Hospital sector investing in new equipment to drive efficiency gains

18 November 2014

 Hospitals in developed countries are becoming increasingly confident about their growth prospects for the year ahead despite rising costs and ongoing economic uncertainty, according to a survey by GE Capital.

The Hospital Sentiment Report is based on interviews with more than 380 senior hospital executives with responsibility for budget decisions in  six countries in Europe plus Japan and Australia [1].

The report highlights specific areas of positivity for the hospital sector, 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, vs. 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%).

Peter Krause, Head of GE Capital’s Healthcare Financial Services team, commented: “Hospitals are under immense strain, dealing with ongoing spending pressure and the pressing need for improved quality of care. It is encouraging, however, that hospitals are keen to adopt crucial new technologies that can not only advance treatments to patients but also enable them to continue to achieve quality and efficiency gains that are necessary to win in this environment.”

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.

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.”

The report is available at: www.gecapital.eu/hospitalsentiment2014