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Mitigating Risk, Liability & Improper Management of Used Medical Equipment




It is estimated that approximately $765 billion worth of medical devices and supplies are disposed of by healthcare organizations annually. Yet, despite the high volume of equipment moving through our nation’s 6000+ hospitals, very few of these institutions have a system-wide disposition process in place.

As a result, healthcare providers across the country are putting themselves at risk for substantial financial loss, clinical liabilities and a host of other damaging issues. We explore some of the more serious risks hospitals face in regard to out-of-service medical equipment and offer strategies to mitigate them.


The Health Insurance Portability and Accountability Act of 1996 was enacted to safeguard the protected health information of patients and to strictly control when ePHI can be shared.

Those who violate HIPAA regulations can expect to pay hefty fines. In fact, since 2015, healthcare providers including hospitals, individuals, pharmacies and insurance companies, have paid more than $100 million in HIPAA penalties.

Considering that some devices, like ultrasound machines, contain information for thousands of patients, the improper disposal of a single device can result in multiple fines and can be financially crushing.

Avoid HIPAA Fines and ePHI Exposure


Does your organization have a system in place to properly remove ePHI?

Do you have technical experts on staff who are trained in ePHI removal?

Have you identified partners who specialize in ePHI removal?

If you’re using old equipment for parts, are you ensuring that patient data is not being transferred or exposed?



When it comes to medical equipment, there are two types of theft your organization can potentially be exposed to: the theft of data and the theft of the actual devices.

Data Theft. Now more than ever, fraudsters and scammers are laser-focused on stealing patient data, as it is a virtual goldmine for them. A single piece of patient data, which includes Social Security numbers, credit card information, and birth dates, can go for as much as $1,000 on the black market. Healthcare organizations are certainly feeling the impact, as data breaches have cost the sector $4 billion in 2019 alone.

Medical Device Theft. From surgical gloves to laparoscopes to monitors to beds, equipment is disappearing from hospital storerooms and winding up on online sites for sale. The thefts can come from almost anywhere, including patients, employees, outside vendors, service workers and sales representatives who have access to the facility. To make matters worse, these crimes usually go undetected until a full accounting of the inventory is done. That could be days, weeks or even months after the theft is committed.

Theft, of course, is a major concern for healthcare institutions who are losing millions of dollars a year. The good news is, there are ways to protect your hospital.


Do you have an asset management system to track inventory in real-time?

Have you incorporated an audit process?

Have you installed security cameras in instrument and equipment storage areas?

Are your devices stored in a secure area?

Are you using badge or fingerprint technology to limit access?


Hospitals produce more than 5.9 million tons of medical waste each year. While much of that volume includes single use items, such as surgical supplies, a good amount of medical equipment finds its way to the landfills, as well.

Oftentimes these devices contain chemicals, toxins and even radioactive materials. If they aren’t disposed of properly, they can do damage not only to the environment, but to a hospital’s bottom line as well. Depending on the severity of the violation, fines for improper disposal of used medical equipment can range from $5,000 to $70,000 per violation under OSHA recommendations.

Of course, OSHA isn’t the only entity who can impose penalties. A whole host of federal agencies have oversight on matters concerning medical waste. The Department of Transportation (DOT), for example, has rules for the packaging and transportation of wastes. The Drug Enforcement Agency (DEA) regulates the handling and disposing of controlled substances. The Environmental Protection Agency (EPA) regulates most federal programs and laws concerning human health and the environment. And the Nuclear Regulatory Commission (NRC) oversees radioactive waste management practices.

If you’re like many hospitals, you probably have a sustainability program in place and you’re making a faithful effort to keep equipment out of the landfills. The question is, do your vendors share your commitment? Before partnering with any company, it’s important to understand how they handle and dispose of your equipment once it leaves your facility, and you need be certain they are not putting your organization at risk.

It’s also important that you and your partners adhere to R2 recycling standards. If necessary, equipment should be broken down to its smallest components for recycling to ensure that environmental waste, chemicals, pharmaceuticals, patient data, and your hospital’s asset ID tags stay out of landfills.

Another strategy to keep your equipment out of landfills is to donate usable devices to hospitals in need or to harvest the components for re-use. Both of these options extend the life of the devices while mitigating your environmental liabilities.


Are your equipment removal vendors properly vetted to ensure they abide by environmental regulations?

Is your equipment professionally evaluated and triaged, ensuring that you are in full compliance with all associated laws and regulations?

Do you have a landfill diversion process in place?

Do you have a coordinated donation process?


From an operations perspective, your out-of-service equipment can become a financial liability if it is not removed and rehomed in a timely manner. Experts estimate that the cost of ownership and repair is approximately $93 billion annually.

There are a number of factors that contribute to these costs, including capital equipment, installation costs, maintenance, and training. Idle equipment not only drains your bottom line, it also diverts internal resources who have to schedule, manage and maintain those service calls.

If the devices are not being serviced, your organization can face both accreditation and clinical operational hazards. Add to that, stored out-of-service equipment is taking up valuable space which could be used for patient care.

Finally, there is the risk of over-buying. Facilities without a proper lifecycle management program oftentimes find themselves purchasing new equipment prematurely, and then have an excess of devices they don’t need. The money spent on this equipment, of course, could have been put to better use elsewhere in the department.

used medical equipment financial liability


Do you have a process in place to remove out-of-service equipment?

Have you identified partners who are certified in the removal and rehoming of equipment?

For stored equipment, do you have protocols to ensure regular maintenance and compliance?


Managing out-of-service medical equipment is a challenge for nearly every hospital in the country. Most don’t have the staff or the expertise to do it properly. This can leave organizations vulnerable to a whole range of risks that can cost you millions in fines and losses and can even endanger lives. Now more than ever, it’s important to identify partners who have the expertise to ensure that your equipment is managed properly, who understand the wide array of governmental regulations and can help you remain compliant.