Presenting New Technology to Administrators

Edward S. Sternick, Ph.D., M.B.A.

Dragon Boat Management –A Tale of Two Cities

What Is New Technology? A new acquisition or expansion of an

ongoing clinical program that requires an addition to existing staff, supplies, purchased services and capital equipment with an annualized cost of at least $100,000

Looking to the Future The biology revolution is rapidly translating

scientific discoveries and new technologies into improved patient care

An integration of genomics, proteomics and bioinformatics with new imaging modalities and novel radiotherapy delivery systems will support the rapid growth of comprehensive Image-Guided Radiotherapy (IGRT)

What the Medical Physicist Must Learn! Radiation Oncology Physics Imaging Physics Nuclear Medicine Physics Medical Health Physics Information Systems

How to Prepare for the Presentation Form Assess Review

Create Research

Institute Evaluate Set Up

Form Multidisciplinary Team Assess Needs Review Equipment Options

Create Model Specifications Research Vendor Alternatives Institute Acceptance Test Protocols Evaluate Operations & Maintenance Set Up Quality Program Structure

Form Multidiscipl inary Team Include medical physicist, administrator,

appropriate clinician(s) Responsible for weighing relative costs

vs. benefits of alternatives Minimizes unproductive adversarial

relationships

Assess Needs What is present and projected caseload

volume? Why is current equipment inadequate? What replacement equipment will

benefit patients? Why?

Review Equipment Options Required capital available for installation,

operation, maintenance and upgrading? How much disruption during installation? Sufficient space and access? Environmental controls required? Additional staff training or FTEs needed?

Review Equipment Options (Cont.) Vendor comparisons

Upgrade conditions? Can lower cost system be acquired and

later upgraded? Warranty coverage? Parts and service availability? Downtime penalties? User Group?

Create Model Specif ications Written specifications contractually

define level of performance required from equipment

Work with vendor on preparation Specifications should accompany

purchase order and be referenced as a condition of sale

Research Vendor Alternatives Product line, cost and “intangibles”

important Use life cycle costing analysis

Initial price Installation and renovation costs Training expense Recurring supply costs Preventive maintenance expense Repair costs Life expectancy

Institute Acceptance Test Protocols Procedures described in specifications

attached to purchase order Written protocols and data sheets form

basis of acceptance or rejection

Evaluate Operations & Maintenance Document protocols Accurate record-keeping of operational

failures or service interruptions Service considerations

Vendor-provided Local service organization In-house engineering Combinations

Set Up Quality Program Structure Provides foundation on which clinically

effective and safe procedures are built Ensures that measured results are

within acceptable limits or that necessary repairs and adjustments have been made

Requires documentation and ongoing revision

New Technology Presentation- The Process1) Become the program champion2) Develop the business concept3) Write the business plan4) Defend the business plan

ACMP

1. Become the Program Champion Review what has been done or is being

done to identify the new equipment need

Identify gaps and areas to achieve desired outcome

Provide input and ideas Write business plan “Project manage” the process

2. Develop the Business Concept“Define the value proposition that

specifies the business rationale for the new technology acquisition”

= Administrator-Speak for:

Show me what you

got!

Administrative Criteria Screens Fit with Hospital strategic plan? Market attractiveness? Financial return and risk? Operational feasibility?

3. Write the Business Plan Specify fit with Hospital Strategic Plan Analyze market attractiveness and

competitive implications Seek help from hospital financial analyst to

develop financial statements and clarify reimbursement issues

Identify risks Define business goals/milestones to

be reported

4. Defend the Business Plan

Review reasonableness of market and financial assumptions

Show likelihood of achieving desired results

Demonstrate ability to fund the new technology – Income (P&L) Statement Multi-year projections

Income (P&L) Statement - RevenueGross Patient Service Revenue

Less: Contractuals, Provision for Doubtful Accounts, Free Care, Other

= Net Patient Service Revenue

+ Other Operating Revenue

= Net Operating Revenue

Income (P&L) Statement - Expenses Operating Expenses

Salaries and Fringe Benefits Purchased Services Supplies and Other Expenses Depreciation Interest Pension Community Initiative Contribution

Financial Yardsticks Net Income

Net Operating Revenue – Operating Expenses

Internal Rate of Return Interest rate equivalent to dollar returns

expected from project. Can compare to rates hospital could earn by investing money in other projects.

“Not everything that can be counted counts and not

everything that counts can be counted”