Construction began in 2008, at about the same time the hospital negotiated a sole-source agreement with Siemens Healthcare for the equipment purchases. Financial planning had been completed two years earlier because of requirements of the California building code. When calculations for the hospital's imaging services were updated to reflect post-DRA conditions, Gagliardo found that PET/CT reimbursement had fallen more than $1300 per procedure. Instead of yielding a return on investment in 18 months, the scanner would have to operate 30 months before generating a positive return on investment.
The hospital, which is part of the St. Joseph Health System, turned to the community for charitable giving. A portion of the $50 million pledged to the Mission Hospital Foundation for the entire project will support imaging services.
Technologist cross-training is expected to cut some operational costs, and Siemens helped make the equipment more affordable, Gagliardo said. Because of the multi-unit purchase, Mission Hospital was well positioned to become a Southern California luminary site for the German manufacturer. That assured discounted equipment service, upgrades, and parts.
“By selecting a single vendor, there is a commitment on the part of both parties to make it work,” Gagliardo said.
IMAGING AT THE MALL
Losing $600 million in endowment funds at Vanderbilt University Medical Center in Nashville may affect future capital expansion, but for now the impact has been mainly limited to a 5% cut to the operational budgets of radiology and other medical departments. Faculty recruitment continues, and no layoffs are affecting the imaging staff, said Dr. Jeremy J. Kaye, radiology chair.
Except for the delayed start of a wellness center, the medical center's plans to establish 19 separate outpatient medical services in 440,000 square feet of commercial space in a Nashville shopping mall have also moved forward. The first stage of the $99 million Vanderbilt Health at 100 Oaks project was completed in February. An imaging center, women's health service, and breast imaging facility opened a month later.
Responsibility for the $3.6 million investment in equipment at the imaging center was delegated to Vanderbilt Imaging Services, a self-funded for-profit company that operates five outpatient imaging centers in central Tennessee. The nonprofit medical center handled the acquisition and financing of $3.8 million of imaging systems for the women's health and breast imaging services.
Vanderbilt Imaging Services drew from its own cash reserves to pay construction costs associated with the imaging center. After deciding to buy scanners exclusively from Philips Healthcare, the firm negotiated fair-market leases with Philips Medical Capital. The company has been using fair-market leases (also called operating leases) for 10 years, according Dr. Jeffrey A. Landman, CEO.
“We believe that it is the best way to keep our equipment fresh. So at the end of a typical five-year term, we can either renew or opt for a lower lease rate for a year or two while we're looking at new technology,” he said. “A fair-market lease also keeps the debt associated with equipment purchases off the balance sheet.”
Financing for the women's health and breast imaging services was secured before the bond market freeze hit Vanderbilt in September 2008. The sources of funding included cash from university accounts, debt financing, and philanthropy.
Consolidating everything at a single site has simplified the logistics of diagnosis for patients and mammographers, according to Dr. John Huff, chief of breast imaging. They now move from room to room rather than from one building to another in the progression from initial diagnosis to biopsy.
Huff appreciates the new arrangement for reasons other than the accoutrements and the high-quality imaging possible with the new scanners. As a radiologist, he likes it because the financing was in place before he joined the organization.
