“I am Free to Focus on More Important Tasks Now”
How a Managed Equipment Service Contract Helps a Canadian Healthcare Provider Deal with Market Conditions
Aug 24, 2016
With three sites, almost 6,800 employees, and a catchment area of over 1.3 million people, the William Osler Health System is one of the largest community hospital systems in Canada. For the next 15 years, Osler will be relying on a managed equipment services contract to keep its medical imaging equipment up to date.
New Equipment for Best Diagnostic Care
“Two years ago, the question of how we were going to replace aging equipment used to keep me awake at night,” explains Joe-Anne McCue, Director of Diagnostic Imaging and Laboratories at the William Osler Health System (Osler). Dr. Joe Fairbrother, Corporate Chief of Radiology at Osler, adds: “Our second facility opened about eight years ago. All the equipment was new then. Now it is aging, and in order to provide the best diagnostic care, some of it will have to be replaced. However, like in most hospitals, the annual capital budget is really not sufficient to meet the required replacement cycle.”
Increasing Volumes and Additional Services
Osler is one of the most important healthcare providers for Greater Toronto. Currently, it operates two full-service community hospitals and is in the process of redeveloping its third site. “We have a significant near-term and mid-term vision. Patient volumes for diagnosis and treatment will increase across all our services – but particularly in diagnostic imaging,” comments Fairbrother. In 2015, his department performed roughly 500,000 exams, with patient satisfaction and confidence being extremely important to McCue and Fairbrother. “We want to provide appropriate imaging services that are very high quality, delivered in a timely way, and in a very reliable and accurate manner,” says Fairbrother.
Osler’s activities also focus on proactive health management. “Proactive healthcare and wellness services are much cheaper than treating patients for a certain disease. So we are trying to keep patients well and out of hospital,” McCue explains. The newly developed site in particular will provide services such as screening for lung, colon, and breast cancer. To be able to offer dedicated health management services, the facility will be equipped with full diagnostic imaging equipment when it opens in early 2017.
The Canadian Healthcare System1
Canada’s healthcare system, Medicare, is mainly publicly financed and provides universal coverage for all residents. Medically necessary hospital and physician services are free at the point of service. Out-of-pocket payments and private health insurance (PHI, mostly employment-based insurance for non-Medicare goods and services including prescription drugs, dental care, and vision care) complement the Medicare system. Canadians are generally satisfied with the financial protection offered by Medicare. However, access to healthcare is sometimes difficult, particularly regarding access to physicians and longer waiting times for non-urgent surgery.
About 70 percent of Canada’s total health expenditures are covered by general tax revenues of the federal, provincial, and territorial governments. The governance, organization, and delivery of health services is highly decentralized, with the provinces and territories responsible for administering Medicare and planning health services. Most Canadian hospitals are funded through global budgets, either directly by ministries of health, or indirectly through budget allocations to regional health authorities.
Expectations of a Partner
In order to keep its diagnostic imaging devices up to date and to equip the new site, Osler’s management decided to enter into a long-term partnership with Siemens Healthineers, and signed a managed equipment services (MES) contract in 2015. For the next 15 years, management services and solutions for the majority of Osler’s medical imaging equipment will be provided. Osler’s management had clear expectations of its partner. “I am expecting both local and global support. Siemens can get in touch with hospitals all over the world easily and share its best-practice examples. This might help us to move our new business ideas along,” explains McCue.
Another aspect that is of great importance to McCue is flexibility: “The contract needed to be flexible enough so that we can adapt and change it as our own needs adapt and change over the years,” she adds. Fairbrother points out that Osler was also looking for a partner who would be able to support them adequately in equipment procurement. “Obviously, procurement is not the focus of our activities. Having access to experts who know the capabilities of technology and who can help align that technology to our clinical requirements brings significant value. Siemens has also provided us with a much more sophisticated approach,” Fairbrother says.
Budget Planning Becomes Easier
“In Canada, hospitals are given a capital equipment budget, which they can use to purchase necessary equipment such as surgical instruments, beds, wheelchairs, and so on. However, buying just one imaging device, for example a CT scanner, could take up the year’s entire budget for the whole hospital,” McCue explains. As a consequence, replacing costly medical imaging equipment was not always possible in previous years.
“With the MES contract, we can now plan our replacements for the appropriate time when the equipment is obsolete. I cannot remember a time – and I have been chief of the department for many years – when I could sit in my office and feel confident that I had a capital plan for all pieces of equipment in the department,” Fairbrother says. He can now spend more time on other management topics. “I am free to focus on more important tasks in the department now, like improving clinical quality and patient experience. This is a very significant benefit of the MES contract, and the way of the future.”
1Marchildon, Gregory P.: Canada. Health system review; in: Health Systems in Transition; Vol. 15 No. 1 2013; http://www.euro.who.int/__data/assets/pdf_file/0011/181955/e96759.pdf (accessed April 29, 2016)
The statements by Siemens’ customers described herein are based on results that were achieved in the customer's unique setting. Since there is no "typical" hospital and many variables exist (e.g., hospital size, case mix, level of IT adoption) there can be no guarantee that other customers will achieve the same results.