Technology Assessment Consultant.

Objective of the consultation

The objective of this consultation was to evaluate capital and asset management in Maldivian

Health services, to design and support the implementation of a policy and strategic plan with

projections regarding capital expenditure of medical equipment over the period January 2012 to

March 2012.

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Methodology

The methodology that has been applied in the assessment of current status of capital and asset

management (biomedical equipment) in Maldivian Health services by adapting a quantitative

and qualitative approach.

The quantitative approach adapted questionnaire and designed focusing on service strategy

planning and major capital planning, budget processes and prioritization of capital needs,

procurement and expenditure control, major capital medical equipment reporting and recording,

major capital funding, maintenance of major medical equipment items, risk management.

The questionnaire was distributed to Male Health Service Corporation Limited, Southern Health

Service Corporation Limited, Upper North Health Service Corporation Limited, Northern Health

Service Corporation Limited, Upper South Health Service Corporation Limited, North Central

Health Service Corporation Limited and South Central Health Service Corporation Limited by e-

mail with cover letter to all managing directors with a deadline.

Second deadline was extended to all Health service corporations, only Male Health Service

Corporation Limited replied to the questionnaire and no reply from other six corporations.

Proposal to visit these Health Service Corporation’s was made by consultant but due to

geographic and financial constraints, the proposal was not supported by MoHF.

The questionnaire findings reflect only the status of Male Health Service Corporation Limited

under which Indira Gandhi Memorial Hospital (IGMH) is covered, which is the only public

tertiary care center in Maldives. Henceforth the Male Health Service Corporation Limited is

referred as IGMH in the report.

The qualitative approach adapted was field visit and interviews with purchase and supply

department, Indira Gandhi Memorial Hospital (IGMH), Ministry of Finance and Treasury

(MoFT), National Social Protection Agency (NSPA), State Trade Organization (STO), Maldives

Food and Drug Administration (MFDA), UNOPS, WHO and Quality Assurance and

Improvement Department (QAID) of Ministry of Health and Family (MoHF).

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Acknowledgements

The Consultant is very much indebted to the support received from the Health ministers,

director’s generals and staff members of MoHF, and above listed national and international

organizations. The Consultant gratefully acknowledges the co-operation and support received

from the director, deputy director, assistant director and staff of Health Information, Monitoring

and evaluation section, MoHF.

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1. Introduction

It is a distinguished fact that medical equipment is one of the essential infrastructure elements for

the delivery of health services. Studies conducted by the World Health Organization (WHO)1

and other international agencies2 have shown that 25% to 50% of all health equipment that exists

in developing countries cannot be used for one reason or another, seriously impeding efforts to

improve the delivery of health services to their people. While one of the root causes of the

equipment idleness is the lack of funds, especially for covering recurrent costs, analyses

conducted by international experts indicate that the main root cause is improper management3.

Access to capital, either through flexible funding or increased government capital investment

funds, is critical to upgrade the ageing infrastructure, replace equipment and invest in capital

works that will improve se rv i ce delivery, and p romote opera t iona l ef f i c ienci es

and innovat ion . However, an enormous amount of work is necessary for broad innovation

and reform, and there is little consolidated current data available to support development and

analysis of options in Maldivian Health care system.

Good management of health care equipment increases efficiency in health care services and

enhances health outcomes. The growing demand for more and better health care greatly expands

the role of health care equipment in the delivery of health services. More specifically, the lack of

established policies and procedures for medical equipment planning, evaluation, selection,

acquisition, utilization and maintenance of health equipment which is appropriate, efficient and

safe, have not received the attention they deserve in the transformation of health care services in

the Maldives, hence remains a major challenge to the Maldives’ Health facilities.

However, access to major capital funding remains one of the key areas of concern for Health

facilities. It remains under funded, ad hoc and fragmented in access to funding, not understood

1 World Health Organization (WHO), Interregional Meeting Report: Maintenance and Repair of Health Care Equipment,

WHO/SHS/NHP/87.8, Geneva, 1987.

2 Project HOPE Center for Health Information, “Appropriate Health Care Technology Transfer to Developing Countries”,

Summary of Proceedings, Millwood, Virginia, 1982.

3 WHO, the World Health Report 2000 – Health Systems: Improving Performance, Geneva, 2000.

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by most stakeholders and generally falls “under the radar” in Ministry of Health and Family

(MoHF) and also in annual budget discussions in Ministry of Finance and Treasury (MOFT).

2. Situation Analysis

2.1Country General Profile

The Maldives consists of approximately 1,190 coral islands grouped in a double chain of 26

atolls, along the north‐south direction, spread over roughly 90,000 square kilometers. The atolls

of Maldives encompass a territory spread over roughly 90,000 square kilometers, making it one

of the most disparate countries in the world. It features 1,190 islands, of which 164 are inhabited.

Maldives has a population of approximately 300,000 which makes Maldives the smallest Asian

country in both population and area.

