New Technology/Equipment Acquisitions: Balancing Needs vs. Wants

Updated on August 8, 2011
Ross Swanson

In today’s rapidly-changing market for healthcare landscape, choices about what technology or new equipment to evaluate, if and when to make a purchase, and how to implement are significant ones.  Many important questions surface when getting started with this daunting process; in fact, the list of considerations could be endless when factoring in facility size, scope, and location.

But, despite the many and varied questions that can arise, there are ways to streamline this process and increase the chances of successful planning and implementation.  Corazon recommends the following:

Implement a structured service line management model.  This program arrangement can give an organization a “leg up” throughout the capital planning and product evaluation process since all related areas for one specialty are grouped together.  Service line management should also allow for an expedited approach to the evaluation process when timing for these acquisitions is so crucial. In fact, those hospitals that have a fractured [and thus a delayed] process for the initial steps in technology evaluation will find many items outdated once a final decision has been made.

Find balance between needs and wants.  When working with clients across the country, the biggest struggle throughout this process comes from a capital resource perspective.  Hospital and program leaders must weigh options and choose what the organization needs vs. succumb to pressure from physicians and staff about what they want.  Decisions should be made based on what the hospital can reasonably afford, while still improving care delivery.  The biggest, flashiest, and most expensive new technology isn’t necessarily always best.  Also consider the ROI.  We often recommend that a full ROI should be reasonably expected from a technology or equipment investment within one year for smaller, niche technologies, and 3-5 years for large-scale capital items that may cross multiple services.

Consider new financial distributions.  Corazon promotes an innovative model, wherein one lump sum of capital dollars is allocated to the entire service line.  This lump sum can have a relative relationship to the revenue generated by the program and/or to the importance of the program as it relates to the bottom line of the hospital.  Money is then allotted to various areas of the service line through determinations of the service line leadership and key physician leads based on strategic priorities, cost/benefit, and other factors.

Creating a specialized Product Evaluation Committee whose sole mission is to evaluate, implement, and ensure the profitability of the newly-adopted technology or equipment is the best way to not only accomplish the above, but also streamline the go/no-go decision.

The following best-practice approaches can make the most of the committee:

    • Meet at least quarterly; if less often, the committee will fall behind on internal requests and/or new technology in the marketplace.
    • Use a structured and standardized approach for requests.
    • Define clear guidelines regarding the process, expected turnaround time, as well as budget stipulations.  Such rules emphasize the value of communication, and reinforce the formality of the Committee.
    • Make the status of requests available.  Some organizations track updates online, which can allow for ‘real-time’ inquiries.
    • Be transparent.  Once the analysis is complete, the Committee should share the documentation that led to the go/no-go, such as the business plan or pro forma that provides the rationale behind the Committee’s decision.

Within any organization, the decision to implement new technologies is never an easy one.  This is particularly true with technologies directed at cardiovascular and/or neuroscience diagnoses and treatment, which often come with the highest price tags.

The addition of new technology oftentimes will challenge all involved – from leadership to physicians to clinical staff – to behave and interact in new ways. A new technology or equipment acquisition will likely become a tough terrain of managing conflicting priorities, multiple personalities, and restricted capital; however, allocating the time and resources into setting-up a structure, as well as providing education around that structure is critical to its success and will eliminate future headaches.

Just because an organization ‘builds it’ or ‘buys it’ doesn’t mean that new patients will come…Every new purchase or investment must have a solid plan that details essential action steps, assigns accountable parties, and targets completion dates.

The infrastructure of Committees, a rigorous business evaluation process, and the quantification of clinical benefit can round-out a robust technology/equipment acquisition process that can assist hospitals with charting their way through these tough decisions.  The result:  a clear path for program growth and success.

Ross Swanson is a Vice President at Corazon, a national leader in consulting, recruitment, and interim management for the heart, vascular, and neuro specialties.  Visit for more information.  To reach Ross, call 412-364-8200 or email [email protected]

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