A new surgery center's top two expenses? The building itself. And the medical and surgical equipment. Surprised by No. 2? Well, consider that a surgery center can house as many as 5,000 pieces of equipment (if you count surgical instruments) made by as many as 100 different manufacturers. Much of this equipment has 90- to 120-day manufacturing lead times, plus shipping, installation, training and biomedical certification time. Put another way: If you wait until the construction phase to start thinking about equipment, your project is sure to suffer.
An equipment-buying timeline
Many times, architects and engineers must stop their work, awaiting detailed information so that they can design the building to accept the equipment that you've purchased. This not only slows the development process, but it also increases costs.
The equipment specification and procurement process will typically fall in five clearly defined development phases:
- programming/budgeting
- schematic design
- design/development
- construction documents
- and construction phase.
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Programming Phase (1st Phase) |
Design Activities |
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Equipment Activities |
Define/Determine: - Project type / scope / license type
- Procedures / volumes
- Space / quantity & type of rooms
- Location
- New building / tenant improvement
- Design team
- Building codes
- Zoning
- Schedule
- Space program / block schematics
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- Division of planning & procurement responsibility
- Survey of existing equipment
- Determine procedures / specialties / volumes
- Determine quality / goals
- Survey staff / investors as to preferences / standards / dislikes /buying methods
- Review of space program
- Preliminary owner furnished equipment budget
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These phases very clearly coincide with the normal development phases for the rest of the project. What's more, this terminology is common on the architectural and construction side of the team.
You should begin equipment planning during the programming phase and complete the process approximately 90 days after construction ends. Within this article are several charts that demonstrate the equipment-related activities that should coincide with the design activities in the same phase of the project.
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Schematic Design Phase (2nd Phase) |
Design Activities |
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Equipment Activities |
- Preliminary (single line) drawings & review
- Preliminary (double line) drawings & review
- First integration of medical equipment & systems into drawings
- Outline specification book of A&E (architectural/engineering) detail & review
- Plan view of casework, doors, sinks, etc.
- Exterior elevation studies
- Siting drawings
- Preliminary city/state plan reviews
- Interview/pre-qualify contractors
- Test soils, codes, etc.
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- Finalize responsibility checklist
- Preliminary owner specified fixed equipment technical data book, cross referenced to drawings
- Preliminary systems narrative / review
- Preliminary owner specified equipment location drawings, cross referenced to the fixed equipment tech data book
- Review of A&E incorporation of owner specified equipment data
- Review of A&E outline specs
- Test / revise / review equipment budget
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Design Development Phase (3rd Phase) |
Design Activities |
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Equipment Activities |
- Start interior elevations / coordination
- Locate specialties, equipment, finishes, ceiling heights, etc.
- Revise/finalize exterior elevations, parking, etc.
- Review / revise all drawings
- Integrate owner specified equipment at every level & discipline
- Coordinate owner furnished equipment with casework & elevations
- Finalize D.D. drawings
- Test final D.D. drawings against budget
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- Review and amend preliminary owner furnished technical data book & drawings as required
- Finalize systems narratives & develop schematic systems location drawings, i.e. nurse call, medical gas, phones, computers, etc.
- Start room-by-room fixed equipment list, incorporating hard specs & pricing
- Review all levels of A&E documents with regard to equipment
- Test against budget
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Working Drawings Phase (4th Phase) |
Design Activities |
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Equipment Activities |
- Review/expand/finalize all written specifications, including: architectural, mechanical, electrical, plumbing, structural, landscaping, finishes, etc.
- Seek and obtain state & local approvals
- Incorporate final owner specified equipment responsibility checklist, tech data book, location drawings, & shop drawings into final A&E construction documents
- Test against budget and prepare alternate bid packages, if indicated
- Prepare/issue/receive & review construction bids
- Selection of contractor/sub-contractors
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- Review and amend preliminary owner furnished technical data book & drawings as required
- Finalize systems narratives & develop schematic systems location drawings, i.e. nurse call, medical gas, phones, computers, etc.
