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27 June 2017

Hospitals: Stretch your budget not your resources


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Hospitals: Stretch your budget not your resources

Hospitals - beds in corridor

How one Local Health District overcame budgeting challenges

Technology is advancing at a significant rate with no signs of slowing down. This has a number of benefits for consumers and organisations alike such as less time spent waiting for new software updates and more accurate and efficient technology. However, the cost of having the ‘latest and greatest’ technology is becoming increasingly expensive. As a result, hospitals in New Zealand and Australia often find it difficult to keep pace with the advances as a result of budget constraints.

Total spending on public hospitals from government and non-government sources increased by a marginal 2.7 per cent, totalling $48 billion in 2014-15, according to the 2017 Australian Medical Association (AMA) Public Hospital Report Card. This is 1.7 per cent below the 10-year average increase in funding.

The AMA’s Report Card paints a bleak picture of the public health system, claiming the performance of public hospitals is “essentially frozen at the unsatisfactory levels of previous years”. The report found bed ratios had remained static, emergency department waiting times had worsened remaining well below targets, and elective surgery waiting times had worsened. To top it off, treatment times had only improved by a small margin.

The AMA blames a lack of government funding for “choking [public hospitals’] capacity to provide services”. The Association of Salaried Medical Specialists (ASMS) in New Zealand has reported similar concerns.

All levels of government agree more funding is needed, but many hospitals across the country are still waiting for a boost.

According to the Australian Government’s Productivity Commission and their 2015 report, Efficiency in Health, research has cited “Weaknesses in Australia’s health technology assessment (HTA) system are part of the problem.”

So what solutions are there for hospitals?

If we are to take the quote above and hospitals were to improve how they assess their technology, obsolete and inefficient equipment could be identified and either upgraded or replaced earlier saving a staggering 20 per cent on the $160 billion annual health budget.

But, how can health districts ensure their staff have access to the right equipment, improve patient outcomes and ensure that they stay within budget?

One district which is responsible for 13 hospitals that we have worked with since 2000, has turned to leasing to address these issues.

A key hospital in the district needed to acquire two new CT scanners, however, they were unable to replace their current equipment because of fiscal constraints. This was making it increasingly difficult to provide the high level of service to their patients that they commit to providing, and threatened to increase patient wait times.

To help remedy the situation, we developed a solution that enabled them to switch their spending from CAPEX to OPEX and spread the cost of the equipment. In addition to this, we managed the decommissioning of their existing scanner so they could concentrate on sourcing their new equipment. We also managed to help them extend equipment beyond the initial period by working with the vendor to upgrade the equipment to prolong the useful life. This way, their staff could concentrate on providing their patients with the care they needed and not the complexities of swapping outdated equipment.

With rising healthcare costs, complex processes and constantly evolving technology, hospitals can’t afford not to be flexible. Asset finance could allow your hospital to expand its capabilities and improve processes and patient outcomes efficiently and cost effectively.

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