Acquiring capital equipment through shared-risk agreements

The Medical Center at the University of California, San Francisco (UCSF) developed a shared-risk relationship with a vendor to manage the costs of infusion therapy. The relationship was centered on upgrading UCSF's aging stock of infusion pumps. Over the course of the 60-month agreement, the vendor agreed to provide the medical center with 750 new infusion pumps, upgrades on related software, a full warranty, full maintenance on the pumps, and assistance with ensuring appropriate utilization. Additional pumps were to be available if required to meet demand. In exchange, UCSF agreed to pay the vendor a fixed rate based on the number of admissions. If the number of pumps required exceeded 775 or fell below 730, the fixed rate could be reassessed. As a result of the agreement, UCSF has needed fewer infusion pumps and infusion sets. A slight increase in operating expenses has been more than offset by avoidance of the 7 to 10 percent interest the medical center would have had to pay if it had borrowed funds to purchase new pumps.