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What does the U.S. health care industry have to do to survive?

by Tom Spees, Director, US Sales, Philips Healthcare, Dunlee Division | October 28, 2014
Tom Spees
From the September 2014 issue of HealthCare Business News magazine

The U.S. health care system is going to be put under a tremendous amount of pressure in the years to come.

One fact staring us in the face is that the U.S. Census Bureau estimates the number of Americans today over age 62 now stands at 46 million. The government believes that number will be 82 million by the year 2030. That sounds like a long time, but that is only 15 years from now

Obviously older people are the ones who are going to need the most health care — so everybody can connect the dots for themselves: more services will be required for more people.

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Over the past few years, we have seen a real trend going toward IDNs trying to gain a better handle on controlling their operating expenses. This holds true for all expenses, and especially big-ticket equipment maintenance costs associated with CT or MR service.

More than ever, we are seeing IDNs seeking alternative service options for some high-cost assets. These options can include some lower cost models from the OEMs, alternative service companies like independent service organizations, OEM Multi-vendor service organizations, or even in-house clinical engineering teams. These are all various service options IDNs and hospitals now are carefully considering.

For many years, our industry accepted apractice of actually paying as much, if not more, for equipment maintenance of an asset over its lifetime than its original purchase price.

If you look at a Total Cost of Ownership model on a high end imaging modality, such as an MR system or a CT system, it is not unusual to see an IDN actually doing just that. They pay more to maintain it than they did to buy it.

I think most people would agree that the average consumer would never accept that kind of an ownership model for the products they buy. You would not buy a refrigerator for $2,000 and expect to pay $2,000 in maintenance expenses over the course of its lifetime. You would probably just go buy another one. And for higher ticket items like an automobile, you would not buy a $50,000 automobile and expect to pay $50,000 in maintenance expenses over the course of the seven or eight years that you own it.

That is an economic model the average consumer would not tolerate.

Now in fairness, high end DI assets are revenue generating, and a different TCO model can be acceptable as part of a comprehensive business plan. But IDNs and hospitals did not have alternative service options that were very well-established in the past. In recent years however, those alternative options have become readily available and very viable. Choices exist today that can reduce expenses without compromising patient care or clinical uptime.

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