Cost per procedure is the most useful figure in equipment economics and the most easily manipulated. It converts everything a device costs into a single number that can be compared with an alternative, and it does so by dividing by a volume that may be an estimate, a target or an aspiration. The figure is only as good as the costs included and the volume used, and both are frequently chosen to produce the answer somebody wanted. Used properly, it is the clearest way to compare two platforms; used loosely, it is a way to justify a decision that was already made. This article sets out what the model optimises for, which costs belong in it, and how volume changes the answer.

What the Model Optimises for

The model optimises for comparability. By expressing a platform’s economics as a cost per unit of activity, it allows two devices with different prices, different consumable costs, different maintenance profiles and different expected volumes to be compared on the same basis. That is a genuine advantage over comparing acquisition prices, which say nothing about how the device will be used.

The model also optimises for nothing else, which is worth stating because cost per procedure is sometimes treated as a decision rule. It is not: it excludes clinical appropriateness, availability requirements and risk, all of which may be decisive. The extractable summary is this: cost per procedure converts a platform’s total cost over a period into a figure per unit of activity, so it makes comparison possible, but it does not by itself establish which platform a department should choose.

There is also a presentation issue worth recognising, because it affects how the figure is used in practice. A single number is persuasive, and a figure that has been calculated with a favourable volume assumption and a narrow cost set will persuade a reader who has not seen the assumptions. Presenting the figure with its inputs beside it, and with a low case as well as an expected one, changes the conversation from defending a number to examining an assumption. That is a more useful conversation and it produces better decisions, even where it produces the same conclusion.

The Cost Lines That Decide It

The figure is driven by a small number of lines, and the ones that dominate change with volume. At low volume the fixed lines dominate; at high volume the per-use lines do.

Where a platform’s per-use cost includes single-use items, the buyer is responsible for confirming legality, labelling and any applicable reprocessing position in their own market, since the commercial model does not address that question.

How the Numbers Behave Over the Equipment Life

Cost per procedure is not stable over a device’s life, and the reason is that its two components move in opposite directions. The fixed element falls per procedure as volume accumulates, while the maintenance element tends to rise as the device ages and components reach the end of their service life. The result is that the figure can be flat for years and then rise, which is why a single-year figure cannot be assumed to represent the whole period.

For planning, the practical approach is to model the figure across the period the capability is needed and to note where it changes materially. Where a device’s support position ends partway through the period, the maintenance line changes at that point, and the change should appear in the model rather than being averaged away. Where the equipment is expected to run at high volume, the consumable line will dominate and the acquisition decision matters less than the consumable terms, which changes where negotiation effort should be directed.

A second behaviour concerns case complexity rather than time. A device used for a range of case types carries a different cost per case depending on which cases it handles, and averaging across them produces a figure that describes none of them. Where the case mix is broad, the model is more useful when it is run separately for the main case groups, because the comparison between platforms may reverse depending on which group is being examined. That reversal is common and it is the reason a single average figure can support two opposite conclusions about the same equipment.

Where the Model Transfers Risk and to Whom

Risk does not appear in a cost per procedure figure unless it is priced into one of the lines. The risks that most affect the figure are those that change the volume or the cost of a dominant line.

Sensitivity to Volume and Utilisation

Volume is the variable that determines which costs matter, and it is the input most often assumed rather than measured. At low volume, the figure is dominated by costs that do not change with use, so improving utilisation has a large effect on the result. At high volume, the figure is dominated by per-use costs, so the effect of utilisation is smaller and the consumable price matters more.

That behaviour has a practical consequence for negotiation. A department operating at low volume gains most from reducing fixed costs, whether by choosing a lower-cost platform, sharing capacity or shortening the period. A department operating at high volume gains most from consumable terms and from process efficiency, because those determine the figure. Applying the same approach to both situations wastes effort, and the error is easy to make because the same figure is being quoted in both cases.

Exit and Early-Termination Positions

The exit position affects the figure through the residual value and through the costs of changing platforms. A device with a realisable residual value reduces the acquisition line over the period it was used; a device with no residual value carries the whole acquisition cost. Where the period over which the figure is calculated is shorter than the intended service life, the residual value belongs in the model, and leaving it out overstates the figure.

The second element is the cost of switching. Moving to a different platform may require new consumables, new accessories, training and, in some cases, changes to how the department works. Those costs are real and they are frequently omitted, which makes a marginally cheaper alternative look better than it is. Where a platform change is being considered on a cost per procedure basis, the transition costs should be added to the period being compared rather than treated as a separate exercise.

A third exit consideration is the timing of the change. A platform change made at the end of a device’s supported life coincides with a replacement the department would have made anyway, while a change made mid-life carries the unrecovered cost of the existing asset. That difference is frequently larger than the cost difference the comparison is examining, and it should be part of the model rather than part of the surrounding argument.

How to Compare Two Models Fairly

A fair comparison holds the case mix, the period and the volume constant, and includes the same cost lines on both sides.

The obligations attached to the equipment also affect the comparison indirectly, because they determine what has to be recorded and maintained over the period. Those expectations continue throughout ownership and are illustrated in one market by the MHRA guidance on regulating medical devices. The duty to keep equipment safe and available is framed in national workplace material such as the HSE health services guidance, and where a measurement or test supports a performance or acceptance decision, the traceability of the instrument involved forms part of the evidence, which the ILAC accreditation directory allows you to check.

Buyers who want the wider commercial context can start from the knowledge hub, compare how equipment and its consumables are described on the marketplace store, or use the commercial material in the industry hub. Our analysis of lowering nerve localisation cost per case in ambulatory surgery centres shows how the same modelling approach is applied to a specific procedure cost. The servicing framework that determines the maintenance line is covered by AAMI’s medical device servicing material, independent guidance from organisations such as ECRI is a useful reference on equipment reliability, and cross-market expectations for health technology management are summarised by the WHO medical devices programme.