Throughout the country there are 6 Regional Hospitals, 13 Atoll Hospitals, 87 Health Centers, 37

Health posts and 51 Family Health Sections. More over in Male’ the capital of Maldives, where

more than one third of the population reside, 2 tertiary level hospital exists one in government

and one in private sector.

2.2 Capital and Asset Management in Maldivian Health Services

The Situation Analysis carried out on capital and asset management in Maldives health services

in 2012, revealed urgent need of systematic planning in the acquisition and maintenance of

medical equipment and devices, particularly during the procurement, commissioning and

operation phases. The fragmented, disorganized and ineffective manner, in which some medical

equipment resources were managed and distributed, resulted in high levels of inappropriate

utilization of medical equipment due to early breakdowns and unnecessary expenditures. There

was lack of appropriate and consistent acquisition strategies, which contributed to a high level of

medical equipment cost, and resulted in lack of equity with respect to patient access and

allocation of the medical equipment.

Most of all, there was no coherent system of regulation and assessment of this medical

equipment. Overall there were also weaknesses on the areas of planning, evaluation, selection,

procurement, operation, maintenance, personnel training, technology assessment, research and

development, resource allocation and local production.

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2.3 Capital Planning

Health Services Corporation was asked whether they were able to produce reasonable forecasts

of asset replacement requirements. Minimum criteria suggested were a combination of reliable

assessment of the useful life of assets together with good asset register software and

controls.

Response:

IGMH s t rongly disagree that they could forecast asset replacement requirements.

IGMH has no plan for managing major capital and has no reliable data on the life span

of equipment or guarantee of funds year to year for biomedical equipment replacement

purposes.

2.4 Asset Registers

The adequate documentation of assets is a critical component of ownership and decision making

in relation to the acquisition, maintenance or replacement of assets. Health Service

corporations were asked to provide information about their asset registers. Asset registers

usually have information on the age, replacement cost and condition of asset

i

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IGMH believe that there is a need for guidelines or standards for estimation of useful life of

assets so that health service requirements can be presented to funding authorities on a more

objectives and standard basis.

The useful life of each individual medical equipment asset must be based on:

An assessment at the time of purchase.

An estimate by the Biomedical Engineer.

Suppliers’ recommendation of useful life of given biomedical equipment.

Recommendation: IGMH must develop a medical equipment status report and 3-5 year

recommended replacement and acquisition plan. This then forms the reference for funding

the majority of med ica l equipment replacement.

2.5 Priotization of business case

Presently in Maldivian healthcare system, there is no standard practice of preparing a

prioritization business case template which includes cost- benefit analysis, risk assessment,

and lifecycle costing to simple justification for purchase or asset acquisition forms. Presently,

a standard proforma's are used for capital request, which do not have any justification as in

case of business case template. Required items are usually prioritized and costed. The priority

list is then compared to available sources of funds.

Recommendation: Use of standardized b u s i n e s s c a s e t e m p l a t e s b y Health

service corporations will ensure decisions are based on adequate information, and will assist

them in s u b m i s s i o n -based p r o ce s s e s with proper justification for requested funding.

2.6 Finance Allocation

Ministry of Finance and Treasury (MoFT) is allocating the annual capital budget to Health

service corporations mainly based on historic capital expenditure levels. Major c ap i t a l

med ical equipments a re not managed on a program basis. Public Enterprises Monitoring and

Evaluation Board (PEMEB), as a section under the Ministry of Finance and Treasury, monitors

and evaluates the financial and overall performance of Health service corporations expenditure

within and outside budget allocations and give recommendations to improve performance and

increase return on Investments (ROI). PEMEB ensure that all Health service corporations operate

in an efficient manner, comply with the corporate governance requirements.

IGMH indicated that they only had developed partial capital plans; they were not

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developed by asset class. IGMH medical equipment replacement and upgrade plans are

prepared in consultation with technical and financial boards. A budget is set, with all requests

prioritized against the available budget.

Recommendation: IGMH must develop capital plans. Detailed planning must address a minimum

12- month period. Planning horizons often differ between asset categories, and hence, the

focus of the detail must normally be at a 1-year horizon.

2.7 Capital budget and Decision making process

Health Services corporations were asked questions about how they develop their capital budgets

and their decision-making processes for prioritizing needs.

Response: IGMH reviewed their capital budgets annually as part of their annual budgetary

processes and timelines. For IGMH, capital expenditure is influenced by funds made available

through donations and fundraising activities. IGMH is developing risk management plan to

prioritize replacement of medical equipment assets.

Recommendation: Budgeting and prioritization are risk based; hence, available funds must be

used for the highest risk items.

2.8 Major Influencing Factors in Capital request Prioritization

Health Services corporations were asked to rate and prioritize issues according to the

degree of importance in terms of influencing capital request priorities, i.e. “what is likely to

influence the relative priority of one asset purchase over another”.

