Mira 2011 Athens Business Class Vassilis Bardis Athens Medical Center
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This document outlines an investment business plan for establishing a robotic surgery program at Athens Medical Center. It discusses evaluating the costs of robotic surgery compared to alternative procedures. A key part of the plan is developing an activity-based costing model to accurately assess the true costs. The plan also covers initiating the program, including dedicating an OR room, assembling the robotic surgery team of a leading surgeon, nurses, and assistants. Training programs for staff and residents are also important. Monitoring outcomes and the economic feasibility is essential for the long-term success of the robotic surgery program.
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Mira 2011 Athens Business Class Vassilis Bardis Athens Medical Center
- 1. Investment Business Plan for aRobotic Surgery Program. Athens Medical Center VASSILIS BARDIS COO ATHENS MENTICAL CENTER DLSHTM , MSc HSM.
- 2. 1983 : foundation of Athens Medical Center Today, leading role in the field of health care in southeastern Europe. Listed in Super brands catalogue Forbes Magazine ranks us among the 200 most important companies in the world European Business Magazine : 100 most important Companies President of Athens Medical Group, Dr. G.Apostolopoulos
- 4. 7th : Thessaloniki –Transbalkanic Center
- 8. > 15.000 patient / year
- 9. > 9.000 surgeries /year
- 11. The successful strategic and business plan requires not only the evaluation of robotic costs, but the evaluation of relative costs such as lost labor cost e.t.c which have influence in patients decision making
- 13. of the associated material, staff recruitment and/or staff trainingPossible operating room (OR) modifications necessary ->to support the console and other equipment. ->recruitment of a leading surgeon or his development.
- 14. Evaluation of the growth potential key element Use market analysis to estimate the impact of the new program on the institution. Additional aspects: study of the population and the competition, analysis of reimbursements payers
- 15. The Surgical Volume strictly connected to the learning curve and to the quality of outcomes three to five cases per week during the initiation of the program are necessary to obtain continuity in the learning curve (Ohio State Uni).
- 16. Establishment of an economic model Crucial With Activity-based costing and management (ABC) or alternative models
- 17. ABC Acosting model that identifies activities in an organization assigns the cost of each activity resource to all products and services it assigns more indirect costs (overhead) into direct costs.
- 18. Additional costs ( per case ) Personal costs (per day) Personal costs (per day) Preoperative Surgery Material costs (per day) Material costs (per day) Cost of capital (per day) Cost of capital (per day) Administration costs (per day) Personal costs (per day) Anesthesiology Personal costs (per day) Material costs (per day) Total cost Operative Material costs (per day) Cost of capital (per day) Cost of capital (per day) Consumables Robotic operation (per day) Administration costs (per day) Laparosc. operation (per day) Amortization Personal costs (per day) Robotic system (per day) Postoperative Material costs (per day) Laparosc. System (per day) Operating room Ward Cost of capital (per day) Administration costs (per day) Principle of the cost analysis
- 19. Cost of robotic surgery relative to alternatives
- 22. In current economic climate it is equally important for medical institutions and patients alike to consider the financial impact of treatment decisions.
- 23. ABC Establish the true cost of its individual products and services Able to eliminate those which are unprofitable Able to lower the prices of those which are overpriced.
- 24. Purchase of a robotic system a significant cost associated with da Vinci’s purchase $1.2–1.7 million USD per case disposable fee for the robotic instruments; $200 per instrument used maintenance contract of $100,000 USD yearly per system
- 25. Cost analysis - Economic feasibility check the cost of the surgery, 2) the reimbursement (according to the different health systems).
- 26. Cost of surgery analysis of the variable costs and the fixed costs
- 27. Variable Costs related to all those activities that are necessary to produce the surgical performance (such as disposable tools, medications etc.).
- 28. Fixed costs represented by the overall OR time dedicated to robotics and the purchase of the system. a high surgical volume center can have an impact in terms of variable costs reduction;
- 29. Reduction of cost hence, the best chance to increase surgical volume and therefore to reduce costs the use of the da Vinci system with our surgical teams, as gynecologists, general surgeons and other specialties.
