**6. Business perspective and return on investment (ROI)**

The most important step in acquiring technology is the financial willingness of administration to invest in advanced technology. Therefore, understanding the business model associated with a robotic program is critical. Unlike other industries, the healthcare industry has not experienced a paradigm shift from long-term strategies to transient gain primarily due to the lengthy process that new medical and surgical advancements must undergo to be accepted as a new standard of care. To keep steady profits, companies employ many strategies. One of the strategies is to reduce costs by increasing production and providing the most cost-effective products to market. They often use the theory of "planned obsolescence" [45] by

making products with reduced artificial lifespan and, thereby, get repeat sales. One of the most effective strategies is eliminating the competition, so companies can dictate the prices to their buyers. At present, Intuitive Inc. is the only company that produces viable robotic technology approved for human use and unilaterally decides the production cost, maintenance cost, cost of equipment and other accessories, etc. Therefore, administrators have only limited room to save money by reducing operating time, turn-over time, and the costs associated with readmissions and complications. On average, 150 to 300 cases annually are required for at least six years to offset the initial and ongoing costs of the da Vinci System [46]. **Figure 3** shows five industry-tested steps are important to understand in implementation of a robotic program from a business standpoint. It is also important for administrators to understand that competitive advantage is not sustainable, and therefore, requires an evolution in business strategies over time. Thus, it is important to both monitor and incentivize the upscaling phase along with maximizing both the exploitation and reconfiguration stages to further optimize return on investment (ROI) in advanced surgical technology.

Recently, a study analyzed 180,230 women who underwent laparoscopic or robotic-assisted laparoscopic hysterectomies for either benign or malignant indications (specifically endometrial cancer) from 2006 to 2012 [47]. This study demonstrated that the cost of robotic-assisted hysterectomy remained high, but this cost is offset by increased procedure volume. The use of robotic assisted technology was also found to decrease cost for oncology cases but not in benign gynecological surgeries. The cost difference between hysterectomies performed by three different modalities was analyzed by Bell and colleagues [48]. Data reveals that on average, compared to robotic procedures, the total cost for hysterectomies with staging was approximately 30–40% higher in the procedures completed by laparotomy (P < .005), but robotic was 10% more expensive than laparoscopic surgeries (P=NS). It can be hypothesized that during the phase of the learning curve, there would be major cost burdens associated with the time of the operation, turn over time, initial complications, prolonged hospital stays for some cases, conversions to open laparotomy, and overhead costs associated with the initial cost of acquisition.

**115**

**Figure 4.**

*Hypothetical business model demonstrating sensitivity of revenue stream to learning curve.*

program.

*Present Challenges of Robotics in Gynecology DOI: http://dx.doi.org/10.5772/intechopen.96780*

the learning period.

Due to these increased cost burdens, this would potentially minimize the cost advantage of robotic-assisted surgeries over the traditional laparotomy throughout

After studying various case studies and industry best practices, we proposed a three-stage business model for a robotic program: 1) Negative earning, 2) Zero sum, and 3) Positive earnings (**Figure 4**). The stage of negative earnings coincides with the initial learning curve stage. Hospital administrators should have strategies in place to overcome the expected financial losses during this time. The most important strategies include low-risk case selections (which would typically offer better outcomes and minimize risks of potential losses) and thereby ensuring excellent patient satisfaction (which would lead to popularity and recognition of the program and strengthen the morale of the surgical staff) and continuous monitoring of the learning curve by various parameters such as operating time (used by surgeons), pre-docking and post-docking time (typically used by nursing and anesthesia), turn over time (time required from the end of one case to the beginning of next case), complications, length of stay, etc. In the zero sum stage, transitioning from the learning stage to the experience stage, it should be vital to market the program with positive patient outcomes. Studies have shown [49] that more than 80% of internet users perform research to use information to make decisions regarding their health care choices, especially surgeries. After the learning curve has been conquered and the program is in the stage of positive earning, administrators can expect to acquire advantages such as expanding the payer mix, which will include more private payers in addition to Medicare and Medicaid. Robotic surgery is associated with an early return to work. Private employers may be more likely to appreciate an employee's early return to work after a surgical procedure. That may provide leverage to hospitals to negotiate contracts that can bring to higher reimbursement for those procedures. Periodically, a review of outcomes and protocols associated with credentialing and recredentialing should always be performed by a multidisciplinary team to maintain safety standards and to avoid 'negligent credentialing claims' which has been increasing in the last decades in the court of law [50]. In current, profit-driven health care economics, disciplined planning, efficient strategy, and forecasting business models are the foundation for successful robotic

