ESTATES & FACILITIES
pathways, the use of diagnostic imaging equipment has extended beyond the main domain of diagnosis to other less traditional areas of the patient care continuum, including prevention and therapy. This makes the deployment of up-to-date imaging technologies a particularly decisive factor for patient experience and treatment success. Not only does ageing equipment increase risk of failure, risk of downtime and maintenance costs, it also denies acute trusts the opportunity to provide better healthcare and benefit from increased productivity and higher throughput, compromising the effectiveness of patient diagnosis and treatments. All these translate into a heightened risk of CCGs sending their patients elsewhere.
If acute trusts are to secure themselves a competitive advantage in the new market landscape, they cannot afford to neglect the need to invest in their infrastructure and assets. Very often the acquisition of new equipment can accelerate workflow and generate new savings. However, many trusts are still using obsolete equipment because they do not believe they have the financial means to upgrade their assets, reinforcing a vicious cycle of not attracting patient funds that would allow them to invest in more efficient equipment that saves money and resources.
A sustainable financing strategy
The key to resolving this conflict is a sustainable financing strategy that allows trusts to make capital investments in a way that can drive best value for money without straining their financial budgets.
This recognition has made many healthcare organisations realise that outright equipment purchase (as opposed to a financing plan) may not be the most effective option. The view has been further reinforced by the increasingly sophisticated calculation of total cost of ownership (TCO) employed by healthcare financial managers, which recognises that the purchase price is only a fraction of total operating expenses for a piece of equipment. The TCO approach embraces the well-attested fact that service costs rise and reliability falls as technology ages.
In the latest TCO models, growing importance is also being placed on new factors such as the time cost of money and free cashflow issues, as well as savings through energy efficiency. The TCO calculation in healthcare is even more complex, taking into account factors as diverse as patient radiation dosage, avoidance of costly invasive surgery and patient recruitment (via CCGs) opportunity costs of non-investment, amongst others. Within this context, asset finance plans and leasing arrangements are increasingly proving to be an efficient and affordable alternative financing technique, allowing healthcare organisations immediate access to the latest technology without a large initial capital outlay. These kinds of asset- financing plans charge a fixed equipment lease/ rental and maintenance cost against revenue budgets. Furthermore, they allow healthcare organisations to upgrade their technology in broad line with technology developments without having to write down the full capital cost of purchase.
Through such funding methods, acute trusts
can finance state-of-the-art technology to improve patient outcomes; potentially increase patient throughput rates; drive down the overall cost per patient; avoid more costly procedures; avoid technological obsolescence; embrace TCO; and free liquidity for immediate frontline needs – all crucial factors contributing to improved patient care that, in turn, underlines a trust’s competitive position.
Financially agile
Acute trusts are under more pressure than ever to attract CCG commissioning with top quality services and the safest possible clinical environment. Any inability to do so could lead to a decline of commissioning levels and the funds that come with them. To embrace the new market reality where trusts are asked to deliver more with the same resources, they need to be financially agile by extending their use of alternative financing techniques – already widely deployed by their private sector counterparts.
Efficient use of such financing techniques can help trusts improve their asset management disciplines and access available
(private)
capital, thereby paving the way for long-term sustainable development while delivering service excellence and improving patient outcomes.
Chris Wilkinson
TELL US WHAT YOU THINK
opinion@nationalhealthexecutive.com
national health executive Sep/Oct 14 | 43
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