Whether starting up a new outpatient facility or owning an ambulatory surgery center that’s lasted for a decade or more, the capital equipment that is needed for each is at the heart of enabling both to continue to have safe, effective surgeries with quick turnaround time, using the latest technology available, and all while keeping the practices functioning at a satisfactory level.
But with the current times, obtaining equipment and staying on the cutting edge of technology has been difficult, to say the least. So SurgiStrategies asked both readers and capital equipment vendors for their thoughts on purchasing or leasing, obsolete equipment and more; with each giving tips on how to deal in this current market.
Economic Issues
Without question, the current recession has played a factor in obtaining capital equipment. As a result, some outpatient facilities have employed strict rules. “Capital purchases were frozen at the end of 2008,” says Lynda Dowman Simon, RN, the director of nursing and manager of the head and neck surgery department at St. John’s Clinic in Springfield, Mo. “All unpurchased items were placed on the 2009 capital requests. No other items were added unless it was a critical need.”
While some practices have cut back on capital purchases completely, others have exhibited a bit of caution. “We are still purchasing capital equipment,” notes Karen Maloney, RN, BSN, CASC, an administrator at Tri-State Surgery Center in Washington, Pa. “But we seem to be going for the demos or refurbished items as opposed to brand new ones.”
And while the initial reaction to freeze capital spending has been a common one, the need for improving capital within the ASC still exists, as Tom Maher, vice president of sales at Skytron, points out. “To manage the growing impact of healthcare demands capital must be invested.”
So what are some vendors doing to combat the slowdowns and freezes in capital purchases? Maher states his company offers a variety of programs through several leasing products and long-term, no-risk programs. “We also suggest investing in programs that help facilities reduce some of the waste/cost and promote better utilization of existing assets, eliminating the need to spend capital funds,” he says.
Stephen Heniges, vice president of sales and marketing for CompView Medical, has installed a three-pronged approach in helping potential buyers. “First, since our boom system does not require ceiling construction, the cost to acquire an integrated OR is reduced by nearly 50 percent. Second, for qualified facilities, we offer a trial of our system ... this helps the facility validate the acquisition and ensure the surgical team is satisfied with the product. Third, we also offer month-to-month rentals of our system. This can bridge the gap to acquisition during “frozen budget” periods and again validate the benefits delivered to the surgical team.”
Another factor in the slowdown of capital purchasing is credit. With the shrinking credit market due to the recession, buyers are having a hard time locating credit to purchase capital equipment. So what can buyers to improve their standing and receive the credit they need?
Mark Jones, vice president of corporate finance for Nueterra Holdings LLC, suggests buyers “subscribe to and maintain current reporting to agencies such as Dun & Bradstreet; network within ASC trade associations for leads on financing sources for capital equipment; strengthen primary lending relationships through consistent communication and include in all proposals for lending opportunities; clean up their balance sheets; and maintain a strong payment history with vendors to solidify trade credit references.”
Maher explains that working with your supplier on creative solutions can and will help during these more challenging financial times. “Approaching capital equipment as a commodity purchase does not effectively solve this problem long-term,” he warns. “Valued suppliers will have programs available to help manage these credit issues.”
Keeping Up with New Technology
With the rise of new technologies that becomes available, many potential buyers fear their equipment becoming obsolete in a year or two. What advice would vendors give buyers to ease their fears?
“If an organization is inclined to be an early adopter and typically embraces new technologies, I would tell buyers to be more cautious and patient than they instinctively may have been in the past,” Don Fox, vice president of supply chain at Nueterra advises. “Give the new technologies some time to prove themselves in the marketplace and then judge their long-term staying power based on an actual track record.”
Another decision to be made is whether to purchase or lease capital equipment. Heniges states there are two key questions to ask: Do buyers have the cash and will the product avoid obsolescence in a short period of time?
“If the answer is yes to both, then getting involved in a lease does not make much sense. If the answer is no, as expected in the current economy and technological environment, then a lease is a wise choice,” he says.
A viable option agreed upon by vendors and buyers alike are leasing equipment. “Under many leasing agreements, ASCs have the freedom to acquire state-of-the-art systems or upgrade equipment at any time,” says Nick Jacobs, market manager for infection prevention technologies at STERIS Corp. “This enables facilities to remain current as technologies change.”
But buyers beware, warns Simon. “Leasing gets expensive very fast. If your staff is careful with equipment, leasing can end up costing more than purchasing the item. Leasing is good if the item has a short shelf life and you need to upgrade sooner rather than later.”
Shelf life is also something that Debra Horner, CASC, FACHE, office manager for Tulsa Outpatient Surgery Center in Tulsa, Okla., felt is an important factor in determining whether to lease or purchase equipment. She also cites monthly costs, interest rates, capital or operational leases as other factors to look for.
Nancy Underwood, RN, BS, CNOR, manager of surgical services at Our Children’s House at Baylor in Dallas also felt buyers should look into “ROI if you were to purchase, maintenance contracts, lease limits and what the lease includes (maintenance, repairs, upgrades, etc.).”
Words of Wisdom
Obtaining capital equipment can be an arduous process. So what words of advice would vendors and buyers like to impart to others?
“Look at all of your options, even if you think it wouldn’t work,” Underwood says. “Rates, plans, strategies change all the time and new options become available.”
“I would advise everyone to get as many bids and details on your purchase as possible,” says Maloney.
Maher felt that being open with your supplier regarding your equipment needs and financial position is important as well. “View the supplier as a valued resource. Users and suppliers are affected by the economy equally as hard; working together, creative solutions can be achieved with a win-win for both parties. Now more than ever, relationships and partnerships need to be leveraged.”
Fox offers this piece of information. “Remember to negotiate terms and conditions, as well as actual selling price.” Items to take into consideration, he said, include:
- Delivery terms
- Payment terms
- Uptime guarantees
“Do thorough research, including visiting other facilities with the same proposed equipment to narrow your selection process,” Heniges points out. “Following that, do a trial when feasible. Although trials are time and labor intensive they are less stressful than dealing with a purchasing mistake.”