Cost-Benefit Analysis Case Study
You are the laboratory manager. The hospital administration wants to pene- trate the market and expand the business by performing Parathyroid Surgeries (reimbursement $15,000). They have enticed a prominent surgeon to join the staff. He plans on scheduling four surgeries per week – two on Tuesday and two on Thursdays. Every case will need an intact Parathyroid Hormone (PTH) performed STAT during surgery. You currently send this test to your reference laboratory with a minimum 24-hour TAT. None of the analyzers currently in your lab are capable of running this test. The best pricing you obtain is from Siemens Diagnostics for an Immulite 1000. The price of the analyzer is $75,000. The price of the test kit is $800 for 100 tests. The test requires three levels of controls run per 24 hours. The stability of the test kit once opened is eight weeks. Reimbursement for the test is $20. You realize that you will only be able to run on average 32 tests (patient reportable results) before discarding the reagent ($25 per test for reagent alone).
Cost-Benefit Analysis Case Study
Issues and Questions to Consider:
- Would you bring the test in-house as per the physician’s request? 2. What other departments need to be involved in developing this service?
- What assumptions should be made modifying the Chemistry operating budget?
- What financial tools would be useful in justifying the addition of this test?
- Would further explanation be needed in justifying the addition of this test as addition does not appear to be warranted on its own merits?
Cost-Benefit Analysis Case Study
Consider the case on page 270 of the Harmening textbook regarding the hospital administrator’s request for lab services to support parathyroid surgeries which would require offering intact PTH testing on two days/ week. Costs of the analyzer, reagent test kits, number of controls required, and reimbursement revenues are described. In addition, consider that 4 tests are run monthly for the calibrators. You will be asked to consider if the test can be offered in-house by performing some calculations and explaining factors involved in the decision making by answering the following questions. APA.
- How did the actual cost per test be determined for reagent alone? Show the calculation:
- How many tests in the kit are going for non-billable tests (these are tests you run that are not patient samples)?
- Considering the total reagent cost over 8 weeks, and the number of patient reportable tests, the number of non-patient reportable tests, what is the likely cost of wasted reagent?
- What are other expenses that should be considered in calculating cost per test? Include specific examples.
- Considering the reimbursement revenue discuss your initial thoughts on cost/benefit for offering the intact PTH test STAT for in-house surgery.
- What additional ideas could be explored and provided to the hospital administrator that may make this more favorable?