Acquisitions to undergo closer scrutiny
Central purchasing channels make decisions
If your quality improvement efforts for 1997 call for new equipment purchases, expect far more scrutiny from a finance angle than in the past. Your requests for new medical equipment are probably undergoing increased scrutiny from the "suits" this year, and will continue to be micromanaged for the foreseeable future. A recent national survey conducted by AT&T Capital Leasing Services confirmed a tightening of the medical equipment acquisitions process.
As health care institutions undergo more stringent cost/benefit analyses, purchasing decisions are increasingly being directed by CEOs, CFOs, and other senior executives rather than dispersed medical departments. There is evidence of a growing trend toward centralized purchase decision-making, and the trend is most noticeable among hospitals having upward of 500 beds. (See chart, p. 81.) Of surveyed respondents:
• 32% said they would apply more cost/ benefit analysis to their medical equipment acquisitions this year as compared to a year ago.
• 63% said they balance quality of patient care with cost-effectiveness and profitability of newly acquired equipment. Improvement in quality of patient care remains a primary consideration, however.
• 57% said they take into consideration whether the acquisition of a new piece of equipment will contribute to an ability to win managed care contracts.
• 53% claimed that purchasing departments are more involved in the acquisition process than they were two to three years ago.
• 30% said they see more compliance this year with group purchasing organizations’ recommendations on equipment purchases.
• 41% said they see more compliance with group purchasing organizations’ recommendations on medical supplies.
Leasing looks more attractive
There also appears to be a change in the way large capital investments are financed. Driven by a desire to preserve capital and maintain strong balance sheets in preparation for merger or acquisition, more institutions are considering leasing than ever before. This reduces the risk of technological obsolescence, as well.
Chris Sapp, supervisor of quality resource management for Kaiser Permanente in Atlanta, says, "I see a trend toward capitation, and capitation in this regard means that vendors are paid up front for a membership. If, for example, I have 200,000 members, I can agree to pay a vendor 10 cents per member per month to lease equipment. That vendor provides whatever’s agreed upon to each member walkers, wheel chairs, etc. at no further charge. The equipment is prepaid, and title to the equipment remains with the vendor. When durable equipment becomes obsolete, it’s returned to the vendor."
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