Cost Comparisons

Updated: Sep 19, 2020

Comparing systemic costs of traditional manufacturing against subscriptions is hard. New economy models can help.


One of the questions we get asked a lot as innovators, is "how much do printed devices cost compared to traditional models?"





Cost is only one side of a health economic equation. Because Automedi solves systemic problems, this question become surprisingly complex to answer as it compares apples and pears, in a context where the systemic health economic benefit is actually needed for consideration.


Overview


By their nature, Health economics are nonlinear problems. A small effect at the beginning can result in a large, systemic effects across the service, which may come back into the health system somewhere else. These economic cases are much harder to properly model in isolation, since this "resonance" can yield greater, or lesser benefits than expected. In turn, making traditional accounting methods difficult to apply on their own. When including socio-economic and climate effects, this problem only gets harder to reliably cost without also considering the corresponding value it yields, 2 or more degrees from the source.


Automedi subscriptions are a fixed monthly price. Aside from energy costs, the total operational monthly cost is almost exactly the same whether subscribers make one item or 100 items. The more you make, the cheaper it becomes and any products can be sold on if subscribers wish to. Indeed, many of the micro-economies we are nurturing outside the health system operate in exactly this way. The micro-business take on a fully inclusive device subscription, which they use to manufacture and sell exactly what their own customers want and need. Whether that's a mobile service in attendance outside events, or selling items on any sharing economy website, or even online marketplaces like eBay. Because of this, direct comparisons can only be made in a few, limited ways



1. Comparing Cost per Kg


This is not a very practical accounting option, but one that aligns well to climate KPIs. It combines the cost to manufacture 1kg of a certain item of plastic equipment made with Polylactic Acid (PLA) or Polyethylene Terephthalate Glycol (PETG) with freight and logistics costs for a median distance (in the UK care system, 7.8 miles).


NHS procurement accounts for 5.7 billion miles each year. At 3.5 tonnes on average and delivering almost 4.5 million orders annually, the net cost to transport 1kg of equipment, a median distance, is 34 pence. Couple this with the cost of 1kg of processed plastic, as items, being £17.90 per kg, this results in a total cost of £18.24 for 1kg of that item. Yet emits 900 grammes CO2/kg/km. We will cover climate effects in an upcoming video.


In contrast, Automedi provides all filament within the subscription and while unrecycled raw material costs us £17.50. This is not what the buyer pays. They pay for the entire subscription, including all maintenance. Furthermore, our plastics recycling process maintains a low purchase price and volume for raw materials, as we recycle the same plastics we put into the system, at 100% weight.




2. Comparing Cost per Item

This is the more intuitive benchmark. Yet, because of the different comparisons and the way items cost less the more you make on site, the price comparison naturally changes based on how much is printed.


Taking custom face-masks as an example. Currently custom facemask frames are very expensive. Costing between £35 and £83 ($110 in the USA) including fitting and you have to scan your face yourself, which requires specialist skills and tech literacy, that itself requires training. Automedi only needs to print 2 custom face-mask frames every month to return its entire investment against this. Everything after that, is simply energy costs at 2p per item.


To supply fitted frames to all 1.3 million NHS workers in a two week period would require 30,000 Automedi appliances utilised for only 4 hours a day. A cost of £3.75 million in subscriptions and £24,000 in energy, compared to £45.5 million. Note, this is only making fitted frames! With Automedi, the same £3.75 million spend can also be used to manufacture other equipment, on-site. In essence, making that other equipment free, bar the energy consumption.


In contrast, standard fit frames are currently £3.95 to £5.95 per item including material and delivery. Very often requiring a minimum order quantity in batch sizes which prevent leaner storage regimen. Automedi's fitted face-mask performs so well, they can even be compared to standard frames, despite the fact they are custom units.


Using this model, Automedi demonstrates a very significant return on investment.



Worked Example: Apples and Pears


As an illustration of dichotomy, imagine you procured an Automedi nano subscription at an offer price of £125 per month and you only made one fitted face-mask frame each month and no other equipment. This single face-mask frame consumes 15.9 pence worth of material, yet you have effectively paid £125 for it and consumed around 2p worth of unit electricity.


Compare this to 100 utilisation hours per month. In this case, your £125 investment in the subscription and around £20 of electricity, has generated 60 to 120 face-mask frames, which even in standard, unfitted form, total up to £714 to buy. Furthermore, Automedi takes less time to both deliver, operate and initiate that procurement, compared to ordering online or through a buyer. Simply walk up to your Automedi machine, select it, and start. It also reduces likely sickness absences, which cost the NHS an extra £1 billion this year due to the COVID-10 pandemic. A risk that can substantially reduce with the availability of proper equipment, which in turn, reduces the cost of absence.



NHS temporary staffing cost the NHS an extra £14 billion in staffing costs, including more than doubling NHS sick pay during the 2020 COVID-19 pandemic
NHS temporary staffing costs & composiiton (left) & salary cost of absences (right), March - August 2020


Conclusion

Overall, the Automedi platform provides a number of collective benefits that are not easy to spot from the outset.


The result? Automedi considers systemic effects to support significant cost and risk reduction, faster delivery, greater public health and sustainability. Each of those with a financial proxy that also provides certain additional benefits to the service. Pure financial cost-accounting method don't consider these effects, because by their very nature, they consider only the outgoing consideration. Often as financial proxies, or recurrent variables dependent on itself, through theses nonlinear relationships that exist in each stakeholder's concern.


That's a lot of big words! Granted. For now, maybe it is easier to say that Automedi does offer substantial benefits across the NHS and wider economic system, by removing emissions worth £345 million of NHS demand, reducing plastic consumption and significantly reducing the cost of total manufacture and delivery. Putting it under 10% of it's total cost of purchase. Have more questions? Take a look at our FAQs for more into or Contact Us. We'd love to hear from you!

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