Is the Cost of Robotic Surgery Justified?

Read Transcript

If you look at cost as just peri-operative costs, so we going to just cost in the operating room. It's easy to say its adding cost and its adding no benefit, because you say we spend million dollars on a robot, we have to amortize that over all the surgeries that get done and we have to pay for new instruments for each surgery.

If you extend the envelop a little bit and you say, let's include the entire hospitalization. Now, you start to see the benefits associated with fewer complications, you start to see the benefits associated with sending people home earlier. If you don't do many surgeries with your robot, your robotic cost are still going to overwhelm those cost savings associated with length of stay.

If you use your robot a lot, now you really start to reap the benefits of that upfront technology investment, and you get to kind of realize more of the cost benefit associated with that. And there's definitely a crossing point, in the assumptions that you make in how many robotic surgeries you do in a year, versus with a robot, will really determine whether you decide whether it breaks even or tomorrow or start saving your money.

What we are seeing however, is that there's a lot of hospitals that are getting more than one Robot. They're getting five six robots, and when you start looking, they clearly must be saving on a per case basis but what's also happening is that, if you're sending people home in half the time having done a robotics surgery, then you can do twice as many surgeries for the same number of post-operative beds that you've got.

So now, you're starting to buy robots instead of investing in building another wing to your hospital. You can buy technology upfront, use that to give the patients a better outcome and then downstream be able to not have to invest in the bricks and mortar of your hospital. So, we're seeing those kinds of calculations getting done by hospital's CFOs that are really secondary effects, but are important in terms of driving adoption.