Activity-based cost analysis: a method of analyzing the financial and operating performance of academic radiology departments.
ABSTRACT To develop a methodology for an activity-based cost (ABC) analysis in an academic radiology department, to test the hypothesis that the business of academic radiology can be separated into three distinct businesses-clinical activity, teaching, and research-and to determine the effect of the current teaching paradigm on clinical productivity.
Forty-seven key departmental activities were defined and distributed among the teaching, research, and clinical businesses. Individual radiologists determined the time spent in each of these activities by completing a detailed log of every activity performed during 2 weeks. All departmental revenue and costs were assigned to each activity in each of the three businesses.
The methodology provided a successful understanding of the relative costs of each of the businesses of teaching, research, and clinical activity. It also provided the departmental costs of performing the separate activities typical of each business. Key findings included the following: Faculty spends 72% of time in clinical activities, research is the most expensive service per direct activity hour, and clinical reads (23%) are the single largest departmental cost element.
ABC analysis can separate academic radiology into three businesses-teaching, research, and clinical-and provide a detailed understanding of the cost structure of each. This analysis identifies opportunities for improved quality of service, productivity, and cost within each business.
[show abstract] [hide abstract]
ABSTRACT: 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. 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. 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. 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.European Journal of Nuclear Medicine 02/2008; 35(1):80-8. · 4.53 Impact Factor
Article: Estimating the effects of informal radiology resident teaching on radiologist productivity: what is the cost of teaching?[show abstract] [hide abstract]
ABSTRACT: One mission of an academic radiology department is to teach. The greatest teaching effort is directed at radiology residents. As clinical work demands increase, informal, non-revenue-generating, teaching may suffer. We sought to determine the economic consequences of teaching. With the use of a picture archiving and communications system, 6 radiology faculty members independently interpreted and dictated digitally acquired bone and chest radiographs for 1 hour alone and again 10-12 weeks later with a first-year resident. During the second session, the quality of teaching was graded by independent observers. The number of cases, relative value units (RVUs), and reimbursement for each session were calculated. The difference in number of cases dictated working alone (mean, 44.7) and with a first-year resident (mean, 23.5) was significant (P = 0.007). The difference between RVUs generated by faculty alone (mean, 9.0) and with a resident (mean, 4.5) also was significant (P = 0.006), and the difference in dollars billed when working alone (mean, $1558.45) and with a resident (mean, $777.65) was significant (P = 0.007). As teaching quality increased, the number of cases interpreted, dollars billed, and RVUs trended lower. Informal resident teaching significantly reduces clinical throughput, reducing examination volume, RVUs, and dollars billed by approximately half.Academic Radiology 02/2005; 12(1):123-8. · 1.69 Impact Factor