Techno-Med
A Special Feature on Medical Equipment Technology

Choosing the right technology for your hospital

Soumya Viswanathan - Mumbai

Rising prices of drugs and high cost of technology are the two most commonly attributed reasond for spiralling healthcare costs. It is now a known fact that investments in medical technology constitute 50 per cent of the total cost associated in building a new hospital. Hence, it becomes necessary for hospitals to invest in the right kind of technology to make it financially viable. ‘‘Hospitals do not earn because of their foolishness. Also, the patients suffer,’’ lashes out a Mumbai-based expert.

However, the logistics involved in buying an equipment are complex and most hospitals blindly invest in irrelevant technology to simplify the process. It could be a fashion statement, doctors’ decision or simply a mistake.

The first step

How much financial wisdom is applied while procuring a particular technology or an equipment? “Buying hi-tech equipment without properly assessing leads to unnecessary investigations done primarily with an intention to recover costs,” says Dr C P Kamle, international associate of American Institute of Medicine and Hanns Finne International. Decisions often get driven by the recommendations of ‘star’ doctors, and not through commercial considerations alone, cautions Praveen Singh, vice president, Feedback Ventures, a New Delhi-based consultancy firm.

Agrees Dhanraj Chandriani, MD, Technechon, Mumbai, “Doctors want the best and best often means the most expensive.” Doctors do not necessarily understand the dynamics of a new hospital and if they are used to a particular technology in their practice, they insist on having it. The solution is to discuss the procurement list with the doctor instead of abiding by his or her wishes, say experts.

Next comes the expected patient volumes which is often incorrect. Also, a multi-speciality hospital might have fewer patients coming in for each speciality. Having hi-tech equipment for all speciality departments may not be viable in such cases. Hospitals should perform break-even analysis based on expected patients turnout, salary of technicians, and maintenance costs, before deciding on the equipment, says Chandriani. Financial feasibility on the equipment is a must to ensure a ROI.

The Need

The arguement then is how to ascertain the need. Consultants argue that there is a genuine need for top-of-the-line equipments and that they are not merely fashoin statement. Says Dr Ajay Thakker, CEO of Jupiter Heart Scan, Mumbai-based diagnostic centre, “People buy because there is a need. High end equipment fills up the vacuum existing in the current system. For eg, a multislice CT allows non-invasive angiography that cannot be done with a regular CT.” A fair arguement, but there is a catch here. Says Dr Kamle, “There must be a need for a particular technology for the population in a radius distance of 150 kms at least. The equipment need not be acquired just because the neighbouring hospital has it. Buy it if you get sufficient cases. Otherwise offload your work to another hospital.” Vinay Kothari, COO, Hosmac, a Mumbai-based Consultancy firm advocates sharing of services between hospitals. He says that as in case of a public telephone, which allow them to operate at a minimum distance between them should be applicable to diagnostic centres too.

The right equipment

The cost of an ultrasound ranges from Rs 25 to 80 lakh. So how should a hospital decide which equipment is right? “Apart from the technical specifications, one must see — What is the scale of service? What is the paying capacity of the target audience? The promoter may want the best, but can that wean patients from other hospitals? Can hospital get trained manpower to manage the equipment? “ explains Chandriani.

Purchasing

Dr K C Ojha, MD, Hospic, stresses on phasing out purchase of image building equipment. The key is to buy at the right stage and achieve break even at least in the second year. Agrees Singh. Putting up everything at the start or in the first few months of startup causes too much capital loading upfront, he says. Expensive equipment can be bought a year or two after the hospital has begun operations and the promoters have a better understanding of the amount and nature of patient inflows. “On an ongoing basis, each hospital should try and see each key equipment as a separate profit center. One can then use such data to make the doctors see ’financial’ sense in the longer term,” adds Singh.

The buyer must also set aside budget for at least ten years for maintenance reasons becausefaulty equipments mean a compromised performance, says Dr Ravi Narula, formerly associated with BD Diagnostics.

How to negotiate

How does the buyer maken an informed choice? The biomedical engineers should be made to do a cost-to-feature analysis and advice the CEO on the purchase, says Chandriani. Negotiating prices and getting the equipment at a rock bottom price should not be viewed as an achievement. Secondly, one must demand add-ons like — stock of reagents, spare parts, extended warranty. All this accounts for savings.

Contract criteria

The equipment must be up-gradable at the least cost and must have at least 5 years warranty and spares available in hospital store. The infrastructure must support it and the power requirement must be met. There are two things involved. Making the venture viable and subsequently passing on the benefit to the patient. If this does not happen, in an insurance-deficient society, healthcare would be a luxury and not a need.