OR Manager - February 2019 - 18

Comprehensive ROI pitch helps to procure OR equipment
Finances
ultiple requests for new equipment
and technology-usually
from surgeons but also sometimes
from staff-are not uncommon.
As part of their due diligence, OR leaders
must determine whether the return
on investment (ROI) justifies the purchase.
Doing ROI calculations systematically-and
involving key stakeholders-
can help ensure that the organization
makes the best choices.
M
Diane
Skorupski,
MS, RN,
CNOR, NE-BC
" I try to put science behind
the purchase to
help justify it and then do
a business plan around
that, " says Diane
Skorupski, MS, RN,
CNOR, NE-BC, vice president
of surgical services
at Tampa General Hospital
in Florida. " I think
about what it will contribute
to the hospital. " Skorupski says that
working with others is a key part of developing
that science.
A collaborative approach
OR leaders need to partner with their
business colleagues when purchasing
new equipment. " The business people
help with forecasting because they build
our budgets, and they work closely with
our department of surgery to see who
they [the surgeons] are recruiting, " says
Hope Johnson, DNP, MBA, RN, CNOR,
NEA-BC, director of perioperative and
endoscopy services at Lehigh Valley
Health Network (LVHN)-Cedar Crest
Campus in Allentown, Pennsylvania.
Stephen Spring, senior administrative
director for finance at Massachusetts
General Hospital (MGH) in Boston,
collaborates with several others in determining
ROI, including the surgeon,
chief of the service, perioperative medical
director, OR nursing director, and
another finance staff member. " If [the
purchase] affects other areas in the
hospital, we'll add a person from the
inpatient side, " Spring says.
For a recent purchase of endoscopy
cabinets, Skorupski says, she worked
www.ormanager.com
Consumables and current exConsider
the
added value, not
just the cost, of a
purchase.
with staff from quality, sterile processing,
infection prevention, and endoscopy
to determine ROI. She coordinated
the project, and finance staff wrote the
proposal.
Ave Perrino,
MSN, RN
" It's good to build a
team to help you, " adds
Ave Perrino, MSN, RN,
administrative director
of surgical and anesthesia
services at UPMC
Presbyterian in Pittsburgh.
Perrino works
closely with her business
manager and reaches out to other
facilities in the system to see if they
have purchased, or plan to purchase,
the equipment. " We might be able to
purchase two and get a better price, "
she says.
Considering the numbers
ROI consists of the cost of the equipment
and how many procedures need
to be done to recoup that cost. A simple
formula for calculating ROI is:
ROI (%) = Gain from investment -
Cost of investment/Cost of investment
X 100.
However, determining costs and revenue
is far more complex; it involves
calculating the following:
* cost to purchase the equipment
* estimated life span of the equipment
*
amount of revenue that will be generated
each year (note that revenue
may decrease as innovative technology
is adopted by competitors)
* operating (including costs of consumables,
staff) and maintenance
costs each year.
OR leaders also need to consider the
financial impact of the following areas.
penses. Determine the cost of consumables
associated with each use of the
device, or, in some cases, the cost of
consumables that will be avoided by
using the device. For example, Johnson
says an ROI for a surgical fluid waste
management system, which treats
waste so it can be emptied into a regular
drain, factored in costs of consumables
such as suction liners that would
not be needed with the new system.
Johnson also showed how eliminating
the cost of trucking heavy fluid to a disposal
facility would save money.
Current expenses include repairs.
Using an Excel spreadsheet to analyze
costs and expenses, Johnson justified
a major purchase of laparoscopy equipment
by showing that it would reduce
the high repair costs associated with
aging equipment. " You have to think
globally and far and wide because you
might miss some costs, " she says.
Staffing. " If the new equipment will
require additional staff to operate it,
you'll need to include salary and hours
of work, " Perrino says. She also advises
managers to consider the cost of
educating staff and/or surgeons on the
new device.
Utilization. Utilization of the equipment
is determined by volume of cases.
The requesting surgeon can estimate
anticipated cases, but OR leaders
should also consider use by other surgeons
and how to ensure maximum utilization.
For example, Perrino says that,
at UPMC, if a surgeon who has assigned
time for a robot goes on vacation, that
time automatically reverts to the service
line so others can schedule cases.
Volume. Whether the new equipment
will bring in additional volume is
important for OR leaders at any size
facility, but particularly for those in
smaller organizations. " If you run a fourOR
community hospital, even adding
a few more cases a week has a significant
impact, so you want to capture
that, " Skorupski says.
Continued on page 18
OR Manager | February 2019 17
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