Air and Gas Engineering Division

PROPOSED MEDICAL OXYGEN

GENERATOR PROJECT
 Table of Content

Executive Summary:
Pages
I. Company Profile ---------------------- 1
II. Project Summary ---------------------- 1
III. Technical Principle ---------------------- 2
IV. Financial Study ---------------------- 3
V. Technical Advantage --------------------- 5
 I. COMPANY PROFILE

Vet Specialists, Inc. under the division of “Air and Gas Engineering Division” has been in the
distribution of Oxygen Generators and Air Cleaners for commercial and industrial applications
since 1994. Before the establishment of the company, its associated company which is Third
World Eximport Corporation started the importation and distribution of an air separation
plant and acetylene plant in 1979 and had its first built project of Oxygen/Air Separation Plant
for Belt Gas in Laguna City. The reliability and good performance of the first installations
prompted other gas dealers such as Caloocan Gas, Pryce Gases, Inc., FSP Gases, Inc., Mandaue
Compressed Gas and etc.

Over the past decade, the Air and Gas Engineering Division has distributed a variety of gas-
related systems and products such as medical /compressed air generators, medical vacuum
pumps, oxygen manifolds, nitrogen generators, oxygen cylinders, and acetylene plants, and
other industrial machinery.

Thru expert partnership and business relations, the company has delivered an oxygen
generator to local government unit projects, government hospitals, private hospitals, and
other business entities engaging in the oxygen cylinder refilling business. Consequently, the
provision of accessible and affordable medical oxygen will always now be available to the
hospital. Moreover, VSI carries a multi-system oxygen generator that can suit any hospital
requirement, in terms of capacity, flexibility, and machine configurations.

The company is also representing air cleaners and air sterilizers for commercial and medical
applications. The products are being distributed through physical stores such as DIY shops,
shops inside the shop, and home centers.

Vet Specialists, Inc. has its office and warehouse in Quezon City from where it services the
entire Philippine archipelago. The company’s distribution system includes the operation of its
own fleet of trucks within Luzon and utilizes commercial shipping and logistics facilities to
service its client in Visayas and Mindanao.

II. PROJECT SUMMARY

The medical oxygen requirements of the hospitals (Private and Public) in the Philippines are
mostly being provided by third party suppliers. This current set-up poses issues on ensuring
that hospitals have continuous supply of their medical oxygen and air requirements. Likewise,
many hospitals are spending millions of pesos in a year for medical oxygen. This spending
continuously escalates because of the increasing demand for hospital services every year and
the price increase in the medical oxygen supply as a commodity.

To ensure that the provision of accessible and affordable health care services to the
constituents will always be available, the establishment of onsite medical oxygen generating
plant or oxygen generator facility is being proposed.

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The proposed project aims to achieve the following major objectives:

1. To enable the hospital to produce and supply the medical gas requirements of their own.
2. To reduce the inconvenient frequent repurchasing of cylindrical medical oxygen from the
third party suppliers.
3. To enable hospitals to expand its health services thru savings instead of additional budget.

III. TECHNICAL PRINCIPLE

Medical grade oxygen is generally generated using two procedures, the pressure swing
adsorption (PSA) or the membrane separation techniques. Both methods offer distinct
advantages and disadvantages over the other in relation to producing high grade medical
oxygen supply.

There are variety of oxygen generation machine that are available commercially with varying
capacities and specifications. End-users may also choose from different configurations base on
their requirements and customization to meet their specific needs. Nevertheless, medical
oxygen generators should come with oxygen purity monitoring device which ensure oxygen
produced is within the acceptable purity limits.

In particular, the hospital shall opt to adopt the use of pressure swing adsorption (PSA)
technology to provide the medical oxygen needs of the hospital. PSA technology are also said
to be used widely for oxygen provision in healthcare applications.

Further, the following are the advantages of employing PSA technology in generating medical
grade oxygen:

 Complete automation and simplicity of operation;

 Minimal manned attendance required during operation;
 Enhanced failure safety and reliability;
 Quick start and stop;
 Moderate dimensions and light weight;
 Low noise level;
 Extended operational life;
 Low operating costs;
 Minimal special workshop requirements;
 Easy installation and integration into an existing air system.