Response: IGMH ranked Patient Safety and Clinical Risk as the highest priorities in

influencing capital reques t s , fol lowed by regulatory requirements, equipment

breakdown and Occupat ional heal th and safet y. Other factors considered

important were age of equipment, new technology and treatments. IGMH believe the

distinction between replacement of existing assets (biomedical equipments) and additional

assets is crucial, and additional assets, by their nature, need to pass a more rigorous

investment analysis.

Note: The rankings represent only response, but not a clear policy position. Ranking and

weighting may vary am ong d i f f e r en t hosp i t a l s i n Mald iv es depending on the type

of equipment, its use, maintenance and location.

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2.9 Capital Budgeting and Prioritization

In general, capital planning in an resource res t r ic ted environment, where there is no

funding for depreciation, where technology moves at a significant rate, and where previous

reviews have iden t i f y s ign i f i can t an d mate r i a l needs produces an envi ronment

where immediate and urgent needs are addressed, but more strategic planning does not

always occur.

There is significant variability and levels of sophistication in the way Health Services

corporations budget and prioritize capital expenditure and needs in Maldives. Health

Service corporations work very much in isolation in developing risk management and

prioritization tools, and in formulating processes and documentation to support

replacement, maintenance or upgrade of infrastructure and medical equipment. The

challenge for most Health Service corporations in Maldives is their limited capacity to

allocate sufficient resources to meet the identified requirements and the difficulty in setting

centralized evaluation criteria that satisfy the conflicting interests and demands within the

Health Service corporations.

The lack of available capital, limits the capacity of IGMH to effectively set budgets for

more than 1 year, hence, prioritization is limited to identifying the highest risks. At present

there are no funds available for purchasing of new biomedical equipments.

3.0 The major problems with existing biomedical equipment at IGMH:

A. Shortage of biomedical equipments.

b. Major biomedical equipments are not functioning.

c. Insufficient system for maintenance and repair.

IGMH lack required expertise in considering cost-effectiveness for different healthcare

technology; they feel it is joint responsibility of MoHF and IGMH to decide the cost-

effectiveness.

Presently, IGMH has no forecast plan to tell how much capital is required to be invested in

medical equipments over next 3 years, because of failure in drafting asset management policies

and procedures and in reviewing time frames to cover capital budgets.

IGMH agree with principle “A strategic plan for an organization future success should drive its

capital planning and spending”.

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3.1Factors driving major capital expenditure in terms of priority

1. Compliance with changing regulatory requirements.

2. Changes in clinical practice.

3. Backlog of equipment due for replacement.

4. Age of infrastructure.

5. The need to acquire additional biomedical equipment.

3.2 Policies and procedures for biomedical equipment asset management

In IGMH there are no policies and procedures for biomedical equipment asset management in

following areas-

1. Procurement, standardization, maintenance and rehabilitation, disposal of medical

equipment, asset transfer and appropriateness of the technology.

2. Staff access to policies and procedures.

3. Donated medical equipments

4. Repairs and maintenance expenditure analysis and their forecast.

5. Core technology equipment plan.

6. No Health infrastructure division in relation with biomedical equipments.

3.3Data availability

Presently, no data available on following aspects:

Percentage of equipment stock value set aside each year for replacement of medical

equipment.

Massive capital investment program for bulk replacement of medical equipment.

Value of maintenance budgets.

Cost of actual consumables requirements and usage rates.

Funding of site preparation, installation, and lifetime costs and training cost.

Training courses on healthcare technology management, use and maintenance.

Consumables /medical equipment running costs.

Allocated budget lines for replacing equipment at the end of its life.

There are no appropriate retention terms in tender documents on issues of delays in

supply and to ensure proper installation and training on biomedical equipments.

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3.4 Current priority issues for IGMH

Based on priority, following issues are currently important for IGMH

1. To develop effective asset management policies and procedures.

2. To develop risk management plan incorporating key asset plans.

3. To develop comprehensive asset replacement plan.

4. To improve the allocation of capital funds and process used to allocate capitals funds by

Ministry of Finance and Treasury.

5. To improve the access of alternative capital funding resources.

3.5 Procurement Section, MoHF status

1. Economies of scale are not achieved to the maximum extent due to individual

procurements by Health service corporations.

2. Lack of acknowledgment for procurement as a professional activity.

3. Lack of professional procurement skills.

4. Decision making processes are complicated and protracted.

5. Preparation of functional specifications of Terms of Reference (ToR) needs attention.

6. Lead-time of procurement cycles need to be addressed.

3.6 Supply section, MoHF status

The majority of the medical equipment stored in supply section is without accessories and

operating manual. There is no mechanism of initial testing and acceptance and long storage, the

majority of the biomedical equipment is not in working condition. A good number of medical

equipment needs precision fine tuning and calibration; hence need repair and further

calibration. New equipment reaching to the supply section is without Purchase Orders (PO) and

distribution list. The head of the supply section is not able to send the medical equipment to the

designated hospitals due to limitations in human resources, insufficient funds and logistic

support.

