In a tale which is becoming all too common, a small, rural hospital is considering several concurrent strategies as it struggles for financial survival. Part of the strategy is to shave $460,000 in annual cost by jettisoning lease payments on their surgical robot. As detailed in a story by News 7, the facility has lost $2M in the first quarter of 2019. A detailed cost analysis is underway, and the facility is considering being reclassified as a critical access facility, or merging into a local system. The surgical robot lease payments were apparently identified as an immediately identifiable cost reduction opportunity.
EHC NOTE: Reimbursement pressure, regulatory burdens and challenges in recruitment and retention of providers are causing rural facilities – many of which were on shaky financial ground to start with – to close or teeter perilously on the edge. We understand that a half million-dollar expense savings is compelling to a Board looking at large losses. However, hospitals should carefully evaluate the entirety of a decision to remove a surgical capability and differentiator. While the facility discussed will be able to perform the cases without robotic assistance, it may be that surgeons and patients may decide to go to alternative locations which offer the latest technology. A careful contribution margin analysis should always be performed when making major decisions affecting key surgical differentiators.