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New equipment will mean more revenue, services

Hospital district approves lease for digital equipment

Staff reporter

The board of directors of Marion County Hospital District #1 made a decision Thursday that will revolutionize the radiology department of St. Luke Hospital.

Joe Picket, radiology department director, had presented information at a previous meeting about the replacement of equipment that was not in working order and outdated. The board instructed him to return with cost estimates and lease-purchase information which he presented.

Equipment and cost estimates from G.E. Medical Systems included an anesthesia unit for approximately $55,238; a c-arm mobile unit (typically used in operating rooms during surgeries), approximately $72,500; a nuclear medicine camera, approximately $155,046; and a CAT or CT (Computer-Aided Tomagraphy) unit, approximately $398,896. The approximate total would be $680,000.

Picket said the amount would be less than $680,000 when all negotiations were finalized.

The current interest rate quoted to the board was 4.69 percent, and Picket said he would try to reduce that to 4.25 percent. According to a lease schedule during a 72-month period, the district's payments would be $11,034 per year.

The cost estimates included six days on-site training for the CAT scanner, and four days training for the nuclear medicine unit.

A five-year service contract for the anesthesia unit would be separate.

Picket presented detailed information regarding the current patient cases, charges, and reimbursed revenue generated from the equipment that will be upgraded. He said his estimations were modest and reflected worst case scenarios.

A C-arm mobile unit could see a net cash revenue of $19,552 after its first year of operation; $34,591 after the second year; and $167,210 after the fifth.

The single-head spect system nuclear medicine machine, which has been out of operation for two weeks, could see a net revenue of $8,140 after year one; $137,702 year two; and $788,995 year five.

Most impressive were the net revenues of the CT, four-slice scanner — $11,334 year one; $146,823 year two; and $2,076,382 year five.

Total revenue from those three pieces of equipment during the first five years could total more than $3 million.

The anesthesia machine was included because it would be not be upgraded, just replaced because parts and service are becoming obsolete.

If projected revenues are seen, the lease agreement could be paid early without penalty.

All equipment will be digital which will simplify the process of tests being read by physicians.

The spect system would be used for diagnosis associated with gall bladders, bone scans, and cardiac.

"We'll be able to move into the cardiac field," said Picket. "We can work-up cardiac patients here — right up to the heart catheterization."

He explained there will be a "learning curve" for the department employees.

J.R. Ewing will be the CT specialist with Picket as the backup, and Picket will be the nuclear medicine specialist with Ewing as the backup, said Picket.

At a previous meeting, chief financial officer Hilary Dolbee reported the district had no long-term debt and would benefit from the investment.

Since the purchase is more than $100,000, the district's management consultant, QHR, will review the lease documents. When the documents are reviewed and returned to hospital personnel, the units will be ordered.

The old anesthesia machine will be retained as a backup.

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