- 30. Cases per year in Athens Medical Center
- 31. Most Frequent Robotic Procedures
- 32. Robotic Laparoscopy and Prostatectomy Cases per year in Athens Medical Center
- 33. Mean Robotic cost per procedure in Athens Medical Center
- 34. L.o.S per relative procedures in Athens Medical Center
- 35. Comparing Alternatives to a given health intervention (x) Costs more Robotic procedure’s point Alternative is worse in both respects More Effective X Less Effective Alternative is better in both respects Costs less Status quo
- 37. Administrative Dedicated robotic program manager to Coordinate administrative staff Connect clinicians’ work and marketing plan Website management Patients’ information
- 38. Implementation Dedicated OR room The robotic team The leading surgeon The operating room nursing staff (SN) The surgical physician assistant (PA) Surgical fellows and residents
- 41. Specific stock (short life of many disposable instruments)
- 42. Extra instruments (in case of malfunctioning). Large OR (60 m2) / LCD screens / tech controls
- 44. Plan the strategy for scaling the learning curve and the growth of the program
- 45. Coordinate and to take care of the team and its training
- 47. Share costs over volume
- 49. Creation of scientific network
- 55. Coordinate with the PA; providing sutures, instruments and helping taking care of the camera.
- 57. Needs to have a perfect coordination with the leading surgeon and the scrub nurse
- 60. Adequate teaching programs allow for an effective increase of fellows’ experience with no impact on patients’ outcome (15).
- 61. Robotic training for residents challenge for the supervising surgeon(remote console, lack of haptic feedback).
- 63. Thus, Building a successful robotic program means taking into account many details such as economics organization and teaching
- 65. The coordination of team work
- 66. Careful review of outcomes
- 67. A complete and accurate strategyfrom the beginning
- 69. Business plan
- 71. Acquiring the da Vinci® Surgical System a strategic initiative with a three-to-five year business plan Return on investment depends upon volume and complexity of surgical procedures routinely performed with robotic assistance.
- 72. Potential Procedural Cost-Shifts decreased intra-operative minutes decreased hospital length of stay decreased consumption of routine post-op surgical care needs, such as IVs, narcotics, blood transfusions, wound care management & nursing care surveillance avoidance of intra-operative conversions avoidance of post-operative wound infections
- 73. Business Development Metrics New direct referrals for elective surgical procedures New referrals to ancillary services in the hospital’s continuum of care pre- & post-robotic surgery, such as Radiology, Laboratory, Cancer Center, etc. Market share shifts beyond customary primary & secondary service catchment Shift in payer mix to a younger, insured patient population Change in private payer contract terms, in particular shift from per diem to case rates Change in open surgical volume to minimally invasive surgery volumes Change in adverse surgical events reported by Infection Control & Quality Assurance Reduction in surgical re-admission rates
- 74. Coding Considerations American Medical Association (AMA)
- 75. Laparoscopic Radical Prostatectomy with robotic assistanceICD-9-CM Procedure Code 60.56ICD-9-CM Procedure Code 17.42 Total number of cases performed Length of stay (range & average) Age of patient (range & average) Name of payer Type of reimbursement (MS-DRG, Case Rate, Percent-of-Charges) Amount of reimbursement for each case Cost per case (not charge)
- 76. 3-D ValueBudgeting for Change Clinical: Conversion of complex open surgical procedures to minimally invasive procedures Financial: Operational direct patient care efficiencies Strategic: Change in business practices (new patient referrals, broader market share, shift in payer mix and contract term corrections)
- 77. Will Robotics become commonplace? depends on a number of factors in the private healthcare climate it can justify its high price tag through the added business a hospital can attract using a prestigious device such as the da Vinci
- 78. 1st factor: Hospital ‘s Investment Plan However the Health Insurance Plan usually pays the same amount to the hospital for a robotic surgery as it does for the same laparoscopic procedure in many countries. the difference in cost for each operation must be covered by the hospital, leaving only the largest centers with the potential for operating a system like the da Vinci
- 79. The $4.5 million investment covers the system training Support and five years worth of “disposables,” the one-time use items which are discarded after every operation
- 80. After five years, however, the hospital must cover the disposable costs on its own, which at approximately $2800, are $2000 more expensive than laparoscopic surgery per operation.
- 81. 2nd factor of acceptance: doctors A next step in surgery’s evolution, or just another gimmick ? 2006 poll of urology residents in Canada and the U.S. found that over half of the respondents believed that robotic surgery “looked promising but was not currently the gold standard,” with only 30% responding that “they would be performing robotic surgery after residency.”
