Depending on the options that a hospital chooses to purchase, the cost of a da Vinci system can range between 1 million and 3 million dollars with the associated sales taxes. As with all surgical instruments, there are also disposable items needed during a surgery associated with equipment – specifically the da Vinci which must also be purchased. These items range from $1,000 to $3,000. Finally, as with many pieces ofsophisticated electronic technology, it must be maintained. These maintenance costs can be upwards to $200,000 a year. In addition to these specific costs, hospitals must continue to maintain the surgical suites that this equipment occupies as well as utilize all other supplies that would be used in any surgical setting. The Deal: A local hospital in the Puget Sound area faced a dilemma in the medical arms race. Surrounding hospitals were purchasing and utilizing the da Vinci robot system. Management began to worry about the erosion of patients that would seek out this modern technology over more traditional surgical procedures. To this end, a strategic decision was made to acquire the da Vinci robotic surgical system. The following data was presented to an analyst in the Finance Department for review: Table 1:
