Cash flow

iStock_000001095558SmallThe hospital service will have a more predictable cash flow

The Norwegian hospital service has a nine-year-old CT scanner, which originally cost NOK 8 million, which is out of service due to a technical problem related to wear. According to the supplier, the machine should have had a service the year before, but the service was postponed to save money.

Now significant repairs are needed to keep the scanner in normal operation. A further upgrade will enable it to conduct examinations more quickly, as well as communicating better with the journal system. Both represent a saving linked to treatment and personnel costs that seen in isolation defend the upgrade in the course of a year.

The immediate problem is a good picture of a recurring problem that the hospital service experiences; postponement of maintenance leads to surprising costs and lower overall economy.

The myth of "free" equipment

Medical technical equipment purchased through the investment budget and is perceived as "free" when it is fully depreciated. Therefore, it is not assessed how long it will really be worthwhile to keep the equipment.

Seen in isolation, we know that the older a CT scanner becomes, the more often technical problems will emerge - ownership costs increase over time. At some point the maintenance and personnel costs associated with the old scanner, will exceed the financing costs of a new one.

Operational leasing

Management therefore considers operational leasing to manage and finance medical equipment. The aim is to get better control of cash flow.

By transferring lifting equipment to operational leasing, the hospital has regular predictable costs. The management system reduces unscheduled downtime for a scheduled service instead.

A review of the overall cost of ownership for the current CT scanner also shows that it is more sensible to sell the scanner as second-hand and purchase a new, financed by operational leasing, than it is to pay for maintenance and upgrades. In addition, a new scanner means faster and more accurate treatment of patients.

Hospital management therefore chooses to use operational leasing to finance the purchase of medical technical equipment along the same lines as ownership.