Activity-based costing in radiology. Application in a pediatric radiological unit

Restructuring of a Hospital Radiology Department: Subspecialization Between Man, Machine, and Multidisciplinary Board

BACKGROUND

 Radiology, like almost no other discipline, is faced with a rapid increase in information and technology. This and the growing demands regarding referring medicine, quality requirements, and personnel efficiency increasingly require subspecialization in terms of content. There is already an established move towards radiological subspecialization in the Anglo-American region. In this review article, the content and possibilities of restructuring a hospital radiology department are presented in order to support acceptance in German-speaking countries.

METHOD

 Based on the current literature, the aspects of subspecialized radiology as well as its necessity, advantages, and disadvantages are discussed and the challenges to hospital management with respect to strategic implementation in the individual phases are presented based on the example of a university radiology department. The viewpoints also take into account the education regulations and integrate a modern learning concept.

RESULTS AND CONCLUSION

 Modern restructuring of hospital radiology departments is faced with increasing demands on a traditionally technically organized radiology department with regard to the complexity of referring medicine, subspecialization pressure (including in certified boards), and staff efficiency. The restructuring of a radiology department must be aligned with the clinical requirements and discussed in the overall concept of radiology including its environment.

KEY POINTS

  · The tremendous expansion of knowledge requires a content-based subspecialization of modern radiology as a cross-sectional discipline.. · Proactive radiology meets the increasing demands of its clinical partners and offers great potential for improving quality and efficiency.. · The restructuring of a hospital radiology department requires well-planned strategic management taking into account all involved processes, resources, and personnel qualifications..

CITATION FORMAT

· Henkelmann J, Ehrengut C, Denecke T. Restructuring of a Hospital Radiology Department: Subspecialization Between Man, Machine, and Multidisciplinary Board. Fortschr Röntgenstr 2021; DOI: 10.1055/a-1545-4713.

Costs structure of the inpatient ischemic stroke treatment using an exact costing method

Objectives

Most stroke care expenses are inhospital costs. Given the previously reported inaccuracy of conventional costing, the purpose of this study was to provide an accurate analysis of inpatient costs of stroke care in an acute care hospital.

Materials and methods

We used activity-based costing (ABC) for calculating the costs of ischemic stroke patients. We collected the activity data at the Helsinki University Central Hospital. Persons involved in patient care logged their activities on survey forms for one week. The costs of activities were calculated based on information about salaries, material prices, and other costs obtained from hospital accounting data. We calculated costs per inpatient days and episodes, analyzed cost structure, made a distinction in cost for stroke subtypes according to the Oxford and TOAST classification schemes, and compared cost per inpatient episode with the diagnoses-related group (DRG) -price of the hospital.

Results

The sample comprised 196 inpatient days of 41 patients. By using the ABC, the mean and median costs of an inpatient day were 346 € and 268 €, and of an inpatient episode 3322 € and 2573 €, respectively. Average costs differed considerably by stroke subtype. The first inpatient day was the most expensive. Working time costs comprised 63% of the average inpatient day cost, with nursing constituting the largest proportion. The mean cost of an inpatient episode was 21% lower with ABC than with DRG pricing.

Conclusion

We demonstrate that there are differences in cost estimates depending on the methods used. ABC revealed differences among patients having the same diagnosis. The cost of an episode was lower than the DRG price of the hospital. Choosing an optimal costing method is essential for both reimbursements of hospitals and health policy decision-making.

Cost evaluation of clinical laboratory in Taiwan’s National Health System by using activity-based costing

Background:

To cope with the government’s policies to reduce medical costs, Taiwan’s healthcare service providers are striving to survive by pursuing profit maximization through cost control. This article aimed to present the results of cost evaluation using activity-based costing performed in the laboratory in order to throw light on the differences between costs and the payment system of National Health Insurance (NHI).

Methods:

This study analyzed the data of costs and income of the clinical laboratory. Direct costs belong to their respective sections of the department. The department’s shared costs, including public expenses and administrative assigned costs, were allocated to the department’s respective sections. A simple regression equation was created to predict profit and loss, and evaluate the department’s break-even point, fixed cost, and contribution margin ratio.

