In this economy it still takes money to make money, but some less-traditional ways of building your imaging suite may not require as much.
As the imaging world gathers at McCormick Place this month for the 2009 meeting of the Radiological Society of North America to view the latest equipment, one overriding issue will be top of mind?in this economy, does it make sense to buy new?
The US economy shows some faint signs of recovering from a protracted recession. But jobless figures remain high, and as a consequence, the number of Americans with health insurance coverage remains down. Couple that with an overhaul of the health care system and longstanding issues related to government reimbursement. Given these uncertainties, it?s a time of great questioning about capital investment.
For many hospitals and freestanding imaging centers, buying new does makes sense. For many others, however, price and needs dictate an alternative approach.
William Quinn, director of imaging services at Chicago?s Weiss Hospital, is looking at multiple capital expenditures over the next few years to meet his hospital?s rapid growth. ?Our orthopedics department, for example, is exploding?we have four or five new orthopods,? he said.
?With the addition of many new physicians and to achieve the throughput we need to achieve, we?re looking at a lot of new equipment. I?ve got X number of dollars, and I have to look at ways to make it all cost-effective.?
At the University of California, Davis, Medical Center, where they perform about 25,000 MRI scans annually, patient demand was so great, and space so limited, they leased two mobile MRI units from Streamwood, Ill-based Shared Imaging.
?We didn?t lease them because of a lack of capital, it was because we didn?t have the access, and we needed the equipment but didn?t have a place to install our units,? said Marge Gorthy, chief administration officer for the department of radiology. ?We leased two MRI units and put them out by our outpatient center and ran with those 2 to 3 years while we built a new outpatient center. When that got built, we, of course, built an MRI in there. We are eliminating one of the mobiles and we?re going to keep the other one just until we have a new wing to the hospital finished.?
In rural east Texas, a recent ownership change has brought 15 hospitals into a network of health care providers. East Texas Medical Center (ETMC), based in Tyler, operates as a hub with a series of hospitals as small as 25 beds surrounding it within a 50-mile radius. Most of the hospitals serve patients in remote piney woods towns of just a few thousand residents. Bringing MRI capabilities would have been cost prohibitive, were it not for leasing mobile imaging equipment.
?We?re now able to offer MRI, depending on the hosptial and need, 2 to 3 days a week, half days, and that?s without putting a $1.5 million MRI in our facility,? said Chris Norwood, radiology manager for East Texas Medical Center-Gilmer.
HCA Florida Open Imaging also undertook a hub-and-spoke approach as a response to the economy. Jimmy Botero, technical director for PET/CT in the nuclear medicine department of HCA Florida Open Imaging, explains that the Lakeworth, Fla, imaging center sold its CT scanner to Block Imaging, of Lansing, Mich, which in turn outfitted a mobile truck and leased back to the imaging center.
?It?s a very expensive piece of equipment and hospitals have got to watch their costs,? Botero said. ?It made sense for us to share systems.?
Meeting the Need
In September, Weiss Hospital took delivery of an OEC 9800 C-Arm and Proteus X-ray system. Both are GE products, but neither was purchased directly. Instead, Quinn worked with Block Imaging to buy refurbished equipment at a fraction of the cost of new.
?This is the first time we?ve made this transition to a refurbished vendor,? Quinn said. ?We asked is this a reliable solution, will they meet our timelines, what?s the longevity? We were satisfied with the answers, and the equipment so far is doing the same amount of work with the same quality as our other systems.?
Harry Sarafian, administrator of Diagnostic Imaging Network in suburban Los Angeles, needed to find an MRI machine for his rapidly expanding group but capital in this economy isn?t free-flowing. His shopping around took a different turn than calling company salesmen and asking for a quote. Instead, he logged on to DOTmed.com, an online auction site for medical supplies. What e-Bay is to people looking for gently used golf clubs and even cards, DOTmed.com is to health care equipment.
?We looked at buying a brand-new machine and we have machines that we have done that with. But obviously with the economy like this, sometimes that doesn?t make sense, and the owners were particularly interested in getting this facility up and running without overextending capital.?
Sarafian had made five purchases through DOTmed over the last 3 years and felt comfortable placing a bid on a 10-year-old Toshiba Excelart. An inspector has been hired to visit an Oklahoma storage room where the upright MRI is housed, and pending the outcome, the MRI will be delivered and installed before the end of the year.
