From the October 2014 issue of HealthCare Business News magazine
The breakeven calculator provides a real world example, using generic variables, to show at what point the equipment will be paid for. The purchase price of the 1.5T MR is the discounted net price paid for the system. Life expectancy is based on AHA Guidelines for the estimated useful life of depreciated hospital assets and is five years for MR equipment before a major upgrade is required. The labor cost is derived from the hourly salary of the Radiology Technologist as a proportion of the procedure process time. Consumables cost includes all supplies such as linens, needles, syringes, tubing and contrast. Reimbursement rates depend on location and payment history, but this formula uses Medicare CPT/APC reimbursement values for the most commonly used exams.
With equipment maintenance increasing 2 to 3 percent annually, service is a substantial expenditure for hospitals. Outside of capital and supply costs, service contracts are the next line item that can have a significant impact on equipment’s overall life cycle costs. Keep in mind that 40 to60 percent of vendors’ revenue comes from service contracts and they will typically negotiate the highest level of service at the highest price. It is up to the hospital to determine the appropriate amount of coverage, taking into consideration costs and risk. Service costs are a vital part of any purchasing discussion, and for some technologies they can be the difference of breaking even or breaking down over the lifetime of the purchase.
About the authors:
Loretta Loncoske joined MD Buyline in 1991 with over 30 years of clinical experience in the high-end radiology modalities of MR, CT, nuclear medicine, PET, interventional radiology and general radiology and women’s health. She has held positions as director and assistant director of radiology at several facilities. Ms. Loncoske is a registered technologist as well as certified by the American Registry of Radiologic Technologists in Radiology. She is a member of the American Society of Radiologic Technology and Healthcare Information and Management Systems Society.
Katie Regan joined MD Buyline in 2013, bringing with her seven years of clinical research experience. At MD Buyline, she leads all clinical, financial and general healthcare publishing projects. Ms. Regan received her Bachelor of Science from Texas A&M University and her master’s degree from Rice University.
Back to HCB News