The suppliers instead of sending equipments to designated health facility send medical

equipment to the supply section. Supply section has no technical staff to evaluate the received

medical equipment and to check the compliance with the specifications mentioned in the bid/

Purchase Order (PO) and to check availability of spare parts, and operation or service manual of

the equipment. As medical equipment reaches the designated hospital, there is no support from

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the supplier in commissioning and testing of medical equipments and not able to support user

training and carry out appropriate preventive maintenance of the new medical equipment. It is

the responsibility of the supplier to carry out warranty maintenance of the equipment during

warranty period and get certified from user, but purchase and supply section failed to implement

warranty clause mentioned in the Terms of Reference (ToR) and conditions of the purchase

order. Supply section is not recording medical equipments which are leaving supply section to

the designated hospital in their database.

Many medical equipments like centrifuges, microscopes, defibrillators, infusion pumps, dialysis

machines are kept idle in humid environment for many months to years, developed fungal

growth on Printed circuit boards (PCBs), the battery backup in the machines started leaking

which may have spoiled the Printed circuit boards (PCBs) and malfunctioning of the machine.

3.7 Indira Gandhi Memorial Hospital (IGMH) status

Presently in IGMH, there are technical and financial boards, who evaluates medical equipment

purchase based on recommended technical specifications of biomedical department. The central

store of IGMH manages the inventory of assets. They are yet to adapt asset registration or

tagging of medical equipment. Biomedical department is not doing electrical safety testing and

performance/ functional test for new and old medical equipments. In IGMH, medical equipment

is installed by in-house biomedical engineers, which is supposed to be done by supplier engineer.

Suppliers are not doing preventive /general maintenance for warranted medical equipment.

There is no response time fixed for break down call. Clinical departments is not keeping backlog

registers, hence no scheduled plan for planned preventive maintenance. IGMH need to plan

calibration of lab equipments, every 3 to 6 months with the help of supplier. Radiation safety test

for imaging equipment is not planned and implemented. Failure rate of ventilator is very high

due to the absence of centralized medical gas supply; inbuilt compressor system is presently

used, which is not efficient. Filing and library system needs improvement. There is no system in

place to track medical equipments and standard operating procedures to change the location of

medical equipments in the clinical wards. There is no system of incident reporting/ adverse event

reporting on failure of medical equipments during use on patients.

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There is no planned in depth functional or application training for clinical staff in necessary areas

like:

Imaging equipment: enhancing image quality and improving clinical interpretation. E.g.

X-ray, CT or MRI.

Sterilization equipment: standard operation and execution of solid sterilizing procedures.

In laboratory equipments like analyzers and microscopes.

Using minimal invasive operation or diagnostic techniques with the use of scopes;

Intensive care equipments like ECG, ventilators and baby incubators.

3.8 Import Regulations for Medical devices

Presently in Maldives, there is no regulation on importation of used or refurbished medical

equipments. A medical device can be imported either as new or pre-owned. The pre-owned

medical device is not subjected to additional safety check or required to be registered with

Maldives food and Drug Administration (MFDA). Pre-owned medical device is not subjected to

duties and tariffs. Overall bureaucratic obstruction for importation of used or refurbished medical

equipment is not codified in Import regulation act of Maldives.

3.9 Maldives Food and Drug Administration (MFDA) status

MFDA has pushed Medical Device Act to be passed in parliament. Presently, there are no

regulations in controlling medical device standards, use, registration and device listing,

adulteration provisions, misbranding provisions, notification of repair replacement and refund

provisions, restricted and banned devices, mandatory performance standards, human clinical

trials, post market surveillance requirements, device classification and regulatory controls, IVD

labeling, marketing requirements [like marketing applications, premarket requirements (

labeling, registration and listing) and post market requirements (Quality systems, medical device

reporting)], medical device GMP- quality system regulations (Quality system requirements,

design controls, document controls, purchasing controls, identification and traceability,

production and process controls, acceptance activities, nonconforming product, corrective and

preventive action, labeling and packaging control, handling, distribution and installation,

servicing).

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4.0 State Trading Organization (STO)

The State Trading Organization (STO) was formerly totally government-owned but now is a public-

private partnership with 17% private ownership. STO purchase covers not only medicines but all

medical items and 5 main companies are used for importation, including STO, FTec Solutions,

Mamnoos Maldives, Meditec and Mediquip. STO is also financing IGMH for buying Medical

devices. As STO is pioneer in procurement of drugs and medical devices, they helping IGMH in

procurement. It is not clear whether STO is also able to help and finance other Health service

corporations.

4.0a Overview and Context of capital expenditure of medical equipments in Maldives.

The current funding issues in Maldives are not evidence based and will require a multi-

dimensional approach to create a stable and sustainable capital investment in health system in

Maldives. The complexities and compounding effects of the financing and management of

biomedical devices are not clearly understood by the managers of hospitals. The causes and

solutions lie within a system-wide sustainability framework that includes policy, funding models,

access to capital, appropriate incentives for success, system efficiencies and relative efficiency

levels of health services and service planning.

