Deep Dive: Negotiating Maintenance Contracts (Including PPM and CM Clauses)

The majority of professionals sign contracts without going through the terms and conditions. They merely navigate through the prices and prominent inclusions, ignoring what’s written in those small fonts. What people don’t realise is that a service contract is only as good as its fine print.

The aim is to extract maximum value and coverage from your PPM and CM contracts. Otherwise, the professionals only identify contract gaps during a breakdown, which can lead to extended downtime and expensive repair costs. For healthcare establishments, mere contract existence isn’t enough. You also need to negotiate it well.

This blog breaks down the planned preventive maintenance (PPM) and corrective maintenance (CM) clauses so you can decide the right plan for your hospital/clinic.

Defining Service Levels (The SLA)

The SLA (Service Level Agreement) outlines the terms and conditions between the healthcare provider and service experts. It helps ascertain the contract scope and expectations, if any. Below are the points that should be covered under the contract:

• Guaranteed Response Time

Your SLA should mention the response time within which the service experts will reach your facility for inspection. It is especially important in the case of corrective maintenance, as you have to deal with downtime and delays in patient care. The pre-determined timing helps you stay prepared in case of a sudden defect.

• Guaranteed Fix Time/Uptime

The PPM and CM clauses define the fix or restoration time within which the medical equipment should be up and running after the fault is identified. Such certainty is critical, especially in the case of imaging assets like a CT scanner and MRI. That’s because a long downtime can impact patient treatment and care.

Additionally, uptime helps ensure the continuation of service after a breakdown. Clear negotiation of these timelines helps professionals in healthcare settings set realistic expectations and avoid service interruptions.

• Availability of Loaner Equipment

Being aware of the expected downtime helps professionals be prepared in case of extended repairs. They can bring loaner equipment to their hospital/clinic for uninterrupted diagnosis and timely care. Confirm if the PPM/CM maintenance contract includes the provision of loaner equipment if the repair takes time. The terms and conditions should also specify the conditions under which a loaner is offered.

Scoping the PPM Coverage

PPM ensures timely maintenance and repair for an extended lifespan of the medical equipment. But every contract doesn’t offer the same level of coverage. A clearly-defined maintenance contract helps define the services included, the frequency of them, and the covered and excluded components.

Below is the significance of understanding the PPM scope so you are prepared in the future:

• Defining the Scope

You are merely reading through the contract clauses, but what about the terms and conditions in the fine print? It specifies the exact procedures to be carried out. The service includes inspection, calibration, software check, and performance.

• Scheduling Flexibility

PPM is scheduled in advance, but the timeline may have to be adjusted as per patient load, limited staff, or equipment requirements. A contract should allow for such flexibility to reschedule maintenance. It helps minimise penalties or coverage loss.

• Mandatory Documentation (Audit-ready records of all PPM tasks).

The maintenance contract should specify the service report of every PPM visit. It outlines the tasks performed, observations, repair steps, and recommendations for enhanced performance. Such records support the fact that you have followed regulatory compliance and offer transparency. It also helps healthcare units track maintenance history and hold service providers accountable for their activities.

Clarifying CM and Parts Clauses

Before you finalise a corrective maintenance contract, it is imperative that you clarify the terms and conditions. It helps you be prepared for any uncertainties in the future:

• Included vs. Excluded Parts

There should be a clear distinction between included and excluded equipment components. It is important to note that the AMC (annual maintenance contract) covers select services and labour charges. However, high-value components are generally not covered. Corrective maintenance generally includes all parts and labour charges, reducing your financial burden at the time of failure.

As a healthcare facility, you should review the parts included to understand if the cost is worth it.

• Labor Rates for Excluded CM

Contracts should clearly define the labour charges, especially if based on time and material. Additionally, CM should lay out the minimum billing units and escalation clauses. If the rates are not set, service companies may increase the service charges during peak hours or emergency situations.

• Travel Time and Weekend/Holiday Rates

The maintenance cost breakdown includes travel charges and special rates during holidays and weekends. Such expenses are often overlooked but are a key cost driver. The contract should specify if such components will be free or come at a specific cost. It helps healthcare facilities assess the financial impact of CM on their equipment budget.

Conclusion

Effective maintenance costs are not only focused on the pricing. They also prioritise uptime through a well-defined PPM and CM clauses. If the contract clauses are defined in a timely manner, healthcare facilities can control their cost and reduce downtime. It also helps ensure timely patient care.

You can leverage the maintenance contract through careful review of the fine print and negotiation of service terms. It offers reliability instead of overt continuous expenses.