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The escalating costs associated with medical technology present a host of challenges for the hospital clinical engineering department. As service and support costs comprise ever larger portions of a system's life cycle cost, innovative management of service provider mix and mechanisms can provide substantial savings in operating expenses. In addition to full-service contracts, the use of demand service and independents has become commonplace. Medical equipment maintenance insurance programs provide yet another service alternative, combining the flexibility of demand service with the safety of a capped budget. These programs have gained acceptance among hospitals as their providers have become more focused on the healthcare market and its many needs. In view of the long-term cost impact surrounding technology procurement, the authors recommend that hospitals refine system evaluation methodologies and develop more comprehensive techniques directed at capital equipment replacement planning. One replacement planning approach, based on an estimation of system value changes, is described and illustrated using data collected through client consultations. Although the validity of this method has not been demonstrated, it represents a simplified approach to life cycle cost analysis and is intended to provide a standard method by which system replacement planning may be quantified. As a departure from system devaluation based solely on depreciation, this method estimates prospective system values derived from anticipated operations and maintenance costs, projected revenue, and the availability of new technology.