4.1 Context

It is critical that work should be undertaken to explore issues, options and opportunities, which

link capital investment and operating expenditure, and which will support a sustainable and

productive health system. The delivery of Health Services must need to meet “Affordable and

Quality Health care for All” objectives and commitments requires building, maintaining,

equipping and improving high-quality biomedical equipments which are safe to public health

facilities.

4.2 Key principles for funding biomedical devices

i. Make provision for future medical equipment replacement in a 3-5 year horizon (as the

life cycle of medical equipments are in the range of 7- 10 yrs horizon) and it should take

into consideration age of medical equipment, impact of the availability of equipment on

patient care, patient safety, staff safety, maintenance practices, availability of spare parts,

rate of utilization of medical equipment in the patient care, costs of maintaining and

operating the equipment and technological changes, changes in clinical practices and

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affordability. Analysis of all relevant factors must be incorporated in asset management

plans. Hospitals must also develop systems for monitoring utilization levels of all major

biomedical equipments.

ii. Primarily to prioritize to sustain and then improve the quality of the current biomedical

Equipment asset base in Health care facilities.

iii. Maximize the efficiency and capacity of the current biomedical equipment asset base by

optimizing the efficient use of current health care facilities and biomedical equipments.

iv. Hospitals should proactively send biomedical engineers to the meetings, seminars and

dialog with manufacturers/suppliers to keep abreast of the latest technological advances.

Therapeutic Goods Administration (TGA) and ECRI must be monitored for useful,

supporting information.

v. To prioritize and facilitate innovation in service delivery.

vi. There remains an underlying and historical risk around decision-making failing to

adequately recognize the important distinction between capital investments and costs and

between the issue of funding costs and financing investments in Maldivian Health care

systems.

vii. The way in which much capital investment is financed recognizes none of the costs

associated with the investments. Depreciation is not funded in the pricing of Health

Services, and the accounting for depreciation is not considered or not calculated as

variable, which has leaded Health Service Corporation to inadequately recognize the cost

of depreciation in their internal financial management planning. Not only is this a

problem in regard to the reported cost of services, it also mitigates against best practice of

planning and the provisioning for the replacement of biomedical equipments in the long

term.

viii. Health Services corporations in Maldives have no expression of costs associated with the

financing of the capital investments in biomedical equipments. Therefore there is no

"price signal" to contribute to robust investment decision-making on biomedical

equipments. Financing for both replacing assets at the end of their "useful life" and for

making improvements and innovations has to be available and the process needs to

provide incentives for good practice planning and optimal investment decision-making.

Beyond the need to modernize the biomedical equipment, capital investments are

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fundamental for achieving operational efficiencies and can alleviate clinical human

resource pressures, improve occupational health and safety, enable integrated health

service delivery and improve overall healthcare outcomes, but these issues are neglected

in Maldivian Health care system.

ix. Investment of capital must able to meet the demand requirements to maintain Health care

facilities at levels that are consistent with the community’s social and technological

expectations as well as the efficient provision of health care services. Almost all the

Health service corporations have no business case for procurement of major biomedical

equipments. Investment in new biomedical equipment acquisitions should have

appropriate financial planning that must reflect in the present and future models of health

care and must promote operational efficiencies (demonstrable within the business case)

and support financing efficiency of the health care system. These issues must need

priority in the financing of biomedical equipments in the Maldivian health care system.

x. In a financially constrained background, it can be more and more difficult for hospitals to

‘tease’ biomedical equipment improvements (capital investments) and to support major

maintenance funds from operational budgets and any remaining capital reserves, which

may pose challenge to maintain right balance between clinical needs and biomedical

equipments.

xi. The Ministry of Finance and Treasury (MoFT) is allocating budget to health service

corporations based on patient volume and projection of operational cost from previous

years, which is not evidence based and the results of such financing may be unpredictable

in terms of health care delivery outcomes.

xii. The current funding arrangements do not demarcate funds required for new capital works

that improves the service capacity with funds for renewals, replacements or upgrading of

medical equipments; hence it is recommended that the present funding model ought to be

re-assessed to ensure depreciation funding is provided to Health Service Corporations to

effectively maintain their existing biomedical equipments.

xiii. The Finance section, MoHF, indicated that, there is variability in accounting practices

and business rules within the general ledger among health service corporations that needs

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to be addressed to enable all health service corporations to follow similar accounting

standards.

xiv. Lack of access to capital can have a financial flow-on effect on recurrent and

maintenance costs of biomedical equipments in many ways. In order to maximize the

value of the limited capital funding, or to assess the alternative use of recurrent or special

purpose funds, board members of health service corporations must priorities capital

works and medical equipment purchases against a background of risk assessment to the

hospitals, patients and clinical staff safety.

xv. Presently there is uncertainty in the right allocation of funds for biomedical equipment

because the capital investment decision-making and governance processes are not

supported by information from asset registers, lack of in-depth analysis of risks related to

compliance and clinical safety of medical devices, and there is no consideration for use of

business cases in the procurement process, where there can be a feasibility to demonstrate

efficiency or recurrent cost avoidance as a result of the proposed investment. Hence,