Results:

In clinical chemistry and seroimmunology sections, the cost per test was lower than the NHI payment and their major laboratory tests had revenues with the profitability ratio of 8.7%, while the other sections had a higher cost per test than the NHI payment and their major tests were in deficit. The study found a simple linear regression model as follows: “Balance=–84,995+0.543×income (R

Conclusions:

In order to avoid deficit, laboratories are suggested to increase test volumes, enhance laboratory test specialization, and become marginal scale. A hospital could integrate with regional medical institutions through alliances or OEM methods to increase volumes to reach marginal scale and reduce laboratory costs, enhancing the level and quality of laboratory medicine.

A cost management model for hospital food and nutrition in a public hospital

Background

In Chile, the use of costing systems in the public sector is limited. The Ministry of Health requires hospitals to manage themselves with the aim of decentralizing health care services and increasing their quality. However, self-management with a lack of accounting information is almost impossible. On the other hand, nutrition department costs have barely been studied before, and there are no studies specifically for activity based costing (ABC) systems. ABC focuses on the process and traces health care activities to gain a more accurate measurement of the object costs and the financial performance of an organization.

Method

This paper uses ABC in a nutrition unit of a public hospital of high complexity to determine costs associated with the different meals for inpatients. The paper also provides an activity based management (ABM) analysis for this unit.

Results

The results show positive effects on the reduction of costs for the nutrition department after implementing ABC/ABM. Therefore, there are opportunities to improve the profitability of the area and the results could also be replicated to other areas in the hospital. ABC shed light on the amount of nutritionist time devoted to completing paperwork, and as a result, system changes were introduced to reduce this burden and allow them to focus on more relevant activities. Additional efficiencies were achieved through the elimination of non-value adding activities and automation of reports. ABC reduced the cost of the nutrition department and could produce similar results in other areas of the hospital.

Conclusions

This is a practical application of a financial management tool, ABC, which would be useful for hospital managers to reduce costs and improve the management of the unit. This paper takes ABC and examines its use in an area, which has had little exposure to the benefits of this tool.

Tracing contacts of TB patients in Malaysia: costs and practicality

Tuberculin skin testing (TST) and chest X-ray are the conventional methods used for tracing suspected tuberculosis (TB) patients. The purpose of the study was to calculate the cost incurred by Penang General Hospital on performing one contact tracing procedure using an activity based costing approach. Contact tracing records (including the demographic profile of contacts and outcome of the contact tracing procedure) from March 2010 until February 2011 were retrospectively obtained from the TB contact tracing record book. The human resource cost was calculated by multiplying the mean time spent (in minutes) by employees doing a specific activity by their per-minute salaries. The costs of consumables, Purified Protein Derivative vials and clinical equipment were obtained from the procurement section of the Pharmacy and Radiology Departments. The cost of the building was calculated by multiplying the area of space used by the facility with the unit cost of the public building department. Straight-line deprecation with a discount rate of 3% was assumed for the calculation of equivalent annual costs for the building and machines. Out of 1024 contact tracing procedures, TST was positive (≥10 mm) in 38 suspects. However, chemoprophylaxis was started in none. Yield of contact tracing (active tuberculosis) was as low as 0.5%. The total unit cost of chest X-ray and TST was MYR 9.23 (2.90 USD) & MYR 11.80 (USD 3.70), respectively. The total cost incurred on a single contact tracing procedure was MYR 21.03 (USD 6.60). Our findings suggest that the yield of contact tracing was very low which may be attributed to an inappropriate prioritization process. TST may be replaced with more accurate and specific methods (interferon gamma release assay) in highly prioritized contacts; or TST-positive contacts should be administered 6H therapy (provided that the chest radiography excludes TB) in accordance with standard protocols. The unit cost of contact tracing can be significantly reduced if radiological examination is done only in TST or IRGA positive contacts.

Filmless versus film-based systems in radiographic examination costs: an activity-based costing method

Background

Since the shift from a radiographic film-based system to that of a filmless system, the change in radiographic examination costs and costs structure have been undetermined. The activity-based costing (ABC) method measures the cost and performance of activities, resources, and cost objects. The purpose of this study is to identify the cost structure of a radiographic examination comparing a filmless system to that of a film-based system using the ABC method.

