This report originally appeared in the May 2009 issue of DOTmed Business News
At a recent industry meeting, a large hospital group reported in one metro area they started the year with a budget of $30 million for equipment and services. Within a short time that budget was reduced by more than half with the realities of the economy. When asked about purchasing used equipment as a way to spread the available budget, the answer was at their facilities there was an expectation they would have new equipment. The underlying yet unspoken claim was new equipment aligns with leading-edge services.
As I traveled back to Boston, I thought about the "Expectation" this hospital group had set for its referring doctors and the community it serves. By using new equipment as the draw for hospital services, they'd locked themselves into new equipment as their only option.
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Conversely, to deal with the budget shortfall, they were planning to get more useful life out of the equipment they had in place. Some of this equipment was at end-of-life or beyond. How can you justify the difference if you align new equipment with quality outcomes? You can't. You can only appear to be responding to the economy by lowering the quality of the services provided.
Many providers of medical services make this mistake. But, what if they focused on the quality of the service provided rather than the age of the equipment? To do this requires an understanding of the local market and the use of this understanding to provide the best diagnostic and therapy related services. Outcomes data is important to those needing the services. Providers of medical services have a choice. They can talk about the equipment they buy or the people they cure. Which would get your attention?
The need for equipment can be measured and quantified based upon the area's clinical demand. This demand should drive an equipment specification. With a specification the buyer can consider the full complement of new and pre-owned devices.
If pre-owned serves the need, the buyer can frequently purchase at less than half the cost of new. If a new or pre-owned device delivers the same outcomes and reimbursement then the purchase of pre-owned equipment makes sense. Along with the initial cost savings there is an additional savings in service and parts.
The acquisition of any pre-owned or new equipment for hospitals and medical imaging centers should only be considered after the need is defined. If your medical imaging business is promoting new equipment rather than quality outcomes, you'll have a very difficult time controlling costs and separating your product from the rest.
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