I’d love to stick to the numbers on this one because that would be simple. But the reality is that a true look at value and ROI is more slippery than just numbers, especially when it comes to the overall value that our clients and patients receive in terms of our clinical culture.
The time and energy we spend on each relationship, client, and task are an investment in the future. We invest time and energy in relationships and tasks with goals in mind. Moving closer to those goals produces momentum that makes it easy to choose to keep investing our time and energy.
The more time & energy we invest, the more valuable those things should become. To invest in something that continually loses value is folly.
As veterinary professionals, we invest time and energy into tools & skills that produce better outcomes for our clients and patients. If our clients and patients get better outcomes, our clinics get better outcomes. If our clinics have better outcomes, we have better outcomes as veterinary professionals.
If an investment does not equally benefit both ourselves as professionals and the client-patient relationship, we fail in the long run to honor our commitment to our profession.
Most may think that a return on investment (ROI) is only about the dollars that return on an investment. ROI is bigger than doing the math of “gains minus costs divided by costs”.
Investments are about increasing value, and ROI should explore the different kinds investments a clinic makes. This includes investment in equipment dollars, clients and patients, the people we work with, ourselves as veterinary professionals and the clinical culture we create together.
That said, this look at ROI is multifaceted and nuanced. It does take the numbers into account. It explores the client & patient side of perceived value. It takes your investment in your employees and yourself seriously as big factors in creating a positive clinical culture.
Investing in computed tomography (CT) returns in many ways on several different levels. After we get through the ROI elements, I will walk you through the specific steps you will need to take to make a CT purchase work for you, for your clinic, for your employees and for your clients & patients.
ROI #1: ELEVATED DIAGNOSTICS
Diagnostic return is the main reason we should consider purchasing a CT machine. Veterinarians can obtain more detailed information within the targeted anatomy of the animal patient when compared to typical radiographs. Cross-sectional CT images of the animal patient allow a veterinarian to evaluate the precise location and scope of an identified mass or lesion. Radiography and ultrasound are both limited in providing this high level of precision.
A veterinary hospital can raise the level of diagnostic information that can be generated on-site with an investment in CT.
ROI #2: INCREASE OF GOODWILL
Goodwill is another form of return on an investment in CT. Goodwill has value in any business. It can be defined as perceived value. It is always considered in decisions by prospective clients, pet owners, partners, and associates. You cannot see, touch, smell, or taste goodwill. It’s more of a gut feeling generated by an overall sense of culture, customer service, and level of attentiveness that is standard practice. A familiar companion of goodwill is called trust. Trust that comes from neighbors and patrons is important in the long-term success of any business. A veterinary hospital obtains more goodwill & trust when it develops a reputation for practicing medicine at a higher level with investments in new technology and training.
ROI #3: ENHANCED CLINICAL CULTURE
The culture in a veterinary hospital is the key to all types of returns. If a veterinary hospital does not normally operate on the cutting edge of medicine and technology, any returns on investment cannot be maximized. A positive, upbeat culture is embodied by engaged, happy employees who have the skills, supplies and confidence to do their job well. Clients and patients leave happy. They are glad to speak highly of your clinic in the public space. The opposite is a culture where the grind is a daily frustration, requests for materials & supplies go unanswered or the lowest bidder continually wins contracts that offer sub-par supplies & equipment. Clients, patients, and employees may turn over quickly in these environments. Without the proper culture, adding a technology like CT will fall flat and the returns will disappoint. Many general practitioner veterinarians experienced this disappointment when they purchased an ultrasound 10-15 years ago. Quality ultrasound training was not yet available, so many went unused.
The same applies for CT today. Everyone seems to want a CT. The training has not caught up to the technology on a broad scale…yet. Some of those ultrasounds became expensive door stops. A CT could have the same fate if you’re not investing in the skills of your staff to use it effectively. Investment in cutting edge medicine needs to be coupled with cutting edge training to enhance client, patient, and employee culture.
ROI #4: DOLLARS & ‘SENSE’
This is the part you’ve all been waiting for. This section is last because the other pieces of the puzzle need to be in place as you consider making this investment. A hospital owner must be able to pay for the machine, training, operations, and maintenance while also producing profit from using the machine. Profit is healthy and fair for all business entities so as long as value is produced and received by all parties. Those who are satisfied with breaking even (or just barely exceeding the breakeven) often find themselves constantly struggling. Animal hospitals must prioritize staff training in technology tools. It pays off in all the ways outlined above in this post. The right culture plus a healthy profit will often yield growth in trustworthiness and increase the longevity of the hospital. The long-term result of this is called “creating a legacy”.
FIRST CONSIDERATION: FINANCING YOUR CT
Choose wisely when selecting a finance plan for your equipment. Some vendors will offer their own financing plans. Sometimes, vendors are receiving a commission on the financing in addition to the profit from the equipment sale. Most of the time these vendor finance deals are leases. Leases, in my opinion, are toxic. ALWAYS read the fine print and/or have your attorney do that for you.
Simple interest loans with a fixed APR are the best option for equipment. Therefore, the cheapest financing is rarely with the vendor you are purchasing the equipment from. The best advice: Give your local banker a shot at the financing first. Another option is to consider lending entities who specialize in veterinary equipment financing. There are several experienced equipment financing entities whose representatives understand veterinarians and the veterinary business.
THE SECOND CONSIDERATION: ANALYZING THE NUMBERS
Several things factor into the purchase of CT machine. The stakes are raised on this type of purchase simply because this will be the most expensive piece of equipment a veterinarian will buy, except for an MRI.
Equipment Purchase – This should include the gantry, couch, and workstation. Sales tax and freight are also added to this number. Signing an order for this equipment is simply the beginning of all work that must be done. No other piece of equipment will require as much preparation and training as a CT will.
