The pace of change and significant advancement of technology in the medical industry has increased dramatically, both enabling and accelerating positive patient outcomes on a daily basis.
In 2014 alone, the Medical Technology Association of Australia was responsible for up to a million separate device entries on the Australian Register of Therapeutic Goods. Medical equipment on the register includes in vitro diagnostic devices and x-ray machinery, as well as new tools to improve the productivity of medical professionals behind the scenes.
Even within non-patient-facing areas of the medical industry, new technologies are driving increased levels of productivity, helping time-pressed professionals work quickly and accurately, to the benefit of the patients under their care.
Medical technologies and pharmaceuticals are one of five focal points of a $188.5 million Australian federal government push for new growth centres as policymakers seek to drive innovation in the sector. While still in the proposal stages, the Medical Industry Growth Centre will be tasked with cutting red tape, improving the relationships between research and industry, boosting workforce management and skills, as well as giving access to global supply chains. With such an increasing list of responsibilities, new technologies are stepping in to fill any void in time management.
As the medical industry continues to grow, it is vital that we look at ways to use technology effectively, which requires using all assets to full effect. There are two challenges here: firstly, the more we rely on technology, the more important it becomes to keep it in effective working order; secondly, healthcare organisations need to balance budgets in an environment that is increasingly capital-intensive.
The Australian Institute of Health and Welfare notes that overall recurrent expenditure (on everything from new equipment to staff wages) in Australian public hospitals reached $44 billion in 2013-2014, having risen for each of the previous five years. With rising financial pressures, it all points to the fact that medical organisations need to prepare for technological change – both now and in the future.
Keeping up with technological change in the medical industry
According to IBISWorld, the medical equipment manufacturing industry is poised to grow by 1.8 per cent annually through to 2019. Today, there’s a faster-flowing pipeline of new medical technologies than ever before, including better imaging capabilities, more accurate diagnostic techniques and more efficient IT hardware. All of which will give professionals greater tools for improving productivity, directly influencing the quality of care and outcomes available to patients.
Providing world-class care and improved patient outcomes – be it through radiation therapy, x-ray machinery or simply having an appropriate IT and communications system in a hospital – means upgrading as technological advancements occur. Asset financing can allow medical and healthcare businesses to switch technologies, or upgrade their existing equipment to improve output and capacity, while avoiding replacement and obsolescence costs.
The longevity of medical industry equipment
The September 2015 Alleasing Equipment Demand Index (the Index) demonstrates just how much the healthcare sector relies on new asset acquisitions. Almost a third of respondents in the personal and other services sector – which includes the healthcare industry – said they intend to add to their asset base in the coming quarter, with 30.8 per cent indicating they will acquire computer and IT equipment. Meanwhile, 65.9 per cent said outdated assets affect operations – higher than the 62.9 per cent average, which is understandable considering how equipment directly impacts patient outcomes.
Our research also shows that between November 2014 and May 2015, the percentage of Australian businesses intending to acquire medical equipment doubled.
Keeping on top of the development of state-of-the-art medical equipment is both an ongoing process and evolving challenge. Just as the research field is constantly striving to unearth new ways to improve our lives, hospitals and other medical facilities need equipment that aids productivity and stays in peak condition for the long term.
This means governments and medical organisations need to keep the useful life of certain technologies in mind when outfitting their facilities, while also having one eye on the future. Leasing equipment rather than purchasing outright is one way of staying ahead of the curve by avoiding productivity issues relating to old technology, without incurring significant costs through obsolescence.
For example, as the government’s Medical Industry Growth Centre opens the door for new x-ray equipment, current machinery can be returned to a finance provider without incurring the costs of disposal and replacement if the equipment was acquired via a rental or leasing agreement. The ability to upgrade regularly and minimise replacement costs, and the flexibility to optimise usage, are key reasons leasing equipment is an attractive proposition for Australian medical and healthcare organisations.
The Index findings correlate strongly with this sentiment, suggesting those in the healthcare sector are indeed aware of the challenges that lie ahead when it comes to their assets and equipment. Some 34.8 per cent of personal services sector respondents intend to fund new asset acquisitions through equipment finance, ahead of the 30.5 per cent average.
Change and technological advancement within the medical industry is constant, and necessary if we are to continue to improve our well-being and provide the right patient outcomes. It’s up to those in the industry to future-proof their organisations and the best possible chance of achieving this is to start with a strong financial foundation that will ensure they avoid issues relating to old technology.
NB. The research and publication of the Equipment Demand Index was conducted under Maia Financial’s previous name, Alleasing.