capital budgets, and look at a profit-and-loss statement, which usually
doesn't indicate depreciation. But their per-case cost can be pretty
astronomical when you add in maintenance and other costs."
Facilities also forget to consider their transactional costs, he says —
the cost of having somebody sit down and write a purchase order, of
receiving supplies and putting them on shelves, of getting those sup-
plies back off the shelves, of dealing with back orders, of coordinating
with surgeons when there are back orders and deciding what prod-
ucts to use, of knowing where to get those products, and so on. "We
eliminate those ridiculous costs, because they know exactly what
their cost per case is when they use us," says Mr. Swing.
The outsourcing companies also provide a broad range of supplies,
including microscopes and disposables — another key area to consid-
er, says Mr. Swing. "As facilities become more focused on their costs,
they're starting to realize how much product they destroy — through
expiration, mishandling or contamination," he says. "That's something
we eliminate with our process. Because we have a wide client base all
over the country, if we have something that's close to expiring, we
know where to put it to be able to use it."
Looking ahead
What's next? Maybe a kind of hybrid arrangement in which facilities
that own their own equipment have the ability to periodically expand
and contract according to their needs. "That's an interesting thing
we're seeing, the opportunity to have an extra room periodically," says
Mr. Gaslin. "They have their own supplies and agreements, but we can
bring in everything for another room — instruments, a highly skilled
technician, a machine and a microscope. It's a way to periodically
take advantage of the potential to book more patients."
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