When does your surgical robot end up in a dumpster ?

This is the nightmare situation for every robotic start up. History has not been kind so far to many makers of surgical robots and other healthcare robots. So how should anyone (like people wanting to join companies, investors looking to invest - or strategics looking to partner or buy a company) assess if the robot is heading the way of the dumpster.

There are a few key metrics that everyone should be asking - but one of the most important is system utility. ie. "How many surgeries are being performed by a robot across an active fleet of robots per week."

System Utility

This seems to be some simple math. It's the number of procedures performed, by the number of systems out there, over the time span they've been active. But getting to that number is a bit more complex because robots get added to the fleet every so often, there are ramp up learning curves that confound the sums and other factors at the start of a program that may confound the numbers.

But what you need to get to is - for robots that have been in field for more than one year - how many total procedures were done by that active fleet over a 52 week period. And then divide that number of procedures - by the number of systems in that active fleet - and again divide by 52.

(The one year is a fair time span to have gotten to a steady state.)

This number is the number for utilisation that really counts:

A good number would be 10 per work week (2 per day) (520 cases per year)

An average number would be 5 per work week (1 per day) (260 cases per year)

Then we need to get into the sad and risky numbers:

If a system is doing less than 3 procedures a week ( about 150 per year) then that system is most likely losing money for the hospital - and certainly losing money for the company; and not being used nearly enough to become a routine. And that can have clinical implications.

If 1/3 or more of an active fleet is in that level of numbers - then there is a significant issue brewing... you need to dig in system by system and ask some hard questions. Why is the level that low?

Less than 2 procedures a week is a big issue.

And here's the big question: Are there ANY of the fleet that are sitting still and gathering dust - not doing any procedures? If the answer is "Yes" then watch out! Except for incredibly exceptional internal hospital issues - a robot should never be idle. If it is... it's coming back.

There are many reasons for why you could end up with a sitting robot - but the most likely is that it just does not perform as was "sold". It either is slower, more difficult to use, not capable, hinders workflow, breaks, frustrates or sucks time and money. It should be a huge huge huge red flag. (Ask that question!)

Now to make it a little reflective of the real world - you also need to trim off the outlier "super user accounts" - they can distort this number dramatically if the fleet is in the single digits. The super user account could do 5 procedures a day - which shows a sort of potential. But you must always come back down to the real world numbers of the average of the active fleet when you get to scale. A few super user accounts are not what a sustainable business is built on.

Why is this so important? Why should you care?

Simple- this is the health of the profitable revenues. Be it a lease system, a rented system, even a sold capital system, maybe a PPC system. The usage will determine the real revenues of the system and the overall profit. Under 150 procedures and everyone is losing money. You need to be getting to 250 procedures per year to be seeing a healthy system. 350 per year is a good solid sustainable business.

Number of "Installs" is not reflective of the health of the business - especially in a world where most capital is now placed "free of charge" based on utilisation. Don't use that as the stick to measure by.

Utilisation impacts everything:

The leverage of the people employed to run the system, the servicing, and the volume of instruments you need to produce, leverage of the investment by the hospital and company to get going (sales cycle - time invested - training etc etc) - Volume also ties back to the cost of the instruments, and ability to drop that cost. If you can't get your instrument costs down and lives up - to a realistic level - forget profits. I'm talking here 250 plus procedures a year with 10 life instruments at a low cost of manufacture.

It's all linked; and usage per week per system is just a great barometer of robot health, robot company health. There are other ways to measure the health of the robot, the health of the company for sure - but this "utilisation method" is a great way to understand the overall health at a simple glance.

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