Your flexible friend

Keeping up with rapidly improving diagnostic equipment is vital for the modern healthcare provider… but boy, can it be expensive. However, says Chris Wilkinson, capital expenditure is not the only route...

With an annual turnover estimated at £50bn¹ the UK life sciences industry is an important part of the economy². By providing essential information for the diagnosis, prevention and treatment of diseases, clinical laboratory services have an integral role in any healthcare environment.

When it comes to diagnostics, fast and accurate testing is essential in order to provide patients with the best care possible

When it comes to diagnostics, fast and accurate testing is essential in order to provide patients with the best care possible. Technological developments have made diagnostic procedures simpler, faster and more accurate, all of which eventually leads to improved health outcomes and a reduced cost of care³. Advancement of improved test methodologies and wider access to them should therefore be a priority within healthcare.

Not only that, laboratory services are increasingly seen as adding important value to a hospital’s revenue generation. Nevertheless, the financial constraints many healthcare institutions face are putting laboratory managers under pressure to manage operations more efficiently⁴. Meanwhile, the demand for sophisticated laboratory services is growing due to, amongst other things, an ageing demographic, increased obesity that gives rise to chronic diseases such as diabetes and dementia. Viral infections such as influenza, pneumonia or Severe Acute Respiratory Syndrome (SARS) and mounting test volumes also mean there is greater need for rapid testing systems and diagnosis⁵.

Continuous developments in automation and the increased use of point-of-care testing are causing major shifts in testing that can help cope with both the changes and the increasing demand. The latest technology platforms and automation of processes are central to these enhancements. Using the latest technology, laboratories can run several tests simultaneously, generate results faster and increase sample throughput while reducing the need for manual work, the risk of errors, client turnaround times and costs. Innovative automation systems for processing lines also mean information and workflows can be integrated and shared across various laboratory facilities, which can help to cope with peak volumes at busy times.

[box type="shadow" ]...For Example An international clinical science company firm wanted to replace its existing immunoassay platform with a new system that would radically improve test productivity and accuracy. Since it had always been committed to providing its laboratory professionals with the most advanced equipment in order to stay at the forefront of its field, the company was looking to acquire a new system that would offer optimal sample processing, as well as a high level of efficiency. Due to capital budget constraints, the company needed a flexible financing solution to make this major investment without impacting cash flow. After considering a broad range of funding options, the clinical specialist chose a five year finance lease offered by Siemens Financial Services, based on its cost-effectiveness and flexibility. By spreading investment expenditure over a tailored financing period, the lease facility enabled the company to preserve its capital, retaining the freedom to fund other business activities. As a result, financial and operational support helped the company improve diagnostic accuracy while maximising productivity, regardless of the volume or types of tests performed, and enhance its test capabilities. [/box]

Budget limitations In many instances, however, the medical laboratory sector is caught in a predicament where budget limitations are impeding the ability to make essential investments. Medical laboratories can tend to retain outdated technology as keeping pace with technological advancements requires considerable capital expenditure. This practice can however have a negative impact on capability, productivity and efficiency. Harnessing technological innovations can not only result in laboratories’ cost savings, but can also help optimise processes, raise healthcare standards and increase productivity and efficiency of testing services. To this end, alternative asset financing solutions such as leasing are emerging as an increasingly popular, cost-effective investment-enabler.

Financing arrangements can also cover other costs such as installation, as well as introduce the flexibility of future technology upgrades in line with technology developments

Such financing solutions essentially spread the cost of the equipment over an agreed financing period, with finance payments typically arranged to align with the expected efficiency gains enabled by the use of the latest technology. This removes the need for a large initial capital outlay and enables immediate access to up-to-date equipment despite tight budgets. Medical laboratories can deploy precious funds in other areas to improve service quality. Financing arrangements can also cover other costs such as installation, as well as introduce the flexibility of future technology upgrades in line with technology developments.

Tailored, all-encompassing financing packages tend to be offered by specialist financiers which have an in-depth understanding of medical technology and its applications. They understand the profound impact up-to-date technology can bring to the daily operation and can expertly evaluate the financing requirement. This contrasts with the standard financing terms usually available from generalist financiers who often lack a thorough understanding of the medical laboratory sector as well as technical expertise.

The laboratory sector is seeing major shifts in the market due to changes in methods of testing and the time it takes for results to be returned. Clinical laboratories need advanced equipment to offer diagnostic accuracy while maximising productivity and efficiency. Farsighted medical laboratories are looking to employ alternative financing techniques to acquire modern, up-to-date equipment. In doing so, laboratories ensure they stay at the forefront of technology while preserving limited financial resources for investment in key areas such as training and research. This is likely to bring longstanding benefits to the healthcare and life science sectors as a whole.

Author: Chris Wilkinson is Head of Sales for Healthcare and Public Sector at Siemens Financial Services

References: 1. HM Government Life Sciences infographic https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/225316/life-sciences-infographics.pdf 2. Policy paper UK life sciences strategy https://www.gov.uk/government/publications/uk-life-sciences-strategy 3. Robert L. Michel, ‘In the United Kingdom, Medical Laboratory Professionals Gather to Explore Disruptive Diagnostic Technology, ISO 15189, and How Labs Can Add Value’, 30 January 2015 4. http://labmed.oxfordjournals.org/content/34/7/515 5. http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3820169/