The Complex Calculations of Cancer Care

The organization started from scratch, purchasing brand-new technology for its radiation program, including two linear accelerators from Varian and the CyberKnife stereotactic radio surgery system—the first in Broward County.

It’s not just the money
Of course, Agarwal and his team first had to convince Broward’s leaders that the investment was sound. That wasn’t easy, in part because the decision wasn’t based solely on financial ROI, but on the impact in terms of quality care for patients, he says. Further complicating the matter is the halo effect—the fact that having the technology improves the organization’s image and attracts patients even if they don’t ultimately take advantage of it.

“I don’t think projects of this magnitude get off the ground in any significant way unless the ROI makes sense,” Agarwal says. “The ROI and the pro formas are important.” But ROI goals vary among organizations, he adds. Some might want a 5% return while others are willing to break even or take a loss, knowing that the halo effect will make up for it. “Obviously you have to make sure that the program’s not just going to be bleeding money every day, but that was almost a secondary concern.” The main goal, he says, was to “reset the bar in terms of the standard of care and to become the place where people will go to get the best care, regardless of their resources or ability to travel.”

Pecora cites four steps to making a decision about investing in new technology. “First and foremost, we have to believe that it’s materially better than the existing technologies for the patients,” he says. “Then we do a financial analysis to determine whether or not the cost of capital will be offset by an appropriate return on investment, like any other business makes a capital investment business decision.” Access is another consideration—are there geographic or regulatory barriers? Finally, the technology should be one that the clinicians who would use it want and are excited about, he says.