How Can We Transform Healthcare into a Profit Center from an EBITDA Perspective?

Maintenance professionals and senior managers need to understand that decisions made separately between Maintenance, HSE (Health, Safety, Environment), and Procurement often lead to inefficiencies, increased risks, and missed return on investment (ROI) opportunities.

As maintenance engineers, we ensure equipment runs smoothly, procurement manages cost savings, and HSE manages compliance and safety. However, true success comes from these teams working together.

Unfortunately, the current industrial sector is experiencing a crisis due to various reasons. This has increased the importance of competitiveness and operational excellence.

EBITDA (Earnings Before Interest, Taxes, Depreciation, Amortization) is measured as an indicator of a company's financial success. I also believe it is linked to economic efficiency and directly impacts maintenance, HSE, and procurement efficiency.

In this article, I will try to explain how EBITDA can contribute to building reliable maintenance strategies and how collaboration between HSE and procurement can be encouraged.

Those familiar with the stock market are very familiar with the concept of EBITDA. This metric is frequently used when discussing company balance sheets. Unlike net profit, which accounts for interest and taxes, EBITDA gets to the heart of an operation's earning potential and clearly shows a company's operational profitability.

EBITDA is more than just a financial metric; it's a game-changer.

The Difference Between EBITDA and Traditional Financial Indicators

Maintenance performance indicators like MTBF, OEE, or Downtime help us monitor operational performance. However, they don't fully reflect the financial impact of maintenance decisions.

Integrating EBITDA into maintenance strategies allows companies to shift from a cost-focused approach to a value-focused strategy that directly impacts profitability. When maintenance is aligned with EBITDA, companies can clearly demonstrate how investments in reliability increase profitability, asset lifecycle, and productivity.

This can be achieved through top-down dissemination of company goals. It's impossible to increase company profitability by setting departmental goals that are independent of or unrelated to management goals. Therefore, the goal-setting process is crucial.

How can we turn equipment reliability into a financial advantage?

• Equipment reliability provides us with:

• Reduced unplanned downtime

• Lower maintenance and replacement costs

• Extended equipment lifespan

• Increased energy efficiency

These benefits directly translate into greater financial success, making it easier to justify long-term investments in predictive maintenance and reliability-focused maintenance programs.

Why Should We Invest in Predictive Maintenance and Reliability-Based Maintenance Activities?

When considering predictive maintenance activities and RCM, a systems-oriented approach can unfortunately be a distant, superficial one. The initial investment costs for these technologies and systems appear high. However, an EBITDA-focused approach can be measured by the following:

• ROI (Return on Investment).

• Fewer unplanned downtimes

• Improved workforce productivity

• Improved HSE (Health, Safety, and Environment) metrics

• Increased equipment utilization

  
  

Outcomes of Reliability-Centered Maintenance

RCM is a systems approach to maintenance designed to deliver the highest value. To align RCM strategies with EBITDA targets, businesses can:

• Prioritize critical equipment with the most significant impact.

• Eliminate unnecessary maintenance activities that do not contribute to reliability and occupational health and safety.

• Implement a risk-based approach that balances cost, safety, and performance.

  
  

How can we bridge the gap between finance, procurement, and maintenance?

One of the biggest obstacles to securing funding for maintenance management systems is the disconnect among decision-makers. Maintenance investment recommendations can be evaluated in terms of EBITDA impact and occupational health and safety (OHS), and a convincing model can be created through coordination with top management.

In a business where maintenance expenses rank third or fourth as an operational cost item, if a maintenance budget and investment budget have not been created or are not being reviewed, that business is largely neglecting its profitability.

Key steps include:

• Demonstrate the financial impact of reliability improvements (e.g., “Reducing downtime by 5% will increase annual revenue by $2 million”).

• Show the long-term savings of proactive maintenance by presenting an analysis of total equipment utilization.

• Align maintenance goals with company KPIs, ensuring reliability efforts contribute to the company’s overall profitability goals, including profitability, safety, and production.

  
  

To explain with an example:

Let's say your facility has high-risk heat treatment furnaces that you use extensively and that significantly impact quality, energy, and maintenance costs.

For various reasons, you neglect planned maintenance activities and don't perform periodic thermographic analyses due to cost considerations.

Let's assume 50% of your natural gas consumption comes from this equipment. A problem in the burners will result in high energy costs and also lower quality costs.

Because you don't check the furnace insulation condition with thermographic analysis due to temperatures reaching up to 1000°C, you won't be able to detect insulation problems early. This will increase your maintenance costs. At the same time, you will observe a shortening of the equipment's lifespan due to increased thermal stresses in the furnace casing caused by thermal leakage.

When Maintenance Management, Occupational Health and Safety (OHS), and Procurement work together, the company wins.

• Burner failures decrease

• Quality problem rates decrease

• Equipment life is extended

• Fuel efficiency is maximized

• Equipment utilization rate increases