As the healthcare sector continues to face increasing financial pressure, hospitals are focussing on finding ways to reduce costs and improve patient care. Preventative healthcare, made possible by sophisticated diagnostics technology, is one approach to meeting the combined pressures. Here, we speak to Chris Wilkinson of Siemens Financial Services about the latest asset financing techniques that are emerging as increasingly-popular investment enablers in the healthcare sector
As the healthcare sector continues to face increasing financial pressure, hospital CFOs are focused on finding ways to reduce costs and, at the same time, improve patient care for an ageing and growing population.
Preventative healthcare, made possible by sophisticated diagnostics technology is one approach to meeting the combined pressures.
Years of constrained investment mean that many healthcare organisations have ageing or unreliable diagnostic imaging technology
Advancements in nuclear medicine imaging, for example, have led to improvements in the detection and identification of age-related conditions such as cancer, dementia, heart disease etc, which enable treatment at a stage when it is often simpler, more effective, less costly and less invasive.
The financial benefits alone that result from early, accurate diagnosis are widely recognised as far outweighing the cost of treating a lifetime of ill health.
Despite this, years of constrained investment mean that many healthcare organisations have ageing or unreliable diagnostic imaging technology.
Recent research reveals that, of the NHS trusts questioned, 21% of Linac radiotherapy machines are at least 10 years old, 11% of CT scanners are a decade old, and 24% of MRI machines are at least 10 years old - with the oldest MRI scanner being 23 years old.
Older medical equipment – especially in the diagnostics area – becomes expensive to maintain, fails more often, and impairs a hospital’s ability to deliver high-quality patient outcomes.
To make diagnostic capabilities in the healthcare system as effective as possible, clinicians need to have access to the latest technology.
The use of up-to-date machines enables healthcare professionals to diagnose more patients earlier and with more accuracy, as well as providing more-targeted treatments with higher success rates.
Newer equipment also reduces operating costs due to lower maintenance costs.
Asset financing techniques, such as leasing, are emerging as an increasingly-popular investment enabler in the healthcare sector as they remove the requirement for a large initial outlay and spread the costs for the upgrade or acquisition over the agreed contractual period
At the top end of the technology, exciting developments are currently in progress.
Super-magnet imaging, for example, will have a particular impact on neurologic and oncological diagnosis and research.
Smart software developments are also appearing on the market which allow, for instance, rapid set-up change so that research imaging happens at night while therapeutic diagnostics operates through the same unit during daytime patient hours.
Against the background of limited availability of traditional sources of funding, however, equipment acquisitions and upgrades have become difficult for many healthcare providers.
That’s why asset financing techniques, such as leasing, are emerging as an increasingly-popular investment enabler in the healthcare sector as they remove the requirement for a large initial outlay and spread the costs for the upgrade or acquisition over the agreed contractual period.
Asset finance packages can bundle equipment and modest installation costs into a fixed payment for the financing period, thereby providing a reliable and transparent financing method which helps manage the financial outlay and avoid hidden cost escalation.
Arrangements can also include the option to upgrade to newer, more-efficient equipment, enabling healthcare providers to harness technological advances to improve patient outcomes.
Such a package can, for instance, take the form of an operating lease that allows for use of a machine without transferring all of the risks of ownership to a hospital, with payments being allocated to hospital’s revenue budgets.
By choosing to work with a specialist provider of asset finance for the upgrade of their diagnostic imaging equipment; healthcare organisations can take important steps towards providing improved healthcare against the background of increasing demand and the continuous evolution of progressive medical technology solutions
Alternatively, under a finance lease the financier purchases and owns the diagnostic imaging equipment and leases it to the hospital. During the agreed term, the cost of the machine, interest and charges are paid by the hospital via regular payments tailored to suit their cash flow.
Such tailored financing packages tend to be offered by specialist healthcare financiers that have an indepth understanding of diagnostic imaging and its application.
They use their market knowledge and technology expertise to create customised financing packages to fit the specific requirements of a hospital, for instance, taking into account the need for the financing facility to be NHS compliant.
Their specialist background enables them to accurately evaluate the potential risks and benefits associated with the technology and create the optimum financing solution for the client.
By choosing to work with a specialist provider of asset finance for the upgrade of their diagnostic imaging equipment; healthcare organisations can take important steps towards providing improved healthcare against the background of increasing demand and the continuous evolution of progressive medical technology solutions.