2 0 • O U T PA T I E N T S U R G E R Y M A G A Z I N E • N O V E M B E R 2 0 1 8
B
efore you buy
that new and
indispensable
technology your sur-
geons just gotta have,
be sure you first
answer this question:
"Will this new piece of
equipment prove its
worth?"
The same goes when
you're replacing older
equipment that's become obsolete and unable to be serviced. The
replacement equipment almost always costs more than the existing
equipment and your operating margins are likely not increasing at the
rate of these price increases, if at all. You're walking the balancing act
of increasing quality of care while decreasing costs in the value-based
payment world.
Measuring return on investment (ROI) is an elementary practice of
healthcare finance. The ROI calculation is typically done on a spread-
sheet, but for smaller purchases you can do it in your head. The big
decision centers around your facility's ability to earn its money back
after purchasing the equipment and then to go on to reap a profit. The
timeframe for the profitability is also a factor. The finance term for
this is internal rate of return (IRR). The calculation is straightforward
and will serve as the guide in your decision making. The greater the
IRR, the better your expected financial outcome is predicted to be.
Will That Equipment Pay for Itself?
The key question to answer before you buy your next big-ticket item.
Business Advisor
Rena Courtay, RN, BSN, MBA, CASC
• POSITIVE CASH FLOW Sharpen those pencils and calculate how many cases,
procedures or tests are required to break even on a capital equipment purchase.