Pressure Swing Adsorption (PSA) Principle

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 The technology behind the standard Oxygen Generators is the Pressure Swing Adsorption
process wherein oxygen is separated from air. Purely a physical process no chemical, electrical or other rea

The Generator consists of two cylinders with Zeolite Pellets. Zeolites are used to generate oxygen. An exter

MOLECULAR SIEVE
(ZEOLITE ABSORBS NITROGEN)

It results to high-purity gas and this is stored in the buffer tank. During this step of the cycle,
the second cylinder is cleaned. Next, the pressure between the two cylinders is equalized.
When the pressure drops in the left cylinder and the pellets are saturated, the waste products
are blown out through the exhaust system. In the right cylinder, pressure builds up until the
pressure between the two cylinders is once again equalized. The Process is repeated and a
constant production of gas is established. A full PSA Medical Oxygen System is composed of an
Air Compressor, Refrigeration Dryer, in-line Filters, Air Tank, Medical Oxygen Generator and
Oxygen Buffer Tanks. All that is required is Electricity and Air.

IV. FINANCIAL STUDY

Based on the financial performance, the establishment of an onsite oxygen plant was found
to be beneficial to hospitals to ensure continuous supply of medical oxygen. Moreover, there
is also a good opportunity to generate revenue on the production of excess cylindrical
oxygen for private hospitals. Thus, the savings on purchasing oxygen supply may be allocated
to other healthcare services for the growing patient census in most hospitals. Financial cost
analysis can be provided wherein the return on investment, yearly savings and cost of
ownership will be thoroughly assessed and calculated.

Moreover, as we have studied the cylindrical tank, there is 10% oxygen retention in every tank
which cannot be used due to low pressure that is no longer able to push thru. This translates
to a 10% loss on the cost that the hospital has on cylindrical tanks.

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 10% Oxygen Retention = 10% Loss on the cost of Medical oxygen

Sample Computation on the 10% yearly savings:

Yearly Hospital expense on Medical Oxygen: Php 7,000,000.00

 Php 7M x 10% (Oxygen retention) = Php 700,000.00 Financial Loss which
supposedly may be allocated to other healthcare services

Financial study on the cost of ownership can be made once all updated information below
is provided:

 Current bed head capacity (Operational)

 Is the hospital equipped with oxygen manifold? (Buildings that are equipped
with oxygen pipe laying)
 Average number of cylindrical tanks of oxygen consumed in a daily/monthly basis.
(For the desired capacity of the machine that will be proposed)
 Current refilling cost of oxygen per cylinder tank.
 Electricity cost per kilowatt/hour. (For the computation of the production cost per
tank)

Feasibility Study
This is a comparison between the current hospital expense on purchasing cylinder tanks from
third party supplier and the operation cost when the installation of onsite Oxygen Generating
System is implemented. Once the unit has been turned over to the hospital, they can attain
revenue on the savings they would have from utilizing the system which can be allocated to
other hospital services. The factors that affect the production cost of the system are stated as

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follows: electricity cost on the production of the medical oxygen, maintenance and other
operating expenses. In order to measure the cost effectiveness of the proposed project, a ten-
year projection of the expenditures if the hospital will purchase medical oxygen from private
suppliers was computed and compared it from the operating expenditures of an on-site plant.

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 V. TECHNICAL ADVANTAGE (MULTI-SYSTEM OXYGEN GENERATOR)

Reasons to implement VSI’s (Air & Gas Engineering Division) Oxygen Generator Proposed
Project in private hospitals:

1. VSI has a multi-system and types of oxygen generators to offer (stand-alone system,
multi skid unit, containerized skid, oxygen generator for centralized gas piping and
oxygen generator with cylinder refilling)

2. The oxygen generator’s oxygen purity will be ranging from 94% to 99%, depending on
the requirement of the end user.

3. Some VSI units have a better energy savings feature which has less power consumption
compared with other brands.

4. It requires less space for the unit compared with other brands, translating to
less infrastructure cost.

5. The technical advantage and plug-and-play features of the unit will entice more the
end users with multi-tasking, partially skilled staff of hospitals or LGU’s technical staff.

6. VSI Business Developer strongly believes that oxygen generator doesn’t need to be
industrial in looks, and a typical PSA “Twin Tank” Oxygen Generator has many moving parts
which can translate to high annual preventive maintenance costs on parts and labor. For a
hospital environment, oxygen generators can be minimalist, aesthetically appropriate and
still provide the biggest technical/financial advantage for the hospital.

7. VSI Business Developers would want to deliver at your site and turn over a
sophisticated oxygen generator set up that will last for years.

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