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John Vano, President, Radiology Oncology Systems | October 10, 2012
From the October 2012 issue of HealthCare Business News magazine

Technology reimbursements: Buying a new machine today allows for a specific technological reimbursement. But what will that be when the machine is sold in ten years?

The Centers for Medicare and Medicaid Services utilize reimbursement rates to encourage clinicians to adopt new, proven treatments. When CMS code 77421 was released years ago, image guided radiation therapy became widely adopted, and linear accelerators were upgraded accordingly. Eventually, IGRT became the norm.

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And as economics dictates, when there is more volume to spread across the fixed costs of development, the cost of such equipment goes down. CMS, accordingly, lowered the reimbursement rates of the technology.

This has been the pattern. A strong reimbursement rate generates adoption of new technology. As the technology is adopted, the average costs decrease. And once costs comedown, reimbursement rates follow.

Whether a linear accelerator system has the technology to capitalize on higher reimbursement rates naturally affects the price of a machine in the used equipment market. Linear accelerators with IMRT, IGRT, and CBCT (cone beam CT) capability naturally command more than machines without these technologies.

It’s hard to predict what technologies will be reimbursed in years to come, and how they will impact the value of the equipment. Varian and Elekta have a long history of manufacturing systems that can be upgraded with new technologies, and this has helped bolster the value of used equipment. Other, more specialized systems may be more limited in their upgrade paths.

John Vano is the president of Radiology Oncology Systems, Inc., a company based in San Diego, Calif. For the past fifteen years, the company has been helping radiation oncology and diagnostic imaging facilities worldwide with cost-effective, refurbished equipment programs.

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