Health Service Corporation’s need to develop asset registers which can provide

comprehensive information and can guide systematic and transparent decision-making

processes in the acquisition of medical devices and their useful utilization and

maintenance. It is always best practice to assess the known risks and calculate the full

life-cycle cost of the proposed biomedical equipment along with good asset management

and planning of health services to form critical prerequisite for Ministry of finance and

Treasury (MoFT) to transfer requisite funds to health service corporations through fully

or partially funding for medical equipment depreciation.

xvi. Strategic planning and appropriate policies in the area of procurement and management

of technological investments is currently the most challenging task to public health

policymakers and planners in Maldives. Well-managed medical equipment procurement

and maintenance can save both time and money, as a result of the shorter time required to

train operating personnel, proper installation and commissioning of medical equipment,

lower frequency of breakdowns and accompanying inconvenience, shorter equipment

downtime period, smaller expenditure for spare parts and maintenance, and fewer

preventive maintenance requirements.

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xvii. In Maldives, procurement department failed to implement tender clause of post sale

service and some suppliers are just following practice of "sell and run" philosophy, where

they are not forced to provide after-sales back-up services and no legal remedies are

sought to implement the clause “post sales service”.

xviii. Increased use of modular electronic elements in medical equipment will require that

fewer types of replacement parts be stocked for repair and service, compared with the

many individual components now required. Faults in equipment designed using modular

electronic elements can usually be diagnosed more easily and equipment can be repaired

and returned to proper operating conditions more quickly than equipment of traditional

design, hence the proposed National Advisory board on biomedical equipments and

biomedical engineering department should promote use of modular electronics elements

in medical equipments in the future purchases.

xix. Equipment maintenance budgets should be linked to actual medical equipment capital

investment and rate of utilization. Hospitals should not purchase equipment, which their

maintenance budgets cannot support.

xx. The most important consideration on capital investments in health care is the effective,

safe and sustained use of the goods and facilities by the user. The challenges posed in

new capital investments include:

providing health care technology appropriate to the needs of the country and consistent

with its rational priorities;

ensuring the cost-effectiveness of the necessities;

Preventing harm to patients by defective medical devices.

“The key suggestion is to establish quality management systems for the full lifecycle of medical

equipment. An important component in the Total Quality Management is to set up a National

Advisory Board on Medical devices, who must have authority and responsibility for all

components of the medical equipment lifecycle. This board should ideally be involved in the

improvement of medical devices status in Maldives”.

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5.0 Recommendation for Health service Corporation.

It is recommended that hospitals, in consultation with the National advisory board on medical

devices and Department of biomedical engineering:

1. Establish sustainable maintenance systems for medical devices by allocation of adequate

funds for maintenance and repair of medical equipment.

2. Prepare asset management plans for their medical equipment which can incorporate 3

(three) year forecasts of funding requirements.

3. Develop a single asset register, using standard classifications (Asset description must be

based on medical equipment nomenclature system as adapted by Maldives Food and

Drug Authority (MFDA) or nomenclature system devised by ECRI) to describe the

medical equipment and specified details of the equipment, which can be linked to the key

user groups within the hospital.

4. Develop and use guidelines which reflect industry best practice to periodically assess the

life expectancy of medical equipment.

5. Regularly determine the condition of medical equipment using a standardized assessment

system.

6. Consider options to support the introduction of better Central Medical Equipment

Management System (C-MEMS) for the management of medical equipment.

7. Assess the merits of linking a proportion of funding allocations to the quality of the asset

management practices adopted by individual hospitals.

8. Adopt risk-based principles when determining the nature and frequency of preventative

maintenance.

9. Evaluate the costs and benefits of their in-house maintenance department and obtain

external quality accreditation.

10. Regularly monitor the utilization levels of major equipment items. Where utilization is

less than optimal, options of sharing within and between hospitals must be explored.

11. A standard equipment list (SEL) should be compiled for hospitals of different sizes. The

SEL should guide investments on essential equipment.

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12. Improve the generic technical specifications of biomedical equipments and share the

information to all, i.e., who are involved in tender compilation and purchase activities for

medical equipment.

13. The health service corporations must encourage the reporting of sentinel events caused by

a malfunctioning of medical device/ electromedical instruments must be reported to

Quality Assurance and Improvement section of MoHF.

6.0 Recommendations for Procurement department:

1. Procurement section along with Health service corporations pursue opportunities for

improved value-for-money in the procurement of medical equipment. (It is more cost

effective to have centralized procurement of Medical devices, compared to individual

procurement by Health Service Corporations).

2. Collaborate with procurement agencies/ develop contract with UNOPS.

3. Strengthen the existing procurement arrangements.

4. Establish standard framework for bid/ tender contracts.

5. Establish “Logistics Support Unit” (LSU).

6. Introduce Logistics Management Information System (LMIS).

7. Draft standard list of medical equipment specifications.

7.0 Recommendations for supply department

1. All major capital equipments procured and which need incidental services from the

manufacturers / suppliers like installation, maintenance or training must be sent directly

to the designated hospital, with appropriate installation planning.

