IOE 481 HOSPITAL SYSTEMS COST ACCOUNTING OPERATING …ioe481/ioe481_past_reports/w8907.pdf · This...

OPERATING ROOMSCOST ACCOUNTING

HOSPITAL SYSTEMSIOE 481

PRESENTED BY:Julie Hemmen

Kathleen KoesterEric Meyer, BSN, RN

HOSPITAL CLIENT:Mr. Scott Lovelace

PROJECT COORDINATOR:Mr. John Gialanella

PROJECT DIRECTOR:Dr. Richard Coffey

Executive Summary

The University of Michigan Hospital operating rooms currently use twofixed hourly/half hourly charge rates for two overall categories ofsurgery. In addition, flat fees are used for procedures being done in theendoscopy rooms. These charges evolved over a long period of time, butwithin the past two years were linked to reimbursements because of theevolution of payments based on diagnosis related groups. Questions,therefore, remained concerning the cost and related profit margins forindividual surgeries as well as for categories of surgery.

During the winter semester of 1989, a team of three industrial andoperations engineering students, including one who is already an RN,developed a LOTUS spreadsheet. This spreadsheet uses cost accountingprinciples to calculate a cost per procedure. This tool was then used tocalculate costs for six procedures previously identified by Scott Lovelaceand Leo Rutledge.

A breakdown of the costs and comparison with current charges yields thefollowing basic conclusions:

A. Large profit margins on long, complicated procedures

B. Slim profit margins for endoscopy procedures mostlydue to a large indirect overhead burden and potential incompletereimbursement realities.

An analysis of the accounting steps used and further explanation of ourfindings is provided in the following report.

Julie HemmenKathleen KoesterEric Meyer, BSN, RN

April 1989

INTRODUCTION AND BACKGROUND

This report summarizes the creation of a cost analysis model for theUniversity of Michigan Hospital main operating rooms and endoscopyrooms. Currently, the hospital is charging for surgical procedures using afixed room rate for the first hour of surgery plus a rate for eachadditional half hour of surgery. Chargeable items are also billedseparately from the room rates. This structure is based on covering totalexpenses and revenues. An actual breakdown on how the expenses are usedin the operating rooms has not been analyzed.

Historically, hospitals have been fortunate to obtain 100% reimbursementfor their outpatient procedures. Presently, though, this has not been thecase, third party reimbursement groups have been paying only a percentageof the total charges. This reduction in reimbursements and an increase incompetition among hospitals has created the need for a cost analysis ofthe operating rooms.

The main objective of this project was to provide Scott Lovelace with acost analysis model to assess the actual costs of performing a particularsurgical procedure. The model was to be easy to use and yet as accurate

(j as possible. We have created two parallel models in the form of a LOTUSspreadsheet One model represents the main operating rooms while theother is used for the endoscopy rooms. We feel that the overhead costs ofthe two vary greatly and should not be allocated equally.

APPROACH AND METHODOLOGY

In developing the model to calculate the costs of all surgery cases wefollowed the procedure outlined in the proposal.

1. Determine, with the client, what specific operating room direct andindirect costs affect all surgery cases. To determine the specificcosts we initially met with Project Coordinator, John Gialanella, andoutlined all the possible operating room costs. We then met withProject Client, Scott Lovelace, and Administrative Associate, LeoRutledge, to verify the determined costs and their categorization.

2. Develop a summation equation for determining total cost perprocedure. In the initial meeting with John Gialanella the costsdetermined to affect all surgery cases were put into a summationequation. This equation was then edited and verified by ScottLovelace and Leo Rutledge. The finalized equation follows:

Total Operating Room Cost per Procedure =

Direct Expenses + Indirect Expenses

Direct Expenses:

Variable Labor

Variable Commodities

Overhead Labor

Overhead Commodities

Indirect Expenses:

Institutional Overhead

3. Classify determined costs into well defined variables which will beused in the equation. Through contact with John Gialanella, ScottLovelace, and Leo Rutledge, we determined the costs that would beincluded in each of the terms of the equation.

4. Quantify through investigation all these current costs. Throughcontact with several departments we collected the necessary data toquantify the costs affecting all cases. Several interviews were heldwith the nursing staff to aid in determining variable labor cost,variable commodities cost, and overhead commodities cost. LeoRutledge supplied the projected operating rooms budget for the 1988- 1989 fiscal year, data regarding the labor overhead of the operatingrooms department, and the breakdown of surgery cases and hours forthe previous year. The Capital Programs department supplied the list

2

of all depreciable items present in the operating rooms and theirvalues. The Finance Department supplied data regarding theinstitutional overhead allocated to the operating rooms from othernon-revenue centers of the hospital. The collected data was analyzedand, in coordination with Scott Lovelace, John Gialanella, and LeoRutledge, a method of allocating each cost to the cases wasdetermined.

