Monday, April 21, 2014

Those of you who had any doubt at all about the points I raised in my recent post about how the daVinci robot system has extracted funds from the health care system, check out this story by Jaimy Lee and Harris Meyer on Modern Healthcare, "Surgical Robot Costs put Small Hospitals in a Bind."  Excerpts:

Memorial Hospital of Converse County last year purchased a $2 million da Vinci Surgical System, the second hospital in Wyoming to do so. Memorial executives said they expect their facility to perform about 100 robotic surgeries a year. That's far below the estimated volume experts say is needed to produce a viable financial return within six years on the robotic system, whose average cost ranges from $1.5 million to $2 million.

Memorial, which reported an operating loss of $2.2 million in the first half of fiscal 2014, used cash reserves to buy the da Vinci system, manufactured by Sunnyvale, Calif.-based Intuitive Surgical. Memorial said 40% of its cost will be reimbursed by Medicare as a capital expense because it is a critical-access hospital.

Ryan Smith, the hospital's CEO, said he doesn't mind if it takes awhile for the pricey new piece of equipment to pay off because it's already attracting patients who previously would have traveled to other hospitals in Colorado or Utah to get robotic surgery. Also, it helps his hospital recruit and retain surgeons, and is expected to reduce surgical complications and lengths of stay. “We did not buy the da Vinci system to get a very high return on investment,” Smith said. “It was the right thing to do for our patients.”

While overall sales of da Vinci systems are on the decline, a number of small and rural hospitals are considering following in Memorial Hospital's footsteps, believing it will help them attract and retain surgeons and appeal to patients. The government system for financing critical-access hospitals helps underwrite some of the costs.

But small hospitals going down that path will face the same issues now confronting major systems that have installed surgical robots. Some studies have raised doubts about whether robotic surgery offers better outcomes than standard laparoscopic procedures. And Intuitive Surgical faces dozens of product liability lawsuits across the country filed by patients who claim injuries from the device. 

[By the way, notice how the hospital's website above, promises: "reducing outpatient recovery times, blood loss, and pain."  See my earlier post for documentation of how these claims are unsupported by the evidence.] 

For critical-access hospitals, Medicare helps subsidize the purchase as a capital expenditure on a depreciated basis, calculated by what percentage of patients are Medicare beneficiaries. But “it's a big question in terms of priorities and where your scarce resources are best used,” said Brock Slabach, senior vice president of the National Rural Health Association. “Patients perceive it to be better. But is the cost worth the benefit?”  

More small hospitals view the da Vinci system “as a tool they need to recruit and retain surgeons and to stay viable,” said Liz Tiernan, a consultant in the Advisory Board Co.'s research and insights groups. “It is considered a standard of care .… but it's rarely financially viable for them.”

[W]hen surgeons at a smaller hospital don't reach the estimated proficiency threshold, that raises questions about the adequacy of their experience. “It becomes even more difficult to justify this decision,” Tiernan said. 


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