- 82. Increased number of systems exposure of doctors to robotic surgery, and access to specialized training, it is becoming more common with over 1000 da Vinci systems in 36 countries worldwide
- 83. Realization on a larger scale depends on whether they are perceived as significant enough to warrant the sizable outlay of investment from the finite resources of the healthcare system.
- 84. Technology of tomorrow is already here but until it can be reconciled with today’s economic realities it will remain more a novelty than an effective means of improving the health of patient population on a significant scale
- 85. Conclusion robotic surgery as it exists today represents a powerful new tool in the modern surgeon’s armament improving on many of the shortcomings of laparoscopy with the addition of special features that can enhance a surgeon’s own natural abilities.
- 86. THANK YOU FOR YOUR ATTENTION.
Editor's Notes
- Scandinavian Journal of Surgery 98: 72–75, 2009BUILDING A ROBOTIC PROGRAMB. Rocco1,3, A. Lorusso2, R. F. Coelho3, K. J. Palmer3, V. R. Patel31 Division of Urology, European Institute of Oncology, Milan, Italy2 Senior Planning and Control Department, European Institute of Oncology, Milan, Italy3 Global Robotic Institute, Florida Hospital Celebration Health, Celebration Florida, University of Central Florida School of Medicine, U.S.AKey words: Prostate cancer; prostatectomy; robot; da Vinci; laparoscopically naïveBusiness plan developmentThe establishment of an economic model is crucial for a robotic program. An accurate due diligence is important to establish the economic boundaries that each institution has to deal with
- ; the development of the business plan requires an evaluation of the direct costs (such as buying the robotic system) and of the associated material, staff recruitment and/or staff training. Possible operating room (OR) modifications could be necessary to support the console and the other equipment; a further necessary action is the recruitment of a leading surgeon or his development.
- A further key element is the evaluation of the growth potential; for this particular purpose, a thorough market analysis will help to estimate the impact of the new program on the institution. A study of the population and the competition, the analysis of reimbursements and payers are additional aspects that conclude the evaluation.
- One of the key steps to pursue a successful robotic program is the surgical volume. It is strictly connected to the learning curve and to the quality of outcomes. According to the experience of the Ohio state university, three to five cases per week during the initiation of the program are necessary to Authors report a significant increase in surgical volume since the introduction of the robotic program, from 40 to 350 cases per year within five years (12). obtain continuity in the learning curve.
- Furthermore, the establishment of an economic model is crucial for a robotic program. Activity-based costing and management (ABC) or alternative models seem appropriate approaches to develop a business plan related to robotic surgery.
- ABC is a costing model that identifies activities in an organization and assigns the cost of each activity resource to all products and services according to the actual consumption by each: it assigns more indirect costs (overhead) into direct costs. In this way an organization can establish the true cost of its individual products and services for the purposes of identifying and eliminating those which are unprofitable and lowering the prices of those which are overpriced.
- Purchase of robotic systemThe da Vinci robotic system has a significant cost associated with its purchase. The cost of the robot is approximatel $1.2–1.7 million USD depending upon the type of system purchased. In addition there is a per case disposable fee for the robotic instruments of approximately $200 per instrument used. There is also a maintenance contract of $100,000 USD yearly per system (11).
- In order to make a cost analysis and therefore to check the economic feasibility of the purchase of a da Vinci system, we need to evaluate the following items:1) the cost of the surgery, 2) the reimbursement (according to the different health systems).
- The cost of surgery can be evaluated with an analysis of the variable costs and the fixed costs.
- Variable costs are related to all those activities that are necessary to produce the surgical performance (such as disposable tools, medications etc.).
- Fixed costs are represented by the overall OR time dedicated to robotics and the purchase of the system. It is clear that a high surgical volume center can have an impact in terms of variable costs reduction; hence, the best chance to increase surgical volume and therefore to reduce costs is to share the use of the da Vinci system with our surgical teams, as gynecologists, general surgeons and other specialties.
- Initiation of the programThe beginning of any robotic program can be challenging as multiple members of the team are learning the technology and their own personal roles on the team. Not with standing the robotic learning curve could be considered less challenging than laparoscopic one in terms of surgical procedure, there are many aspects that beyond the surgical act need to be developed at the beginning of the experience. Robotic docking and undocking, use of disposable instruments, assisting at the bedside far from the console: all the different people involved in the robotic program have their own learning curve; therefore it is of major importance to define which robotic procedures need to be performed at the beginning, since the main goal of a robotic team is to standardize the procedure as soon as possible.
