Understanding How Hospitals Buy Medical Technology
Modern hospitals depend heavily on medical technology to
diagnose, treat and prevent diseases. A typical mid-sized
hospital has hundreds of items of medical equipment, from
simple stethoscopes and blood pressure monitors to highly
sophisticated MRI machines and linear accelerators.
Hospitals are complex enterprises with entire departments
dedicated to technology planning, assessment, acquisition,
maintenance, upgrade and replacement at the end of the
product life cycle. They have elaborate systems, programs,
policies, procedures and protocols in place for purchasing
new medical equipment.
To sell successfully to healthcare providers, marketing and
sales professionals have to be well versed in the buying
processes that healthcare providers use. Medical device
marketing is quite different from any other marketing.
Typically, hospitals have a review process to qualitatively
and quantitatively evaluate their medical technology needs.
The review's scope depends on the cost of the technology,
and may involve many departments. For expensive equipment,
the review most likely will be elaborate. For less
expensive and disposable items, the review may simply
assess the department's current needs, and the proposed
purchase's operational and financial impacts. In either
case, a market survey and literature search take place to
some extent, and this is supplemented with extensive data
collection and analysis when needed. This is why white
papers and case studies published by medical device
manufacturers are very useful during the review process -
the decision-makers look for every bit of information they
can find. Hence, white papers and case studies can
significantly influence the decision-making process. A
typical review process includes the following phases:
1. Strategic planning<br> 2. Assessment<br> 3.
Acquisition<br> 4. Utilization<br> 5. Repair and
maintenance<br> 6. Replacement and disposal<br>
The process starts with strategic planning. In this
top-level phase, the relevant stakeholders (e.g.,
Directors, Professors, Managers, Doctors, Engineers,
Purchasing, etc.) review key issues, success factors and
resource allocation, and assign responsibilities for
sustained improvement in technological performance. They
identify the services their facility provides, and the
technologies that would complement their existing services.
The typical questions to answer are: Where are we? Where do
we want to be? How are we going to get there?
Because medical technology greatly impacts the cost and
structure of healthcare delivery, hospitals include
technology assessment in their planning process, which
typically includes cost-benefit and cost-effectiveness
analyses.
Cost-benefit analysis calculates the costs of applying the
technology and compares them to the benefits resulting from
its application. It provides criteria upon which to base
decisions of whether to adopt or reject a proposed device.
The device is adopted if its benefits exceed its costs.
However, one limitation of this analysis is that it
expresses all benefits, including therapeutic effects, in
monetary terms. Hence, hospitals also conduct
cost-effectiveness analyses to quantify therapeutic effects
in terms of reduced patient hospital stays, and compare
these to the costs of the technology's implementation.
Although at first glance the chosen technology may seem to
have limited impact on other facility operations,
stakeholders also examine the likely effect of the new
equipment on existing services.
Other aspects of cost-effectiveness analysis include
assessment of long-term replacement strategies and
identification of emerging technologies. Since medical
devices have finite longevity, hospitals have replacement
plans to minimize the effects of unforeseen capital
replacement. By identifying emerging technologies that fit
into the projected plans of the hospital's service area,
the hospital tries to avoid investing in nearly obsolete
technologies.
Purchase of a new technology is justified only when an
increase in equipment's cost-effectiveness is clearly
demonstrated. The typical questions asked during the
analysis are:
* Will the new medical device increase the volume of the
service?<br> * Will it raise the costs of the service?<br>
* Will the device generate additional revenues and, if so,
how much?<br> * What is the new device's expected
lifespan?<br> * What is the device's reliability and the
costs associated with its repair and maintenance?<br> * How
reliable and reputable is the manufacturer?<br> * What
impact will the new device have on routine operating
costs?<br> * What will the disposal cost be?<br> * How easy
is the device to operate?
Once the technology has been assessed and the decision to
purchase has been made, the next phase in the process is
technology acquisition, which typically includes the
following steps:
* Preparation of general and functional specifications<br>
* Clinical, technical and cost evaluations<br> * Review of
proposals and evaluations, and making a final decision on a
device manufacturer<br> * Contract negotiation for the
device's acquisition<br> * Preparation and issuance of a
purchase order<br> * Contract award
A contract award is the green light for the medical device
company to deliver and install the product.
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Alec Alpert is a business-to-business copywriter
specializing in lead-generating white papers, case studies
and articles for medical technology. Visit
http://www.alecalpert.com to learn how his copy can enhance
your lead-generation campaign.
