The Operational Cost Analysis

Posted on January 28, 2015

By Alex Reinhardt, P. Eng.

When considering the purchase of IV automation such as RIVA, you need to consider all the costs that you will need to pay over the operational life of the system.  In many cases, people just think about the initial purchase cost, but over a five or ten year service life, that becomes just a part of the total cost.  Before you start, it’s probably a good idea to check with your CFO (or whoever is reviewing the financial details) on how they want things presented, for example, over five years using net-present-value.

RIVA in a hospital pharmacy

The operational cost items that should be considered include:

  1. Purchase price: This is easy, what is the total cost of all the items that will be purchased.
  2. Service: There will likely be some form of service/maintenance/parts contract so the total price of service plus parts needs to be added. Warranty would typically cover parts for the first year but not after that.  So consider that as units get close to the end of their life parts costs may increase, just like a car.  Ask your vendor for expected parts costs.
  3. Certifications: Similar to service, the cost of ongoing certifications that the hospital is responsible for should be included.  One that comes to mind is the semi-annual air certification, but there may be others.
  4. Cost of labor to operate: The cost of labor for IV automation can be high or low depending on how much time a person needs to spend with the system to load it, run it, and clean it. Don’t forget that a single FTE is one shift, five days a week in most cases.  IV automation will generally be run for more than one shift per day and on weekends, so you need to add all the resource time required.  For example, if you need to cover a single person for 24/7, that works out to 4.2-4.5 FTE’s depending on how many hours your organization works per shift.  Including vacation, sick days and statutory holidays, that number is closer to five FTE’s per “24/7 person.”  In most cases, you should also include the cost of benefits.
  5. Construction: If construction is required and is directly related to the IV automation option being considered, then the cost of that needs to be considered.
  6. Unique consumables: If the product you are considering requires unique consumables that cost more than you would normally pay for the same item, then the extra cost of that should be included as well. There are many examples of this in the medical field, but an inkjet printer is a good example, you have to buy brand specific ink cartridges which quickly cost far more than the printer.

The above list should cover the most common cost factors.  Clearly, the one big thing that I haven’t talked about in this article is the amount of savings/benefits that you should expect to get from IV automation; that will be the subject of a future article.  Those savings will offset the costs and hopefully result in a payback time that works for your organization.

Alex Reinhardt is Market Development Manager at Intelligent Hospital Systems, designer and manufacturer of RIVA – a Fully Automated IV Compounding System 

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