Surgical Robot
Practice this intermediate merger & acquisition case interview question in the Healthcare sector. Includes detailed problem prompt, clarifying questions, structured framework, and expert recommendation. Part of ProHub's 835+ consulting case library.
This case teaches break-even analysis as the primary financial framework for M&A decisions in healthcare technology. The candidate must recognize that even the superior Da Vinci alternative produces unfavorable returns relative to the robot's 8-10 year lifespan, revealing that neither acquisition is financially justified despite operational improvements.
Your client is a privately owned hospital that offers high-tech surgical procedures. They would like to start using robots in their surgeries.
Recently, a new surgical robot, Robot X, was developed and has now been on the market for six months. The robot is highly precise and drastically reduces human work in surgeries.
Should your client acquire Robot X?
Clarifying Information
- Technology replacement rate is ~10 years for surgical robots
- Client specializes in minimally invasive surgeries, but has never employed a full robot
- Of the hospital staff who are authorized to perform surgeries, 70% are technicians (with Bachelor’s degree) and 30% are medical professionals (with M.D.)
- Buying a surgical robot will allow our client to hire 5 fewer staff technicians per year
- Each staff technician is paid an annual salary of $60,000
- The hospital generates an extra $300/surgery that a surgical robot performs
- There are currently only a few surgical robots on the market; the Da Vinci Robot is the leader in the market