Finding an alternative to buying brand-new equipment?even in the short-term?proved invaluable to UC Davis Medical Center, as well. Patient throughput improved and the medical center managed to hold on to patients who may have gone to a competitor out of frustration.
?Before we got those mobiles, we had two MRIs in our main hospital and two in our outpatient center and we still couldn?t keep up,? Gorthy said. ?We extended hours and we couldn?t keep our backlog down. People were waiting 3 to 6 weeks.?
UC Davis brought in one mobile MRI, which helped, but the demand was such that they leased a second mobile unit. ?It expensive, but it?s easy because it?s turnkey,? she added. ?It worked really well for us as a bridge until we could get our facilities completed.?
East Texas Medical Center wanted to offer all the services of a larger hospital, but for a small, rural setting, that would be cost prohibitive?until they checked into offering a mobile service that would travel between centers.
?We?re rural hospitals and we?re giving MRI capabilities in the rural setting,? ETMC?s Norwood said.
The hospital group leased two mobile imaging vans equipped with MRI, as well as the technicians. ?We have a slot for at least six patients for a half day, they do scans every 45 minutes for 4.5 to 5 hours, and if they have add-ons they?re great about getting them in. We?ve had this lease for a month and it?s been a really nice transition.?
In Florida, Botero?s group bought a mobile coach and had Block Imaging outfit it with their old site-based CT scanner.
?Competition is strong and business was a little tough at the beginning of the year. We thought the best thing to do with the best equipment we have is put it in a mobile coach. Now we service all three of the [local] HCA hospitals,? Botero said. ?They already had mobile coming into the hospitals. Why pay them when you can do your own??
The Financial Picture
When UC Davis decided 3 years ago to contract out for additional imaging services, they sought proposals from the major mobile imaging companies. ?If you put it out to bid, you get better pricing. Keep it competitive,? Gorthy said.? What it does is it not only helps you to leverage a good price, but it also keeps your equipment current and on the cutting edge. They want to keep you with the latest software.?
Lease terms typically are written as a flat fee or per-exam fee. Gorthy said the equipment leased at UC Davis was set up on site, and included a tech to run it until the medical center could recruit and train their own technicians.
?We got the same type of units that we had in our facilities, so we didn?t have our techs and doctors looking at all types of images and scanning techniques,? she said. ?They bring all that in and they take care of all the maintenance. You need your people to hook them up to power and hook them up with telecom and PACS, but that?s really it.?
In east Texas, Norwood said his hospital group entered into a closer partnership with its leasor, Shared Imaging, for its mobile MRIs.
?We do a fee-for-scan. And that incentivizes Shared Imaging to come out and do some marketing, get the doctors on board, let them know what?s offered, what kind of scans are offered, almost everything,? he said. ?It?s kind of a win-win for the hospital and Shared Imaging: If we don?t have patients, they don?t get paid.?
Quinn wouldn?t specify how much he saved on negotiated prices for his refurbished equipment, but estimated it was well over $100,000 off the list price for new equipment.
Similarly, Sarafian estimates he saved 60% by buying in an auction versus a refurbished sale.
The universal recommendation is to check references of mobile imaging providers and resellers. Norwood excluded one company that other hospitals said had a poor response record. But his experience with a buying alternative has been largely positive. Aside from offering major imaging services in remote areas, his lease includes maintenance. ?Anything goes wrong with the unit we call the hotline and they come right out,? he said.
Both his group and UC Davis may look to expand their lease needs. For a while, UC Davis also had a mobile MRI go to one of their satellite campuses 1 day a week, but the volume didn?t justify the costs. ?What?s good about the mobiles is it offers you an opportunity?if you think maybe you need something in an area?to bring it in and really take a look; is it something you want to make permanent?? Gorthy said. ?In that respect, it saved us a lot of time and money.
?We?d absolutely look at this option again,? Gorthy said. ?For a while we were thinking we would need to bring in a mobile PET, too, and were considering this same scenario. But then the economic downturn slowed demand.?
Quinn is considering other refurbished equipment as his purchasing needs arise. ?A lot of it depends on what capital I have and when it comes this fiscal year, and how much bang for my buck I can get.?
Dan Anderson is a contributing writer for Axis Imaging News.