2. Make provision of payment schedule based on services delivered by supplier.

3. Develop and operationalize Delivery and Commissioning Tracking System (D&CTS) to

trace medical equipment from Tender publication until installation, commissioning and

use of biomedical equipments in the destined hospital.

4. Installation of medical equipment requires detailed planning for delivery, hence, before

approval of a tender, following conditions must be applied directly:

a. For all goods and equipment in need of installation and training, the final destination

should be unambiguous and mentioned in the tender document.

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b. The rooms in the given hospital for equipment in need of installation and training must

be ready before the signing of the contract (pre-installation requirements).

c. All equipment in need of installation and training should be delivered to site and must

be installed by the supplier instead of in-house biomedical engineer or technician.

d. Consumables without a specific destination can be purchased in bulk and stored and

distributed from the supply department.

5. The tender and contract documents must include a set of services incidental to the purchase of

medical equipment. These services must be mentioned in the Schedule of Requirements and may

be requested from the supplier in addition to his delivery of the goods. The services might

involve transportation, installation and commissioning of the medical equipment.

6.0 The nominal conditions in the incidental services for high-tech medical equipment should be

mentioned in the Schedule of requirement and should among others include:

a. The supplier ought to provide within six weeks from awarding, all information necessary for

the pre-installation works such as:

a list of equipment to be installed;

detailed drawings (scale 1:20) of all equipment to be installed, showing clearly the pre-

installation requirements and dimensions of equipment and their relation with other

equipment if applicable

b. The supplier must do on-site installation of the supplied medical devices as well as

unloading, furnishing to designated room, unpacking, assembling and connection to main

supplies.

c. Removal of packing materials from site. Connection to main supplies shall be done according

to electric standards of Maldives.

d. The supplier must furnish all materials required for assembly, installation of medical devices

and connection of equipment to main supplies.

e. Check the performance of starting-up and commissioning of the equipment, furnishing of all

required materials such as consumables needed for testing and initial operation of supplied goods

to be part of the final delivery.

f. Carry out training of users on-site in start-up and operation, of supplied equipments. The

successful bidder must provide appropriate in-service training for physicians, nurses, clinical

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staff, laboratory technologists, etc. Training must be provided by qualified clinical instructors but

not sales personnel.

g. Manufacturer / Supplier must provide minimum two sets operation and maintenance manual

for each device unit in English.

7.1 Recommendations on Maintenance

Presently, Health service corporations deficient in establishing standard maintenance structure

for new and existing medical equipment. The appropriate solution to improve the maintenance

situation is to include a maintenance contract in the procurement process particularly for high-

tech equipment; a 3 to 5 year maintenance contract must be included in the tender. The cost of

the maintenance should be regarded as part of the Total Cost of Ownership (TCO).

8. The supplier has to provide repair, Planned Preventive Maintenance (PPM), testing and re-

commissioning of the medical equipment as prescribed in the equipment schedules, at the

hospital site for a defined period.

9. The supplier must also provide the necessary spare parts, training and reports.

10. The preventive maintenance must be in accordance with the manufacturers’ procedure and

interval. The supplier must provide a copy of the preventative maintenance checklist, method

and procedures. The maintenance should include training -on the spot- of hospital equipment

technicians in the repair and maintenance of the equipment.

8.0 Recommendations on development of Delivery and Commissioning Tracking System

To sustain the monitoring of the delivery of medical equipment to its final designated hospital a

D&CTS must be adapted to manage and sustain a delivery process in equipment supply across

the country. Proper reception of medical equipment is very important in the logistic management

with locations scattered all over a country, it is imperative to closely monitor the actual delivery,

installation and commissioning on the given hospital site.

Expected deliverables in the above process are:

both inland and site distribution needs must be managed,

all medical items are rightly delivered to the designated hospital,

pre-installation with satisfactory services and utilities are provided,

all items are delivered at the right time,

missing items are successfully managed,

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all spares are provided and can be located,

adequate training manuals are supplied and can be located,

adequate training on equipment maintenance has been given,

effective equipment receipt procedures are in place,

all items are installed and commissioned.

The D&CTS, must not to be confused with warehouse stock-keeping software, but it is a

different program, on one side the input of the contract details and on the other side the technical

results of the delivery and installation. Combining this information, results in management

information to see the status of the delivery and the acceptance of the equipment. It can provide

sufficient tools to determine the suppliers’ performance and the time of payments. Principally

four components are to be taken care of:

1. Software development

2. Establishing commissioning and acceptance procedures

3. Training of commissioning officers

4. Data processing

9. Recommendations for strengthening the inventory management system

The lack of information on medical equipment concerns MOHF in two key areas:

the distribution data and information on the commissioning of new equipment;

the centrally based information on the availability and the status of medical equipment in

all health facilities.

Proposed solution is to register medical equipments in central medical equipment management

system, the database can be used for decision making and resource allocation.

