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Financial Pressures In Healthcare Driving Need For OR Outsourcing

Wed, 05/21/2014 - 11:39am
Accenture

Financial pressures intensify throughout the healthcare industry.

Consider the business of manufacturing medical equipment, such as patient monitoring devices and anesthesia machines, and selling them to hospitals for use in operating room surgical procedures. These are one-time sales. This is problematic because the overall medical equipment market growth rate is slowing. These manufacturers need to find other ways to generate revenues and increase profits.

Meanwhile, hospitals that buy the equipment have their own set of challenges. They pay for the operating room equipment, but they underutilize it. Machines often sit idle. Hospitals are seeking new ways to maximize returns on these capital investments. They also want to reduce operating room costs of equipment, administration and much more so they can deliver patients more affordable, effective and safe surgical treatments.

Needed: New and Fundamental Changes
To overcome these challenges and improve financial conditions, manufacturers and hospitals need to make new and fundamental changes in how they do business with each other as well as with other healthcare providers. One way is by embracing a new business model called Operating Room Outsourcing Services (OROS). Under this model, a digital network of collaborations between manufacturers, hospitals, surgical institutions and outsourcing service providers could bring about more profitable, more efficient and more sustainable changes in surgical procedures. The time to embrace this model is now. Accenture provides more details about this story in a new report titled Operating Room Outsourcing Services.

Multiple Types of Medical Outsourcing
Various types of medical outsourcing are possible:

  • Outsourcing of equipment and operating rooms;
  • Managed outsourcing (equipment, operating rooms and surgical assistants); and,
  • Fully managed outsourcing (equipment, operating rooms, surgical assistants and physicians such as surgeons and anesthesiologists).

Although outsourcing certain activities at one hospital has potential, the full power of OROS will only be unleashed by establishing a country-wide network of operating rooms. This would make it possible for manufacturers to centralize competencies, knowledge and high-end equipment in hubs while serving a broad base of patients with cost-efficient gear in spoke locations.

Entire Set of Services
In this OROS arrangement, manufacturers could provide equipment but also manage and operate the entire set of consolidated services. By doing this, they could generate new revenue streams to complement equipment sales. This could encompass business analytics, information technology, systems integration, staffing, scheduling, payroll, and patient classification. Manufacturers would no longer be limited to selling equipment. They would be in the service provider business and, therefore, better positioned to generate more revenues and invest in new businesses.

This arrangement has the potential to generate more medical equipment sales. The OROS framework includes moving equipment in and out of various operating rooms to maximize its use rather than sitting idle, which is too often the case. In this arrangement, there would be opportunities to sell more equipment, such as wearable eyeglasses for surgeons in different locations doing collaborative procedures, and other equipment that enables more effective teamwork between equipment, doctors and hospitals. All this has the potential to drive more equipment sales.

Hospitals could reduce their equipment costs. Instead of having to pay for a piece of surgical medical equipment – some priced at $100,000 and more – they could lease that equipment at lower costs on a fee-for-service basis. They could also help minimize pervasive underuse of hospital equipment and avoid costs to keep it stored in the operating room when not in use. An outsourcing service provider could, for instance, move that equipment to another operating room. With the money hospitals save, they could invest more in improving patient treatment, reducing surgical preparation time, and reducing patient stays. Using innovative digital technologies such as big data analytics and telemedicine, surgeons will be better informed, more coordinated, and better prepared. Patients will be more likely to receive services of a specialized surgeon better suited for the type of treatment they need.

How to Succeed?
To capitalize on OROS, manufacturers and hospitals should:

  • Assess and optimize existing resources
    First, evaluate existing resources and their capacities, especially the fit of established equipment of each participating hospital or surgical practice. If the assessment uncovers discrepancies, changes should be made such as replacing equipment and adding staff.
  • Establish Efficient Patient Routing and Operating Room Set-Up
    Second, efficiency throughout the surgical process chain has to be enhanced. Underuse has become a pervasive problem in many operating rooms. OROS aims to boost these rates by designing more stringent and synchronized workflows that shorten prepara­tion time.
  • Use Capacity More Efficiently
    Third, capacity use has to be increased for all operating rooms by extending working hours, improving workflow, and balancing use across multiple network locations. Using the OROS network and modern digital information technology, a flexible routing of patients, as well as exchange of physicians, is possible.

Recommendations
For OROS to become a reality, four components are key:

  • Technological competency: such as the know-how about technical characteristics of all surgical device types. Manufacturers possess these competencies.
  • Medical competency: including surgical skills and complementary nursing competencies. Surgeons and nurses employed by hospitals and surgical centers have these capabilities.
  • Development and implementation competency: such as software development knowledge pertaining to optimized, digital, end-to-end workflow optimization and big data analytics tools. Also required is knowledge about using a new business model with numerous participating parties. Business and consulting service providers possessing this expertise.
  • Scaling competency: encompassing knowledge and experience with rolling out new business models on a country or worldwide scale. These scaling competencies require profound knowledge of professional recruiting and integrating large numbers of employees. Outsourcing service providers possess these skills.
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