- Administrative staffBeside the clinical team, a dedicated robotic program manager is necessary to coordinate administrative staff, connect the work of clinicians with the marketing plan of the institution, make sure that the website is up-to-date, patients’ information of the robotic system and other crucial applications.This way, the clinician can be more concentrated on surgical works and the program manager could accurately monitor the growth and all the other collateral activities.
- MaintenanceData collectionStarting a new surgical program should suggest a frequent update and audit regarding efficiency, outcomes and patient satisfaction. In addition, it is advisable to present and share a new experience with colleagues during meetings and scientific events or reporting it as peer reviewed papers in order to improve quality and to share knowledge and findings. An appropriate and prospective data collection is mandatory. A simple, easy to read database should include all the information; validated self administered questionnaires should be used as evaluation methods and strict follow up should be carried out particularly for oncological diseases. Outcomes should be monitored regularly, in order to constantly monitor the outcome of the new surgical approach. A comparison with the previous adopted technique will be useful to evaluate possible advantages due to the advent of the new technique (16). Clinically it is also helpful to record each of the early cases and review them with the team to evaluate progress and plan a common approach to the procedure. A complete collection of video recorded surgical procedures is mandatory for surgical audits and for training of fellows and residents.Monitoring the economic feasibilityA previously reported econominc feasibility study at an academic institution (12) concluded that the cost of medical and surgical supplies, including the cost of instruments accounted for 45% of total average direct cost and approximately one-third of average total cost. Operating room services and therefore, duration of OR utilization accounted for almost 30% of total average direct cost and 35% of the total cost per procedure, respectively. Projecting an increase in the number of procedures performed per year from 100 to 500 reduced costs by around 18%, based on the cost of the robot, and maximal change in costs was seen in increasing volumes from 20 to 100 cases per year.Training and educationOnce the program is launched, maintenance implies the enlargement of the surgical staff. Residents and fellows are involved in surgical activities with the supervision of a PA and primary clinician, beginning their surgical activity as bedside assistants, after an initial experience watching at least 20 cases.It is noteworthy that surgical procedures performed using a camera have many advantages in terms of training. The video monitors and recorders allow the trainee to watch the procedure with the same field of vision as the operator and it is easier to create a complete video data base that can be used for further and future training. Growth All the aspects involved in the robotic program need to be checked periodically. Together with the program manager, the leading surgeon needs to assess the economic sustainability of the program; a breakdown of all parameters allows for an accurate check of materials and waste assessment. Considering the elevated costs, a reduction in OR time is one of the most important items to be checked to increase the economic feasibility of the project. Obviously, the most important thing is the clinical evaluation. Matching databases and literature to compare the results of the new technique with the gold standard procedures and with other groups performing robotic programs can help monitor surgical quality. Only if the auto-assessment reveals satisfactory outcomes, a further increase of the activity with new investments in terms of materials (another robot) and / or HR (surgeons, PA etc.) can be considered.Nevertheless, an accurate market analysis needs to be renewed before the investment occurs, to match the chance of offering much more surgical volume and the real necessity of this increase.
- According to the literature, robotic surgery has a less steep learning curve when compared to laparoscopy; particularly for a procedure such as radical prostatectomy. Building a successful robotic program means taking into account many details such as economics, organization and teaching. The keys for success are directly related to the infrastructure supporting the program, coordination of team work and careful review of outcomes.To create, maintain and grow a robotic program, it is of utmost importance to build a complete and accurate strategy from the beginning. The risk-benefits analysis, the business plan and the leading surgeon are key factors for success.
- The keys for success are directly related to the infrastructure supporting the program, coordination of team work and careful review of outcomes.To create, maintain and grow a robotic program, it is of outmost importance to build a complete and accurate strategy from the beginning. The risk-benefits analysis, the business plan and the leading surgeon are key factors for success.
- Magazine: Physician Oct 2006ConsumerdemandSome national experts saythe drive toward wider useof robotic surgery will notcome from doctors, many ofwhom are used to doing surgerythe traditional way. However,consumers increasingly aredemanding the latest innovations.Advanced technology also may helphospitals recruit young surgeons to theirmedical staffs. “The younger generation ofsurgeons look for institutions that have thelatest in robots,”Kwart notes.“Some of our competitors already haverobotic surgery,” Kwart concludes. “Patientsare demanding the latest innovations. Let’sget started and remain competitive.”
