The Application of the Total Cost of Ownership Approach to Medical Equipment—Case Study in the Czech Republic

Abstract

Czech hospitals purchase the most expensive medical technology using public procurement process and they often make their purchasing decisions based on the lowest bid price. However, the management of hospital in most cases is unaware that the purchase price is only a minor part of the total cost of ownership of the equipment. This study intended to assess the nature of the Total Cost of Ownership (TCO) method in applications to medical equipment in the Czech Republic, and to carry out TCO analysis for selected medical equipment units. In order to evaluate the awareness and utilization of TCO in Czech hospitals, a quantitative research method (questionnaire) was used. The questions were addressed to the investment departments of the hospitals. To accomplish the research objectives, a TCO analysis for selected medical devices (X-ray machine, SPECT/CT and ultrasound scanner) was conducted. For each piece of equipment, four cost items were considered: acquisition cost; maintenance cost; operational cost and the cost of disposal. The results of questionnaire survey demonstrate that the TCO method was unknown to most of the respondents (67%) and the respondents usually make decisions based on the purchase price of medical equipment. All respondents who have already used the TCO method indicated that this method was useful to them. The results of the case study imply that the operating cost for the selected devices over five years are comparable to the purchase price. SPECT/CT scanner was the only one unit, where the acquisition cost was higher than the operational. In case of purchase of expensive medical technology, health care facilities often make decisions on the basis of the lowest bid price. According to the calculated TCO, this parameter is not the only important cost driver in the life cycle of medical equipment in hospital.