Methods

We calculated the costs of radiographic examinations for both a filmless and a film-based system, and assessed the costs or cost components by simulating radiographic examinations in a health clinic. The cost objects of the radiographic examinations included lumbar (six views), knee (three views), wrist (two views), and other. Indirect costs were allocated to cost objects using the ABC method.

Results

The costs of a radiographic examination using a filmless system are as follows: lumbar 2,085 yen; knee 1,599 yen; wrist 1,165 yen; and other 1,641 yen. The costs for a film-based system are: lumbar 3,407 yen; knee 2,257 yen; wrist 1,602 yen; and other 2,521 yen. The primary activities were "calling patient," "explanation of scan," "take photographs," and "aftercare" for both filmless and film-based systems. The cost of these activities cost represented 36.0% of the total cost for a filmless system and 23.6% of a film-based system.

Conclusions

The costs of radiographic examinations using a filmless system and a film-based system were calculated using the ABC method. Our results provide clear evidence that the filmless system is more effective than the film-based system in providing greater value services directly to patients.

Activity-based costing evaluation of [18F]-fludeoxyglucose production

INTRODUCTION

As healthcare expenses are escalating in many countries, the sector faces a new challenge of becoming more cost efficient. There is an urgent need for more accurate data on the costs of healthcare procedures. The cost of Positron Emission Tomography (PET) with [(18)F]-fludeoxyglucose ((18)F-FDG) studies is mainly influenced by the price of the radiopharmaceutical, which may vary throughout Europe from 300 to 500 Euro per patient dose (370 MBq). The aim of the current study is to conduct an activity-based costing (ABC) estimation of (18)F-FDG production in Europe to better identify the different cost components and to analyse their relative contribution to the total cost.

MATERIALS AND METHODS

Financial data were collected on capital expense and global operating costs through interviews with industry experts, PET centre managers, evaluation of prior studies, and review of expenses incurred at the University Medical Centre in Groningen (The Netherlands). After mapping the activities, we divided the cost in five categories: wage, equipment, consumables, overhead and space costs. A sensitivity analysis was performed for key cost components, including the compliance with regulatory requirements.

RESULTS

The critical factor for profitability was throughput. Including the European regulation procedure, the cost for 370 MBq (18)F-FDG patient dose, 3 h EOS without delivery cost, ranges between 155 and 177 Euro/dose for two production runs and between 210 and 237 Euro/dose for one production run. These costs are predominantly determined by personnel and equipment costs, although the cost for quality assurance increases steadily.

CONCLUSION

The ABC analysis provides significant insight into the production cost components of (18)F-FDG through different operating configurations. Reductions in equipment prices, increased availability of radiopharmaceuticals, growth in demand, and improvements in reimbursement will all contribute to the financial viability of this imaging technique.

Cost analysis in interventional radiology—A tool to optimize management costs

OBJECTIVE

The objective of the study was to analyze the methods to reduce cost in interventional radiology departments by reorganizing procurement.

MATERIALS AND METHODS

All products used in the Department of Interventional Radiology were inventoried. An ABC-analysis was completed and A-products (high-value and high turnover products) underwent a XYZ-analysis which predicted demand on the basis of ordering frequency. Then criteria for a procurement strategy for the different material categories were fixed. The net working capital (NWC) was calculated using an interest rate of 8%/year.

RESULTS

Total annual material turnover was 353,000 euro. The value of all A-products determined by the inventory was 260,000 euro. Changes in the A-product procurement strategy tapped a cost reduction potential of 14,500/year euro. The resulting total saving was 17,200 euro. Improved stores management added another 37,500 euro. The total cost cut of 52,000 euro is equivalent to 14.7% of annual expenses.

CONCLUSION

A flexible procurement strategy helps to reduce the storage and capital tie-up costs of A-products in interventional radiology without affecting the quality of service provided to patients.

Managerial accounting applications in radiology

We review the core issues in managerial accounting for radiologists. We introduce the topic and then explore its application to diagnostic imaging. We define key terms such as fixed cost, variable cost, marginal cost, and marginal revenue and discuss their role in understanding the operational and financial implications for a radiology facility by using a cost-volume-profit model. Our work places particular emphasis on the role of managerial accounting in understanding service costs, as well as how it assists executive decision making.