- Kathryn Barry, MPH, MSN, RNHealth Policy Specialist for Intuitive® SurgicalRe: Planning for Long-Term Success with a Robotic Surgery Program2009
- Acquiring the da Vinci® Surgical System is a strategic initiative that should be associated with a three-tofive-year business plan. Return on this investment depends upon both the volume and complexity oflaparoscopic surgical procedures routinely performed with robotic assistance.
- the operating room mayfocus on procedural line-item cost-analyses, but the Finance Department should maintain a focus onstrategic business development metrics
- During the due diligence process, the hospital’s coding department should review Intuitive Surgical’s“Laparoscopic Robotic Surgery Coding and Reimbursement” document (PN 871971). Its purpose is tobriefly share education and information consistent with decisions made by the American MedicalAssociation (AMA), Centers for Medicare and Medicaid Services (CMS) and leading payers, assummarized in Table 6.
- Before delving into a comprehensive financial analysis, a baseline query of the hospital’s most prevalentrobotic-assisted laparoscopic procedure — such as laparoscopic radical prostatectomy — helps to identifyany programmatic issues that require correction
- In conclusion, a paradigm shift in healthcare financing will inevitably cause a shift in healthcare deliverydecisions. Shifts from cost-accounting to new financial metrics that reward quality and efficiency are onthe horizon. Hospitals that pursue a multi-specialty robotic surgery program should be guided by thedynamic interaction of cost-accounting, strategic planning and business development principles.Oversight requires a multi-disciplinary team, chaired by a Financial Director experienced in monitoring astrategic investment. As a new service line for the Department of Surgery, three strategic shifts are desiredmanagement outcomes
- On the Cutting Edge: Robotic Surgery's Renaissance Toronto 2009Whether robotic surgery in its current incarnation becomescommonplace in Canada depends on a number of factors.Robotic surgery in the private healthcare climate of the UnitedStates can justify its high price tag through the added business ahospital can attract using a prestigious device such as the daVinci.
- However, the Ontario Health Insurance Plan pays thesame amount to the hospital for a robotic surgery as it does forthe same laparoscopic procedure.26 This means the differencein cost for each operation must be covered by the hospital, leavingonly the largest centres in Canada with the potential foroperating a system like the da Vinci. Exacerbating this expensebeyond the initial sale price is the actual operating cost of the daVinci.
- The $4.5 million investment covers the system, training,support, and five years worth of “disposables,” the one-time useitems which are discarded after every operation.
- After five years,however, the hospital must cover the disposable costs on its own,which at approximately $2800, are $2000 more expensive thanlaparoscopic surgery per operation.26
- Another factor important to widespread acceptance iswhether doctors consider robotic surgery as the next step insurgery’s evolution, or just another gimmick. A 2006 poll ofurology residents across Canada and the U.S. found that overhalf of the respondents believed that robotic surgery “lookedpromising but was not currently the gold standard,” with only30% responding that “they would be performing robotic surgeryafter residency.”5
- Still, with the increased number of systems exposure of doctors to robotic surgery, and access to specializedtraining, it is becoming more common with over 1000 da Vincisystems in 36 countries worldwide.9 For example, the number ofurological procedures performed worldwide with the da Vincisystem has continued to increase from 1500 to 20 000 to 36 000in the year 2000, 2005, and 2006 respectively.28 In 2003, LondonHealth Sciences Centre was the first hospital in Canada to usethe system.29 Other cities in Canada that have the systeminclude: London, Montreal, Toronto, Edmonton, andVancouver.
- Whether theseimprovements can ever be realized on a larger scale depends onwhether they are perceived as significant enough to warrant thesizable outlay of investment from the finite resources of ourhealthcare system.
- The technology of tomorrow is already here,but until it can be reconciled with today’s economic realities itwill remain more a novelty than an effective means of improvingthe health of Canadians on a significant scale. Leonardi daVinci’s designs ranged from the revolutionary, in the moderntank, to the ultimately unrealized in the ornithopter, an ill-fatedflying machine. Where on this spectrum the da Vinci surgicalsystem falls, only time will tell.
- ConclusionThere is no question that robotic surgery as it exists inCanadian hospitals represents a powerful new tool in the modernsurgeon’s armament, improving on many of the shortcomingsof laparoscopy, with the addition of special features that canenhance a surgeon’s own natural abilities.