In 2019, the average US hospital had an operating margin of just 2.1%. Across industries, this level of profitability is almost unseen.
In 2019, the average US hospital had an operating margin of just 2.1%. Across industries, this level of profitability is almost unseen. What it means is that US hospitals are struggling – in normal times – to remain profitable, and in most hospitals, having profitable service lines (like orthopedics and cardiology) make up for losses on service lines that routinely are a loss (like emergency services and intensive care units) has been and is the order of the day. Unfortunately, the closing of elective procedures has meant that this equation no longer works – elective procedures are typically the profitable ones. The closing of elective procedures was important, because it protected healthcare workers and patients from mass infections, but it also raked havoc on hospital finances. Modern Healthcare reported that hospital revenue fell 40-60% and YTD March operating income across US hospitals is negative 8.1%. As elective procedures gradually open, it is critically important that profitable service lines are re-established quickly, safely, and with economics that make sense, so the hospital can get back on its feet.
Modern Healthcare reported that hospital revenue fell 40-60% and YTD March operating income across US hospitals is negative 8.1%.
Electrophysiology procedures and single-use device reprocessing plays an important role in this. Atrial Fibrillation and other EP procedures are among the fastest growing in US healthcare, and US hospitals spend an estimated $3.2 BILLION in medical device costs in these procedures every year. Single-use device reprocessing has the potential to inject around $900 Million in savings into this equation, helping hospitals get back on their feet and – longer term – have a more solid foundation for addressing dramatic shifts in healthcare demands.
How hospitals can reduce costs through better utilization of single-use device reprocessing, will be particularly relevant as administrators and clinicians prepare for the reopening of EP labs—and subsequent pent-up demand for “elective” procedures—when this ongoing health crisis recedes. Pent-up demand expands the financial impact of each service provided: If procedures are profitable, the profit contribution of the service line will be greater. If procedures are not profitable, the loss contribution of the service line will be greater. In either scenario, reducing the device costs of an EP procedure by up to 30%, will make a greater-than-normal difference.
The message to the medical device vendor HAS to be: Now is not the time to play games and stop us [the hospital] from getting back on our feet.
What is required for single-use device reprocessing to make a difference for EP labs and hospitals today is a) the commitment of the reprocessor, and b) the willingness of EP lab management to carry out difficult discussions with medical device vendors, who have traditionally prevented the hospital from making optimal use of reprocessed device savings. The message to the medical device vendor HAS to be: Now is not the time to play games and stop us from getting back on our feet. We need a new relationship where every single device is utilized to its maximum potential, and you need to support this. As our CEO, Rick Ferreira says in this video, “reprocessing should… no, reprocessing MUST be part of a new supply chain strategy.”
"...reprocessing should... no, reprocessing MUST be part of a new supply chain strategy."
Innovative Health wants to help EP labs across the country address this difficult situation. So we are providing an unprecedented 50% off of the most expensive devices we sell for a 60 day period after the EP lab re-opens. It will take commitment and dedication for EP labs to take advantage of this – but it is time for it to happen.