- Start room-by-room fixed equipment list, incorporating hard specs & pricing
- Review all levels of A&E documents with regard to equipment
- Test against budget
- Obtain credit information / equipment financing source
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Construction Phase (5th Phase) |
Design Activities |
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Equipment Activities |
- Construction administration
- Shop drawing review
- R.F.I. assistance
- Site surveys
- Punch list
- Building approval
- Certificate of Occupancy
- Open house
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- Obtain delivery requirement schedule, issue fixed equipment P.O.'s & expedite
- Finalize movable equipment list / specs & prices
- Issue movable equipment P.O.'s & expedite
- Coordinate equipment delivery, receipt & installation
- Coordinate equipment in-service
- Arrange for equipment in-service
- Perform accounts payable for equipment
- File freight claims
- Open house
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Factors Influencing Your Purchasing Decision |
Among the many factors that can influence the final equipment product mix:
- Physician or staff preference for one or more vendors usually has a major impact on the final decision.
- In any start-up facility, cost is normally a major factor, so specifying the best possible equipment at the lowest possible cost is nearly always desirable.
- Surgical specialty mix will affect the size of various pieces of equipment.
- The timing of the project is important. During the course of development, new products may become available and existing products may be discontinued or phased out.
- In states where there are Certificate of Need laws, your overall equipment cost may be limited.
- There is always the option of buying new equipment versus demo, refurbished or remanufactured equipment.
- Larry Hampton |
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The magic number: 60 days
While these charts clearly define the process, they don't demonstrate the amount of time it takes to get through the process. To expect a nurse or physician or even a committee of nurses and physicians to get through this process without outside help is asking a lot. Keep in mind that while this equipment planning and procurement process is going on, there are also multiple meetings and decisions on the design and construction side.
Many times in start-up facilities, nursing and administrative staff are not hired on a full-time basis until 60-days prior to opening. And then, they must recruit, market, develop policies and procedures, prepare licensing inspection, train staff and purchase supplies. Typically, the last 60 days of construction is the busiest time of the entire project, with the contractor having virtually every trade on site and the owner having virtually full staff to recruit and train.
Ideally, you should have made all capital equipment specification and purchase decisions and entered purchase orders at least 90 days before you obtain your certificate of occupancy. Because many surgery centers are constructed in six months or less, this means that you should make virtually all fixed equipment decisions before groundbreaking and all movable decisions within two-months of groundbreaking. In summary, start early, use checklists and controls, know your options, commit early and monitor budgets and schedules.
Inside the Cost-Per-Procedure Financing Program |
Surviving the first six months is a daunting challenge for any new facility. Until those reimbursements start rolling in, you may run out of money before you run out of month. Olympus America's Cost-Per-Procedure (CPP) financing program could ease the financial burden on your startup surgery center.
Here's how it works. You order what you need from Olympus: all of your endoscopy, surgical, diagnostic and/or microscope equipment, supplies and services. And you finance what else you need from Olympus: office furniture, C-arms, lights and tables, for example.
Your per-procedure payment is based on the valuation of everything Olympus provides. For instance, $500,000 worth of equipment and $1 million worth of turnkey financing may result in less than a $100 per-procedure payment. The CPP obligates you to perform a specific number of procedures within a specified time limit, such as 16,000 flexible endoscopy procedures in 36 months.
Your facility does not pay a cent back to Olympus until you start to do procedures. During the initial 90-day waiting period before your Medicare certification goes through, you can work the CPP agreement so that you are not making any payments during the first three months.
Once your facility begins obtaining reimbursements, you pay Olympus a fee based directly on the actual monthly usage of the equipment you contract. You can predict your monthly cost/revenue margins because if a case is cancelled at the last moment or the surgical schedule is unusually light in a given month, you are not on the hook to the company for the idle time.
Your facility must make a monthly report to Olympus, citing the number of procedures performed using your contracted Olympus equipment. There is no monthly minimum fee, but the contract specifies an annual minimum payment.
You can use the program to either equip your facility or incorporate it as part of a larger "Turnkey Services" program designed specifically for start-up facilities.
At the end of the CPP, the choice is yours. You can walk away outright and return the equipment to Olympus, continue to use some or all of the equipment as part of a new CPP, replace or upgrade some or all of the equipment or purchase the equipment.
- Bill Meltzer, Associate Editor
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