Session: Alternative options to funding—Doing more with less

Editor's Note

In this OR Manager Conference session focusing on alternative funding options for capital acquisition and related consumables, Steve Spring, BA, executive finance director at Massachusetts General Hospital, outlined various strategies and considerations for managing high-value capital equipment purchases. A core challenge discussed was balancing surgeon demands for advanced medical devices, including surgical robots, C-arms, and other high-end equipment, within budget constraints.

“You probably hear from yur CFO [chief financial officer], ‘I don’t have any capital use, spend less. But do more,” Spring posed to the audience. “‘What do you have on the shelf? Why aren’t you using that?’ I hear that all the time.” He asked how many found those questions familiar, and most in the room rose their hands. That is why he’s had to find alternative options to straight up buying equipment. Owning something outright might not be the best scenario, and there are companies out there that offer renting and leasing options “like you rent or lease a car,” he explained.

Vendors typically offer devices under rental or leasing agreements that include terms of 12, 24, 36, or 48 months, extending even up to 7 years. While leasing can avoid upfront capital costs, these agreements often carry interest and lack ownership paths, placing pressure on operating budgets, particularly when devices require consumables.

Another consideration Spring stressed is evaluating the pace of technology changes before deciding on purchase or leasing terms. Shorter contracts can be beneficial for high-turnover technology, such as surgical robots and certain advanced tools, while more stable equipment like OR tables may warrant outright purchase. “I really recommend talking to the IT or engineering team at your institutions because they'll help you understand what the history of the technology has been and where they think it's going from the engineering perspective,” he posed, adding that even asking the vendor themselves might be helpful. “They [the vendor] might not tell you everything, but they know where they are in the FDA approval process for certain things and might be able to say, ‘Within the next X number of years, this new thing is coming out.’”

Another alternative to purchasing or leasing is equipment placement agreements, where vendors provide devices at no cost in exchange for commitments to buy related consumables. This model was recommended for facilities with predictable usage to avoid penalties if minimum usage commitments are not met. Spring emphasized the need for multiyear agreements that offer flexibility over shorter, monthly quotas. He also addressed per-use agreements, especially relevant for high-cost, low-frequency equipment like imaging tools. These arrangements entail paying per procedure without assuming ownership, enabling facilities to upgrade more easily as technology advances.

Finally, Spring strongly advised against one-off acquisitions for only one surgeon due to risks of usage decreasing, especially if that one surgeon moves on from the facility. “Easy to say, hard to do, I know,” he said. But for the best strategy and best practice, consolidation is key, he added. “Get a group of surgeons behind a request, or make sure that new purchase has multiple uses across specialties. Can that equipment be moved, for instance?” Just having the flexibility to move said equipment from the hospital to an outpatient facility if that’s where the case volume is going will help with maintaining high usage, he concluded.