Training – All vendors will offer some type of training regimen with the CT or Cone Beam CT. Some vendors will offer training included with the purchase price. Others may charge an additional fee. These trainings are designed to get you started, not to help you and your staff maximize the tool. To learn more about CT training, simply send me an email / PM. I am happy to go over the particular needs that must be met by a program. (firstname.lastname@example.org)
Service and Maintenance – Extended service and maintenance costs are important. Spiral CT purchases are often intimidating because of these extended service and maintenance programs. However, you will see later on that the spiral CT is very capable of paying its way in a veterinary practice. I have known some Cone Beam CT vendors who include 5 years of warranty and service with the unit at purchase. The Cone Beam is usually more simplistic in design because it is simply a DR unit on wheel. There are fewer moving parts and CBCT units turn at a significantly lower RPM than a spiral CT.
When purchasing a refurbished spiral CT, the 5 year warranty is just not offered by any vendor, to my knowledge. Spiral CT vendors can and will offer some kind of warranty at purchase. It could be 90 days or up to one year. This plan may or may not include preventive maintenance. That is why it is important to understand all aspects of the offering.
READ YOUR TERMS AND CONDITIONS ON ALL SERVICE CONTRACTS! Have your attorney read them too if that makes you feel better. Hint: CT service contracts are all written in favor of the vendor & manufacturer. Do not be surprised at that, it is the usual CYA language that all big corporations put out to keep themselves protected from litigation.
Facility Modification or New Construction? – All existing animal hospitals who wish to add a CT will be required to modify their current facility to some degree. Room size and electrical are the first factors to consider. Shielding and climate control are equally important. There are newer CT and CBCT machines that can utilize 120v power source with a dedicated circuit instead of the usual 220v – 240v. Again, read the specs of the machine and read the contract!
You also should check with your local and/or state health department on radiation shielding code regulations. If you plan on building a new addition to the current space or plan to move into a brand new building altogether; the earlier your contractor gets involved with your CT vendor, the better.
Other Costs – There are several “forgotten costs” that are often overlooked when adding a CT or CBCT. Without consideration, these costs can create shortfalls in your hospital’s operating budget and inventory.
Additional equipment may be needed: (1) Anesthesia Machine, Vaporizer, Concentrator, and Patient Monitor (2) Radiation safety accessories (gowns, gloves, collars, mobile shielding, and warning signage) (3) Foam troughs and other animal positioning aids.
Incremental Costs (per exam): These costs occur each time a CT exam is performed. (1) Radiologist Consult (2) Drugs (contrast agents, anesthesia, IV fluids) (3) Consumable Items (syringes, needles etc.) (4) Technician Labor
THIRD CONSIDERATION: Profit or Loss?
CONE BEAM CT P/L ANALYSIS
This is an example of a cash flow analysis for a Cone Beam CT. The pricing on goods and services used in this example may or may not be current (or accurate) for any given vendor or manufacturer. This is a simple learning tool for the reader.
SPIRAL CT P/L ANALYSIS
This is an example of a cash flow analysis for a Spiral CT. The pricing on goods and services used in this example may or may not be current (or accurate) for any given vendor or manufacturer. This is a simple learning tool for the reader.
All readers of this blog are free to discern what you will about these two analysis sheets. You should not make any decisions based on these particular cost analysis numbers because it is possible that the pricing and services from CT or CBCT vendors could be completely different than what I have shown here. Each situation is different for a particular veterinarian and his or her facility.
READ ALL CONTRACTS CAREFULLY! Use an attorney if it makes you feel better. Ask a lot of questions. These two analysis sheets are based on my own past experience as a veterinary imaging consultant, a partner in an animal hospital, and as a sales person.
FOURTH CONSIDERATION: NAVIGATING THE BUYING PROCESS
It is wise to accept bids from up to 3 different vendors. Beyond 3 vendors will be too much information to analyze and too many people will be calling and emailing you…constantly…for follow up. Too many choices will increase confusion significantly. The stakes are high in a purchase of this magnitude. Therefore, the buying process should be well-planned and made to be simple.
- Create YOUR OWN timeline for signing the deal and stick to it. Do not allow vendors to manipulate you into signing their deal RIGHT NOW. This is your purchase! It is the most money you will have ever spent on a single piece of equipment and you are the client. Therefore, you must be bold enough to drive the bus. Sales reps are trained in closing deals. Many are effective at closing deals and when the they control the deal, they are essentially controlling you.
- Meet with your CPA and any banking institutions before talking to any vendors. Know what you can be approved for and understand what your budget and tax implications will be.
- Schedule and complete up to 2 phone conversations with as many vendors’ reps as you please. These phone conversations will allow you to discern which 2-3 vendors to select for meetings in person. Schedule meetings at your hospital with the top 2 or 3 vendors from your phone conversations.
- Ask for references of veterinarians in your state or region. Call those references. Ask them a lot of questions.
- Make sure that all proposals from vendors can be compared as apples to apples when it comes to services and features in the equipment. Have someone help you with that if you need it. Pricing, contracts and extras can be confusing when you’re not used to looking at things this way.
- Always call your mentor or another 3rd party (friend, consultant, etc.) and discuss the transaction with them before signing off and committing. This outsider can assist you in being objective.
CT should enhance all the ways your animal hospital offers value to clients, patients, employees and to the bottom line. But it’s not just about the dollars. It’s really about increasing value through investment in better client / patient outcomes, a positive clinical culture, and a healthier balance sheet. However, if we stop there, we fall short. It’s about improving our standard of practice as veterinary professionals. CT can help provide that under the right circumstances.
Do your research. Be confident in your choice. Do not allow yourself to be bullied. Make an eyes-wide-open choice to invest in the value that your hospital offers to your community.