**Figure 3.**

*Five important steps in implementation of a robotic program from business standpoint.*

## *Present Challenges of Robotics in Gynecology DOI: http://dx.doi.org/10.5772/intechopen.96780*

*Latest Developments in Medical Robotics Systems*

(ROI) in advanced surgical technology.

making products with reduced artificial lifespan and, thereby, get repeat sales. One of the most effective strategies is eliminating the competition, so companies can dictate the prices to their buyers. At present, Intuitive Inc. is the only company that produces viable robotic technology approved for human use and unilaterally decides the production cost, maintenance cost, cost of equipment and other accessories, etc. Therefore, administrators have only limited room to save money by reducing operating time, turn-over time, and the costs associated with readmissions and complications. On average, 150 to 300 cases annually are required for at least six years to offset the initial and ongoing costs of the da Vinci System [46]. **Figure 3** shows five industry-tested steps are important to understand in implementation of a robotic program from a business standpoint. It is also important for administrators to understand that competitive advantage is not sustainable, and therefore, requires an evolution in business strategies over time. Thus, it is important to both monitor and incentivize the upscaling phase along with maximizing both the exploitation and reconfiguration stages to further optimize return on investment

Recently, a study analyzed 180,230 women who underwent laparoscopic or robotic-assisted laparoscopic hysterectomies for either benign or malignant indications (specifically endometrial cancer) from 2006 to 2012 [47]. This study demonstrated that the cost of robotic-assisted hysterectomy remained high, but this cost is offset by increased procedure volume. The use of robotic assisted technology was also found to decrease cost for oncology cases but not in benign gynecological surgeries. The cost difference between hysterectomies performed by three different modalities was analyzed by Bell and colleagues [48]. Data reveals that on average, compared to robotic procedures, the total cost for hysterectomies with staging was approximately 30–40% higher in the procedures completed by laparotomy (P < .005), but robotic was 10% more expensive than laparoscopic surgeries (P=NS). It can be hypothesized that during the phase of the learning curve, there would be major cost burdens associated with the time of the operation, turn over time, initial complications, prolonged hospital stays for some cases, conversions to open laparotomy, and overhead costs associated with the initial cost of acquisition.

*Five important steps in implementation of a robotic program from business standpoint.*

**114**

**Figure 3.**

Due to these increased cost burdens, this would potentially minimize the cost advantage of robotic-assisted surgeries over the traditional laparotomy throughout the learning period.

After studying various case studies and industry best practices, we proposed a three-stage business model for a robotic program: 1) Negative earning, 2) Zero sum, and 3) Positive earnings (**Figure 4**). The stage of negative earnings coincides with the initial learning curve stage. Hospital administrators should have strategies in place to overcome the expected financial losses during this time. The most important strategies include low-risk case selections (which would typically offer better outcomes and minimize risks of potential losses) and thereby ensuring excellent patient satisfaction (which would lead to popularity and recognition of the program and strengthen the morale of the surgical staff) and continuous monitoring of the learning curve by various parameters such as operating time (used by surgeons), pre-docking and post-docking time (typically used by nursing and anesthesia), turn over time (time required from the end of one case to the beginning of next case), complications, length of stay, etc. In the zero sum stage, transitioning from the learning stage to the experience stage, it should be vital to market the program with positive patient outcomes. Studies have shown [49] that more than 80% of internet users perform research to use information to make decisions regarding their health care choices, especially surgeries. After the learning curve has been conquered and the program is in the stage of positive earning, administrators can expect to acquire advantages such as expanding the payer mix, which will include more private payers in addition to Medicare and Medicaid. Robotic surgery is associated with an early return to work. Private employers may be more likely to appreciate an employee's early return to work after a surgical procedure. That may provide leverage to hospitals to negotiate contracts that can bring to higher reimbursement for those procedures. Periodically, a review of outcomes and protocols associated with credentialing and recredentialing should always be performed by a multidisciplinary team to maintain safety standards and to avoid 'negligent credentialing claims' which has been increasing in the last decades in the court of law [50]. In current, profit-driven health care economics, disciplined planning, efficient strategy, and forecasting business models are the foundation for successful robotic program.

**Figure 4.** *Hypothetical business model demonstrating sensitivity of revenue stream to learning curve.*
