OR Manager - February 2019 - 20

Finances
Outcomes. Spring says data on
outcomes related to a new surgery for
which equipment is being purchased
can often be found in the literature, or
the surgeon making the request can
provide the information. Estimating cost
savings from preventing complications
can also help in justifying a purchase,
notes Chew.
For example, at Tampa General Hospital,
he worked with infection prevention
staff to determine the cost of each
postoperative infection in a patient undergoing
a hysterectomy. " If it costs an
extra $58,000 to treat each patient,
and you bring in a product that costs
$100,000 a year but decreases the
infection rate by two, you've justified
the expense, " he says (numbers are
hypothetical).
The key is to collect as much information
as possible (sidebar, p 18).
Surgeons at MGH complete a product
request form, which helps collect basic
information to start the analysis (sidebar
at right).
Creating the document
The ROI analysis usually ends up being
presented as a proposal or business
plan. In writing the document, Johnson
says it's important to explain why
the item is needed now, what is being
spent now, what costs can be avoided,
and what are the consequences of not
getting the item. For example, Johnson's
laparoscopy equipment ROI found
a repair cost avoidance of $300,000
annually.
Failure to purchase a new robot for
a surgeon may mean loss of revenue
should the surgeon decide to take his
or her cases elsewhere. Or, as Skorupski
notes, there could be regulatory implications.
For
instance, failure to purchase the
correct storage and drying cabinets to
properly store endoscopes could result
in a citation or even financial penalties
from a regulatory agency.
The length of time for the financial
www.ormanager.com
projections varies according to the project.
Considerations include the life expectancy
of the equipment and how
long it will take to recoup costs of the
purchased item. For instance, based on
the life of the equipment, Johnson projected
out 10 years for the fluid waste
management system to get to a total
cost savings of $15,000.
Most projections will be far less. Although
5 years is common, Chew recommends
projections be 36 months or
less. " As volatile as healthcare is in its
current state, if I can't get my investment
back within 3 years, it's going
to be a hard sell, " he says. " Thirty-six
months is an eternity in healthcare
when it comes to information technology
improvements, technology advancements,
and brand new 'toys.'
I can't
guarantee that 2 years from now, new
technology won't change everything we
just made an investment in. "
Manufacturers can provide equipment
life expectancy estimates, and the
organization's biomedical department
may have data as well.
The final ROI report may be one page
or a lengthy document, depending on
the scope of the project, but even longer
documents should have an executive
summary. " You want to be short
and sweet, and to the point, " Johnson
says.
Chew agrees that longer isn't necessarily
better: " An underappreciated art
is the ability to convey a lot of information
in a very succinct and accurate
way. 'Here is what we plan to do, here
is why we're going to do it, here's the
effect it's going to have, and here's how
much it's going to cost.' " The first two
are the most important and should center
on the patient.
The team working on the ROI should
be sure that material supporting the
information in the proposal is organized
and readily available to the presenter.
The purchase cost will partially determine
how much scrutiny an ROI analysis
receives. Like most organizations,
Product request form
The form used at Massachusetts
General Hospital in Boston is divided
into five sections:
➤ Requestor information. This includes a
question about whether the requestor
or any family member has a financial
interest in the company that makes the
product.
➤ Type of request. Single-case use, replacement
of current product, addition to
inventory, product evaluation, IRB (institutional
review board)
➤ Product information. This section includes
the manufacturer, product name
and catalogue number, cost, brief description
of the product, procedure(s)
where product will be used, and whether
additional physician or staff training or
proctoring is required.
➤ Rationale for request. The requestor
chooses from four boxes (new procedure,
offers clinical advantage, improves efficiency,
reduces cost), writes a justification
of the product request, lists competing
devices and what is currently offered,
and explains the differences between
the requested product and the current
product(s). (Requestors are asked to
submit materials such as research,
white papers, and data that support the
request.)
➤ Requestor sign-off. The surgeon has to
attest that the request has been approved
by the chief of the service.
The form is completed and submitted
online to the business manager.
LVHN has a value analysis team, and
Johnson provides information to them.
She says it's important to make a case
for the value of the purchase, for example,
by showing ways that it will potentially
add volume or reduce current
costs.
Larger projects will likely need signoff
from the C-suite. The person presenting
Continued on page 20
OR Manager | February 2019 19
http://www.ormanager.com
OR Manager - February 2019

Table of Contents for the Digital Edition of OR Manager - February 2019
