Global hospital sector investing in new equipment to drive efficiency gains & profitability, GE Capital research finds
October 24, 2014
London 23 October, 2014: Hospitals across the globe are becoming increasingly confident about their growth prospects for the year ahead despite rising costs and ongoing economic uncertainty, according to GE Capital’s inaugural Hospital Sentiment Research – a report based on interviews with more than 380 senior hospital executives with responsibility for budget decisions over eight international markets[1].
In the backdrop of ongoing austerity measures and enhanced scrutiny of global healthcare systems, the report highlights specific areas of positivity for the hospital industry, finding hospitals are delivering more than ever before, often with insufficient resources. It also finds hospitals are making clear efficiency gains to enhance competitiveness, but that the need to invest in new equipment is becoming ever more crucial to sustain this efficiency.
The research finds both private and public hospitals report bullish growth profiles over the next 36 months: 90% of private hospitals expect to grow in this time period, with 15% expecting to see rapid growth. 84% of public hospitals expect to see growth, with 15% citing rapid growth. 46% of private hospitals expect this to translate to future profitability, versus a more conservative 27% of public hospitals.
Investment and purchasing decisions of hospital managers are being driven mainly in order to replace deteriorating existing equipment (16%) and for the pursuit of efficiency gains (17%) reflecting a sector that is adapting to a challenging environment but remaining optimistic about its ability to meet patients’ needs. Perhaps unsurprisingly, the top reason for not investing is the economic environment (30%).
Meanwhile, the research highlights a clear trend towards increasing hospital costs – with 40% of all hospitals foreseeing an increase in costs in the next year – versus only 18% saying they expect costs to decrease. Decreasing costs are set to derive mainly from the private sector - on one end of the scale driven by downsizing but in most cases as a result of aggregated purchasing, hospital consolidation and process optimisation – incorporating outsourcing and automisation.
United Kingdom
The UK results presented the biggest contrast between private and public sectors due to the dominance of service provision by the NHS. Demand growth is predicted across both sectors though the private sector is more confident with 47% expecting rapid demand growth. However, 50% of public sector hospitals also expect operating costs to increase over the next year. It appears that the private sector is continuing to ramp up to take demand strain off the public sector and remains bullish about efficient growth opportunities.
UK public hospitals continue to battle with red tape and bureaucracy (32% highlighted this as their primary barrier to investment) and manage costs against a backdrop of increasing demand and decreasing funds. With funding for public sector reducing year-on-year and the Government searching for ways to plug the deficit, NHS hospitals are under immense pressure to improve efficiency while still delivering quality patient care. New innovative financial solutions, such as managed equipment services (MES) contracts are becoming a prevalent equipment procurement method with 39% of UK respondents stating that MES would be their preferred funding option for future investments in technology.
Jeremy Knight, UK Leader, GE Healthcare Finance said: “Even though hospitals are struggling to cope with an ageing infrastructure and clinical asset base the optimism around being able to meet demand growth in the sector is encouraging. However, it is clear that the UK healthcare sector is already very different from the pre-recession environment, with a much sharper focus on outcomes based solutions and the efficient use of clinical assets and this focus will need to continue if patients’ needs are to be met.”
Heinz Kölking, President of the European Association of Hospital Managers, said: “The environment for healthcare providers remains difficult. Hospitals are required to deliver more than ever before often with insufficient resources at their disposal and this trend is likely to persist. However, the results show that many hospitals are confident in their ability to meet patient demands and to continue providing them with the best treatments available.”
Other key findings of the research include:
- Hospital managers cite traditional banks, leasing providers and specialist medical lendersas their three most preferred finance providers
- Meanwhile, the most preferred forms of obtaining equipment are leasing, buying outright, and through securing a bank loan
- 55% of private hospitals said they were profitable in 2013, compared to 16% public. 66% of public hospitals broke even and 18% were loss-making (vs. 11%, private)
- General imaging remains the type of equipment that hospitals are devoting most spend towards, both this year and next. GI units are typically expensive and integral to the whole patient care pathway – incorporating diagnosis, treatment and monitoring
- Spending on Surgical Robots is set to more than double in 2015
Looking ahead, the research also highlights hospitals are opting to upgrade their technologies rather than purchase new machines outright. This is particularly prevalent for General Imaging and Endoscopy equipment, where over a quarter of all future investment is set to be made due to the deterioration of the current equipment base.
Ends
About the research
The research was based on a survey of 382 hospital decision makers across the following countries:
Australia, Germany, France, Italy, Japan, Switzerland, Spain, & U.K
Hospital decision makers were surveyed from public, private, and non-profit hospitals using the largest, most reputable global internet panel partners.
- To qualify for the survey, the decision maker had to have sole or shared decision-making authority over the purchasing of equipment and services for their hospital
- Data was collected via a self-administered online survey.
- Fielding was anonymous – GE Capital was not mentioned as the research sponsor
The survey was conducted by GE Capital’s in-house research team and fieldwork took place in Q3 2014.
About GE Capital in the UK
GE Capital, one of the leading commercial finance providers in the UK, has major offices in Bristol, Manchester and the London area and focuses on providing leasing and lending solutions, from working capital and investment finance through to fleet management and equipment leasing to mid-market customers. For more information, please visit www.gecapital.co.uk
About GE Capital International
GE Capital International is a leading, global provider of specialist finance to the mid-market, with headquarters in London and serving customers from 30 markets across EMEA and Asia Pacific.
GE Capital International is focussed on driving growth in its core commercial leasing & lending products and markets. It provides mid-market customers with a wide range of financing solutions including accounts receivable management, inventory finance, asset backed lending, cross-border financing, leveraged finance, leasing/vendor finance and fleet management solutions.
GE Capital is one of Europe’s leading providers of leveraged finance for mid-market private equity backed transactions and has a leveraged loan portfolio in excess of €5 billion across EMEA covering 160 companies in the region. For more info, visit www.gecapital.eu.
About GE Capital Healthcare Financial Services
GE Capital Healthcare Financial Services aims to support healthcare institutions in creating a sustainable financing strategy by offering financing solutions that make technology and medical equipment more accessible. We can fund single or multiple equipment from a various manufacturers, and for a range of different purposes through our wide range of structured and bespoke financial solutions.
Being part of GE, one of the world’s largest producers of medical technologies, gives us a distinctive insight into the complex healthcare industry that makes us stand apart from traditional banking institutions. This unique industry insight enables us to tailor sophisticated solutions for customers across the world. Additionally through the ‘Access GE’ programme, we give customers access to GE’s experience and expertise to help solve business issues and challenges. http://www.gecapital.eu/healthcare
For further information please contact:
Fiona Scholes
External Communications, GE Capital
+44 208 1852 241 / Fiona.scholes@ge.com
[1] France, Germany, Italy, the UK, Spain, Switzerland, Japan, Australia
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