From Cost Center to Value Driver: Making the Case for Total Value of Ownership (TVO) in Life Sciences

• TCO mindset: Focuses narrowly on purchase price, maintenance, and depreciation.
• TVO mindset: Expands the conversation to include (REF, Abbott):
  • Time savings from automation and streamlined workflows
  • Space optimization through smarter lab design and equipment utilization
  • Improved decision-making powered by high-quality, timely data
  • Regulatory alignment, ensuring compliance with value-based procurement mandates

The EU Directive on Public Procurement calls for value-based approaches in healthcare purchasing³ (REF, EU Directive paper). Instead of awarding contracts solely at the lowest price, procurement agencies are urged to assess long-term outcomes, efficiency gains, and innovation impact. This directive signals a significant opportunity for laboratories and MedTech providers: demonstrate not just cost efficiency, but value creation across the healthcare ecosystem.

The value of TVO is more than theoretical. Several case studies demonstrate its measurable impact:

• Citilab’s case study¹ shows that the lowest upfront cost did not deliver the greatest long-term value. While one supplier’s instruments appeared less expensive at purchase, a Total Value of Ownership (TVO) analysis revealed that an alternative solution became 25–30% cheaper once indirect costs such as utilities, waste, and workflow efficiencies were included. Citilab validated these findings through real-world testing of its top assays, proving that operational efficiency and hidden costs strongly influence overall value. This led the organization to shift its procurement strategy from focusing on purchase price alone to prioritizing long-term value and performance
• Asthana et al. (2016)⁴ conducted a cost-benefit analysis (CBA) comparing the Cray Urika-GX system with public cloud implementations for life sciences. Results showed that the Cray® Urika®-GX system lowers three-year TCO compared to public cloud like Amazon Web Services, reaching breakeven in 1–3 years depending on workload size, and even sooner with heavy data transfer. Its integrated, high-performance design reduces complexity and speeds up analytics, unlike cloud-only approaches that carry hidden costs. In this case, not only cost but also performance advantages were considered in the comparison.
• Settanni et al. (2021)⁵ concludes that applying Total Value of Ownership (TVO) and Overall Equipment Effectiveness (OEE) provides a robust framework for evaluating automation in therapeutic drug monitoring (TDM). The introduction of automated LC-MS systems reduced manual labor, cut costs per sample by over 50%, and improved equipment utilization while maintaining high analytical quality. Although turnaround time for some immunosuppressant tests increased, overall workflow efficiency, cost savings, and standardization improved significantly.

The shift from TCO to TVO is not just semantic. It’s a paradigm shift in how we perceive the role of laboratories and life sciences technologies in healthcare. By embracing TVO:

• Providers can justify investments that optimize workflows and outcomes
• Policymakers can align procurement with long-term system value
• Patients ultimately benefit from faster, more accurate, and more sustainable healthcare delivery

Life sciences leaders should position their innovations not as costs to be contained, but as value drivers shaping the future of healthcare.

To demonstrate the TVO of investment to decision makers, complex data should be translated into compelling value stories. BaseCase® makes this possible by offering:

• Interactive models that illustrate clinical and economic impact effectively
• Customizable value arguments tailored to different stakeholders
• Easy localization for diverse markets and payer systems

Whether presenting to hospital boards, procurement agencies, or regional payers, BaseCase equips life sciences teams to demonstrate and defend TVO in real time.