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Technology and rising costs top healthcare equipment trends

By Amy Thomas Posted August 23, 2019

doctor of the future in healthcareTwo continuous threads—rising costs and transformative technology—weave through all of the major healthcare industry trends and issues detailed in a new report on U.S. healthcare and equipment acquisition by the Equipment Leasing & Finance Foundation.

An eye on the future

Called the Vertical Market Outlook Series: Healthcare, the study examines a wide variety of topics related to healthcare, an industry that is not only one of the most significant economic drivers in the U.S. but also encompasses a growing social issue as well. In 2017, healthcare’s share of Gross Domestic Product (GDP) was 17.9%.

In fact, healthcare spending was $3.5 trillion in 2017, which equates to $10,379 per person. By 2027, the Centers for Medicare & Medicaid Services expect healthcare spending to reach $6 trillion, making up more than 19% of GDP.

The report provides an outlook on the U.S. healthcare sector, demographic and spending trends, as well as expected developments and impact over the next two years. It is the third release of the foundation’s forward-looking Vertical Market Outlook Series designed to help readers recognize and understand challenges and opportunities that may affect their businesses.

Besides costs and technology, the report examines the rapidly aging population, growing labor shortage, disruptive forces stemming from technology, and government regulation.

"The industry is changing rapidly in ways both large and small," the report says, "and there’s little indication that the rate of change will slow in the near term."

Market disruptors abound

Disruption is a strong factor in the healthcare industry. Hospitals are forced to deal with falling profits and competition as the traditional healthcare business model fades.

Despite the falling profits of traditional providers, the healthcare technology market is expected to grow nearly 16% between 2016 and 2021, when it is projected to be worth more than $280 billion, according to Deloitte's 2019 healthcare outlook.

In the meantime, large tech companies such as Apple, Google and Phillips are working on disrupting the market through new systems, applications and services.

Delivery shifts to value-based care

Healthcare systems are increasingly focusing on value- and outcomes-based reimbursement. Deloitte expects this shift to cause healthcare systems to embrace new business, care delivery and risk models to create the kind of affordable, high-quality healthcare solutions needed in the future. One of those changes is the move away from volume-based/fee-for-service (FFS) care models to value-based care (VBC).

Digital technology investment expected to rise

Investment in technologies like blockchain, artificial intelligence (AI), virtual/augmented reality and predictive analytics will help transform healthcare by helping doctors diagnose and treat patients, while also improving the patient experience.

At the same time, the use of robots for surgical and other procedures is expected to grow, with surgeons focusing more and more on the minimally invasive surgeries that are ideal for surgical robotic equipment.

Equipment acquisition processes shifting

There is no consistent equipment acquisition process recognized either in the U.S. or globally, according to Health Facilities Management. The equipment acquisition process varies across healthcare systems. Not only does an inconsistent process require more time, increase cost, and raise performance issues, it can also result in equipment being chosen by a single clinician who does not talk to in-house experts, the report says.

In order to optimize procurement, a multidisciplinary group of internal experts needs to collaborate and plan, starting with the initial stages of equipment selection all the way through to a go-live date.

There are several factors in healthcare technology purchases that also play a part in the process:

  • Keeping up with other institutions
  • Offering the latest care options
  • Changes in staff, including recruiting and retaining top talent

Healthcare systems also must address aging equipment or standalone equipment like Computed Tomography [CT] scanners, radiology equipment, and linear accelerators. Availability of parts and service for existing equipment are also important factors in determining the need for equipment replacement.

Big dollars invested in healthcare equipment

U.S. entities will spend more than $1.8 trillion on fixed business investment and capital goods in 2019, with capital spending growing at a more moderate rate of about 4% compared to nearly 8% in 2018, according to the 2018 Equipment Leasing & Finance Industry Horizon Report.

The Equipment Leasing and Finance Association (ELFA) reported medical equipment as the fourth-hottest equipment market for future financing volume, behind construction, trucks/trailers, and machine tools.

"Despite the industry’s preference for leasing equipment, there are some downsides, namely reimbursement cuts that are making for weaker areas within medical equipment," the report says. "In 2017, reimbursements were cut for analog X-ray and in 2018 for computerized radiography, in an effort to push providers to digital radiography."

ELFA members weigh in on question

In the 2019 Equipment Market Forecast "What's hot/what's not" section, the ELFA asked its members whether they expected the volume of specific equipment types to increase in the coming year, decrease or stay about the same. Members responding to the survey expected to book more in medical equipment in 2019 compared to 2018.

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