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Hospitals can save millions of dollars with MES contracts

por Lauren Dubinsky, Senior Reporter | August 29, 2016
Parts And Service
From the August 2016 issue of HealthCare Business News magazine

In May, Siemens announced a contract with Sandwell and West Birmingham Hospitals (SWBH) NHS Trust in the U.K., which includes the Midland Metropolitan Hospital that will be open in October 2018.

The Trust decided to partner with Siemens because of the various challenges it’s facing, including an increased workload, budgetary pressures and a 10 percent to 15 percent year-on-year rise in demand for CT and MR imaging.

GE signed a 39-year contract with the University Hospital Coventry, as part of a public private partnership/private finance initiative project. The contract covers radiology, cardiac, neonatal, critical care and more.

GE ensures that all of the risks related to medical equipment supply, services and refreshes are appropriately structured and that the price remains predictable over the contract period.

GE also signed a 10-year contract with Beacon Hospital in Ireland that covers diagnostic imaging. The hospital and GE are working together to achieve its goal of keeping the radiology department’s capabilities state of the art.

Health systems in the U.K. receive a tax advantage when they sign MES contracts. Tax laws favor technology provided as a service.

Another financial benefit is that Siemens provides the funds in advance to purchase the full fleet of equipment and the Trust pays it back on an annualized or monthly basis.

“Most of the health systems globally today face capital caps,” says Siemens’ Pagaria. “Their capital budgets are coming down from the government, which means they have aging fleets. They have a desperate need to upgrade the technology, but there is no capital investment to do it.”

Siemens recently launched MES contracts in the U.S. and is already in talks with several potential customers.

“We’re bringing it to the U.S. because we see significant changes in the market with consolidation, price pressures and regulatory changes,” says Lisa Collins, vice president of enterprise services at Siemens. “The customers desire this kind of relationship through long-term partnerships to be able to gain benefits, especially when it comes to optimization and rationalization of all of their equipment as they bring together other facilities.”

When health systems consolidate, they inherit a huge fleet of medical technology that needs to be optimized as one system, according to Pagaria.

“Both in the U.S. and with our customers worldwide, we are looking at defining moments that the customers are experiencing, whether it’s financial pressure, consolidation, regulatory issues, aged install base or new facilities,” says Collins. “For us, it’s understanding that defining moment and how we can help them in getting through that challenge to achieve their goals and objectives.”

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