10. Recommendations on Import regulation of medical devices.

1. Introduce ban on devices older than a certain age or beyond a set percentage of estimated

useful life.

2. Introduce taxes on pre-owned medical devices or device over a certain age.

3. Introduce restrictive rights for importation (e.g. Only by responsible holder of registration

or by identified end user, based on safety, efficacy, cost-effectiveness, appropriateness

according to the level of sophistication of health care system, capacity to carry out

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preventive and functional maintenance with availability of spare parts and impact on

social and cultural context.)

4. In case of refurbished device, the imported device must be refurbished by original

manufacturer.

5. Require to have given period of warranty.

6. Required that spare parts and service available.

7. To be registered with MFDA.

11. Recommendations for Ministry of Health and Family (MOHF)

1. Prioritize on institutional strengthening of the equipment management capabilities of the

MOHF.

2. Development of a national policy on management of health care technology. The policy

should give guidance to health technology needs assessment, planning, acquisition,

utilization, maintenance and overall management.

3. Acquire information from hospitals to evaluate their major medical device needs (e.g. life

cycle costs, utilization levels, equipment condition and backlog of patients to be treated).

4. Review the level of equipment funding currently provided to hospitals in the context of

their future equipment replacement and maintenance needs, including the funding of

depreciation costs.

12. Proposed Logical framework for strengthening of biomedical equipment management

system

To strengthen biomedical equipment management system, it is recommended that MoHF must

carry out activities and subsequent outputs to address the following objectives stated in the

proposed logical frame work.

Overall Goal Objectives Activity Output

Strengthening of

biomedical equipment

management system.

1) Identify and

register the available

biomedical

equipment.

Do equipment survey

by using:

Asset Registration

Form.

Database with all

collected data in place

will enhance decision

making and resource

allocation.

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2. Assess current

functional condition

of medical equipment

and quality.

Equipment survey by

using-

Asset condition

appraisal form.

Prepare asset list.

Generate walk

through report.

Data collection

analysis and prepare

report on functional

condition of

equipment.

Define and score

equipment quality.

Brief analysis, report

and recommendations.

3. Assess current

utilization and

efficiency of available

medical equipment.

Equipment survey

data analysis.

E.g. Hour meter

analysis for major

capital equipments.

Analyze, prepare

report and give

recommendations.

4. Assess the

effectiveness of

present preventive and

corrective

maintenance.

Evaluate the tender

documents for the

clause of service

contract from the

manufacturer and its

implementation.

Conduct User

interviews to know

the status on

preventive and

corrective

maintenance.

Analyze the

preventive and

corrective

maintenance log book

Tender documents

should be reviewed;

user experience and

expectations should

be documented.

Analyze and prepare

report with suitable

recommendations.

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and database.

5. Assess the

procurement status

with time frame of

equipment procured

by MoHF and Health

service corporations

and determine their

impact on health

service delivery.

Review policy

documents and

analyze.

Review tender

documents for their

efficiency and present

standards.

Collect data from

purchase and supply

departments and also

from health service

corporations.

Core equipment

acquisition tenders

should be identified

and analyze to

identify gaps.

Planned and actual

distribution data

should be collected

for review.

Assess the equipments

procured through

donations and other

sources.

Evaluate the present

status of medical

equipment and their

impact on health

service delivery, cost-

benefit analysis in

terms of their

maintenance and

consumption of

resources.

Benefits to Health

care system.

Further Improvements

based on data analysis

and recommendations.

Assess overall

economic

effectiveness of

medical equipment

investment made and

proposed for near

future.

Undertake data

analysis planning,

supply and ownership.

Overall economic

impact in terms of

returns on investment,

patient satisfaction,

patient safety and

efficiency of system

and benefits to the

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community and

environment.

13.0 Appendices

Appendix 1: Asset Registration Form

Appendix 2: Asset Registration List

Appendix 3: Adverse Event Reporting Form for Medical Devices.

Appendix 4: Policy on Initial Testing and Evaluation of Biomedical Equipments.

Appendix 5: Procurement Policy of Medical Equipments.

Appendix 6: Policy on Maintenance and Repair of Medical equipments.

Appendix 7: Policy on Disposal of Medical Equipments.

Appendix 8: Policy on Donation of Biomedical Equipments.

Appendix 9: Risk Rating for Biomedical Equipments.

Appendix 10: Proposed Guidelines for Medical Classification of Medical Devices.

Appendix 11: Sample of Medical Devices to be registered with MFDA.

Appendix 12: Training Manual on Health Technology Assessment, Capital Utilization and

Database Management of Biomedical Devices.

Appendix 13: Specifications of Biomedical Equipments.

Appendix 14: Capital and Asset Management Questionnaire.

Appendix 15: Guidelines on Calculating Depreciation, Total Equipment Stock Values, Usage

Rates…etc.

situation analysis on medical equipment in maldives

Healthcare

ministry of health

health information

maldives capital

capital budgeting

capital planning

emsrhs public health

asset management

capital request prioritization