Chris Wilkinson, Head of Sale for Healthcare and Public Sector for Siemens Financial Services in the UK.
The UK medical laboratory sector is operating under mounting pressure as budget constraints and requirements to drive efficiency savings within the NHS have led to shrinking financial allowances for lab testing services. In an effort to cut costs, many hospital laboratories are being asked to consolidate into a single regional lab organisation. The search for competitive prices has also resulted in primary care trusts tendering for pathology testing services, further exacerbating the financial pressure already confronting the laboratory industry. To defend medical test budgets, laboratories must demonstrate the value they can provide to physicians, patients and the healthcare system. Studies have shown that a more effective use of laboratory tests can directly improve patient outcomes and thus significantly reduces the final cost of care. In order to navigate themselves in the new economic reality, medical laboratories need to acquire the ability to continuously improve the quality of lab testing services as well as to offer a more sophisticated menu of medical tests. This much needed competence is particularly crucial in helping diagnose and treat patients effectively as demographic changes and an increase in chronic illnesses further strain the healthcare system.
This requirement, however, necessitates access to up-to-date equipment and technologies that allow medical laboratory professionals to deliver speedy, efficient and accurate diagnoses and analyses to physicians and patients. Medical laboratories are particularly vulnerable to the pitfalls of retaining outdated technology, with its potential to negatively impact capability, productivity and efficiency. The acquisition of modern lab equipment can offer advantages such as expanded test capabilities and optimal sample processing, thereby enhancing customer service, boosting competitiveness and ultimately improving patient care. Nevertheless, medical laboratory technology is often costly to replace and upgrade. Keeping pace with technological advancements also requires considerable capital expenditure. The spill over effect of a constrained budget within the health system is making it even harder for medical laboratories to contemplate such investment. In short, the medical laboratory sector is caught in a predicament where budget limitations are hampering its ability to make essential investments which play a key role in increasing the value of testing services.
In this light, asset financing solutions such as leasing and renting are emerging as increasingly popular financing tools. Such financing techniques spread the cost of the equipment over an agreed financing period, with the ability to align monthly finance payments with the expected efficiency gains enabled by the use of the latest equipment. This removes the need for a large initial outlay and allows laboratories access to the latest technologies, without having to commit scarce capital or use traditional lines of credit. Financing arrangements can also cover other costs such as installation, maintenance, service and some consumables, as well as introduce the flexibility of future technology upgrade in line with future technology developments.
Such tailored, all-encompassing financing packages tend to be offered by specialist financiers who have an in-depth understanding of medical technology and its applications. They are therefore more predisposed and more able to create customised financing packages that fit the specific requirements of each particular organisation – for instance, flexing the financing period to suit the customer’s cash flow. This contrasts with the standard financing terms usually available from generalist financiers.
In today’s economic climate, medical laboratories that want to remain at the vanguard of their field need to be able to bring high value to the broader healthcare system. The deployment of state-of-the-art technology and equipment can help the medical laboratory sector realise this aim through improving diagnostic accuracy while maximising productivity. Medical technology investment, however, must be undertaken under the premise of sustainable and affordable financing. Forward-looking medical laboratories are therefore increasingly turning to alternative financing techniques, with which they can overcome affordability issues, as well as devise a much more transparent and sustainable financing strategy in equipment investment. More importantly, instead of tying up precious capital in equipment, medical laboratories can more effectively deploy available financial resources in other areas, such as staffing, training, and research and development – key areas that underpin the sector’s ability to make a vital contribution to raising healthcare service quality.