Mechanical ventilator acquisition strategy in a large private tertiary medical center using Monte Carlo Simulation
https://doi.org/10.47895/amp.vi0.3892
- Author:
Joven Jeremius Q. Tanchuco
1
,
2
;
Fernando B. Garcia
3
Author Information
1. Department of Biochemistry and Molecular Biology, College of Medicine, University of the Philippines Manila
2. Department of Medicine, College of Medicine and Philippine General Hospital, University of the Philippines Manila
3. Department of Health Policy and Administration, College of Public Health, University of the Philippines Manila
- Publication Type:Journal Article
- Keywords:
Ventilator acquisition;
Payback period;
Financial analysis;
Monte Carlo Simulation
- MeSH:
Ventilators, Mechanical
- From:
Acta Medica Philippina
2024;58(Early Access 2024):1-13
- CountryPhilippines
- Language:English
-
Abstract:
Background and Objectives:Mechanical ventilators are essential albeit expensive equipment to support critically ill patients who have gone into respiratory failure. Adequate numbers should always be available to ensure that a hospital provides the optimal care to patients but the number of patients requiring them at any one time is unpredictable. Finding therefore the best balance in providing adequate ventilator numbers while ensuring the financial sustainability of a hospital is important.
Methods:A quantitative method using Monte Carlo Simulation was used to identify the optimal strategy for acquiring ventilators in a large private tertiary medical center in Metro Manila. The number of ventilators needed to provide ventilator needs 90% of the days per month (27/30) was determined using historical data on ventilator use over a period of four years. Four acquisition strategies were investigated: three ownership strategies (outright purchase, installment, and staggered purchase) and a rental strategy. Return on Investment (ROI), Internal Rate of Return (IRR), Modified Internal Rate of Return (MIRR), Net Present Value (NPV), and Payback period (or Breakeven Point) for each strategy were determined to help recommend the best strategy. A qualitative survey was also conducted among doctors, nurses, and respiratory therapists who were taking care of patients hooked to ventilators to find out their experiences comparing hospital-owned and rental ventilators.
Results:It was found that a total of 11 respirators were needed by the hospital to ensure that enough respirators were available for its patients at least 90% of the days in any month based on the previous four-year period. This meant acquiring three more ventilators as the hospital already owned eight. Among the strategies studied, projected over a 10-year period, the installment strategy (50% down payment with 0% interest over a 5-year period) proved to be the most financially advantageous with ROI = 9.36 times, IRR = 97% per year, MIRR = 26% per year, NPV = ₱39,324,297.60 and Payback period = 1.03 years). A more realistic installment strategy with 15% (paid quarterly or annually) and 25% annual interest rates were also explored with their financial parameters quite like but not as good as the 0% interest. The outright purchase of three ventilators came in lower (ROI = 4.53 times, IRR = 55% per year, MIRR = 19% per year, NPV = ₱38,064,297.60 and Payback period = 1.81 years) followed last by staggered purchase with ROI = 3.56 times, IRR = 64% per year, MIRR = 28% per year, NPV = ₱29,905,438.08, and payback period of 2.06 years. As there was no investment needed for the rental strategy, the only financial parameter available for it is the NPV which came out as ₱21,234,057.60. The qualitative part of the study showed that most of the healthcare workers involved in the care of patients attached to the ventilator were aware of the rental ventilators. The rental ventilators were generally described as of lower functionality and can more easily break down. The respondents almost uniformly expressed a preference for the hospital-owned ventilators.
Conclusion:This analysis showed that the best ventilator ownership strategy from a purely financial perspective for this hospital is by installment with a 50% down payment and 0% interest. Moderate rates of 15% and 25% interest per year were also good. These were followed by outright purchase and lastly by staggered purchase. The rental strategy gave the lowest cumulative 10-year income compared to any of the ownership strategies, but may still be considered good income because the hospital did not make any investment. However, it seems that most of the healthcare workers involved in taking care of patients on ventilators thought the rental ventilators were of lower quality and preferred the hospital-owned ventilators.
- Full text:20240607191410610553892-Other-157450-1-10-20240516.pdf
