thinking and looking ahead

Capital expenditure on large-scale medical equipment is a considerable strain on the balance sheet of modern hospitals. Furthermore, return on investment is directly dependent on the estimated number of cases and the amounts that can be invoiced for them. This makes it difficult to forecast cost efficiency, resulting in unwanted risks in financial planning.

The solution is a back-to-front approach to the problem, which transfers the risks to specialist financing partners, calculating backward from the individual product rather than forward from the acquisition cost. This may sound like a bold approach, but it can make work a lot easier for a hospital's finance department.

In practice it looks like this:

• Instead of the traditional calculation sequence price, lifetime, discount rate, financing or lease instalment, and depreciation, the specialists use expected number of treatments, price per treatment, capital investment amount, and lifetime.
• This means that the lease instalment is based on the expected number of treatments and the potential associated revenue, with the financing partner bearing some of the risk of deviation in the number of treatments.
• The financing model can be adapted to the requirements and situation of the customer as part of the annual review cycle.

Using a simplified example:

• Expected number of treatments per year:2,500 (or more)
• Price per procedure:€100
• Price of a CAT scanner: €1,000,000
• Annual cost of maintenance / operating supplies: €100,000
• Lifetime: 84 months

If you would like to discuss a more detailed calculation using your own figures, please contact us.