5. Apply this cost model to the chosen six surgery cases. After themodel was complete, it was applied to the six surgery cases chosenby Scott Lovelace and Leo Rutledge, shown below:

ColonoscopyGastroscopyHysterectomyLiver TransplantRight Heart CatheterCoronary Artery Bypass - Graft (CABG)

The necessary data specific to the six surgeries was obtained throughinterviews with the nursing staff and patient charge sheets

6. Provide the client with a computerized model to determine costs forall future surgery cases. The model was then put on a Lotus•spreadsheet. A separate spreadsheet was developed for the mainoperating rooms and the endoscopy rooms. With the input of at mostseven values corresponding to a particular surgery, the spreadsheetcontains all the necessary information to calculate the cost of anysurgery. The spreadsheet also contains the yearly input data, whichwhen updated is automatically calculated into the surgery cost

3

ANALYSIS OF MODEL

The following is a detailed qualitative explanation of the terms in thetotal cost per procedure equation. The derivations of the terms and themethods of allocation are given. A quantitative explanation is provided inAppendix I.

Variable Labor Cost

The variable labor cost is the cost of the nursing staff in the operatingroom during the surgery plus the fixed cost of one person from the nursingstaff setting up the room. The 1987 - 88 average nursing and techniciansalaries paid, their projected raises, and a benefits percentage were usedto calculate the projected 1988 - 89 nursing and tech hourly salary. Forone year the nursing staff productive hours of 1579 was used. A weightedaverage hourly salary was calculated based on the amount of presentlyemployed nurses and technicians. The computed variable labor cost forthe main OR is

$45.73t+$11.43

and for the endoscopy rooms is

$23.16t+ $3.86

where t represents the length of the case in hours.

Variable Commodities

The variable commodities cost is the cost of the non-chargeablemedical/surgical supplies and the bedding/linen/laundry used during thecase. The operating rooms projection of expenses for the fiscal year 1988- 89 was used as the basis in calculating the cost. The 1987 - 88percentage of chargeable med/surg supplies to total med/surg supplies,53.4%, was used to calculate the patient non-chargeable med/surgsupplies. The chargeable supplies will be input into the model directlyfrom the patient charge sheets. A percentage of the variable commoditieswas separated for allocation to the endoscopy rooms based on the ratio ofthe supplies ordered for the endoscopy rooms to the total med/surgsupplies.

4

For the main OR the cost was allocated to each surgery based on acombination of per case and per hour. A fixed cost was allocated to eachfirst hour of surgery and a variable cost for each additional half hour ofsurgery. The reason for this being that a fixed amount of supplies areused for the opening and closing of the patient regardless of length or typeof surgery, and then additional supplies are used as the length of thesurgery increases. This percentage of the remaining half hour cost to thefirst hour cost of 18.75% was determined from the current hospitaloperating room charges based on reimbursement. The computed variablecommodities cost for main OR surgeries is

$152.39 + $28.57(2t-2)

where t is the length of the case in hours. The value for t input into theabove equation must be greater than or equal to 1.

For the endoscopy cases the variable commodities cost was allocatedevenly to all cases based on the projected number of cases for the 1988 -

89 year. The length of the endoscopy cases were not long enough and didnot have enough variation to justify allocating the cost based on time.The computed variable commodities cost for endoscopy cases is $18.35.

Overhead Labor

The overhead labor cost is the cost associated with the operating roomsdepartment personnel. The calculations were based on the January 31,1989 Staffing Summary Report, the special salary percentages obtainedfrom Leo Rutledge, and a benefits percentage. The overhead labor includesthe Professional and Administrative Staff, the Office Staff, AFSCME, andthe Nursing Professional and Administrative Staff. For all cases thesalaries of the AFSCME Fixture and Wall Cleaner and the Custodian II werenot used the calculations because these positions will soon be eliminated.For cases in the main OR, the salaries of the remaining three AFSCMEemployees were included. For cases in the endoscopy rooms, the salariesof the Stockkeeper II and the Operating Room Aides were t included inthe àalculation because their work does not pertain to the endoscopyrooms, but the salary of the Instrument/Ster. Processor was included. Thecost of the overhead labor was calculated to be $98.65 for cases in themain OR and $62.36 for cases in the endoscopy rooms.

5


The overhead commodities cost is the cost of the non-variable suppliesused by the operating rooms department plus the cost of the depreciationof the general equipment used during the case. The amount of generalequipment depreciation includes only the equipment used in all cases andall equipment costing under $10,000. The projected 1988 - 89 totalequipment depreciation for the operating rooms was used as the basis forthe depreciation calculations. Specialty equipment costing more than$10,000 and endoscopy equipment were separated from the general mainOR depreciation. The equipment included in the endoscopy roomsdepreciation is listed in Appendix Ill. All depreciation values werecalculated based on the four Master Equipment Lists pertaining to the fouroperating rooms accounts, which were obtained from the Capital ProgramsDepartment.

This overhead commodities cost is allocated evenly to all cases performedin the main OR and in the endoscopy rooms based on the projected numberof cases for the 1988 - 89 year. The calculations are based on theoperating rooms projection of expenses of the fiscal year 1988 - 89. Theyearly maintenance costs of the lithotrypter and the heart lung machineare subtracted out of the total overhead commodities to be inserted laterfor the specific procedure. There is also a component for the depreciationof specialty equipment to be input for the particularcase (see Appendix IIfor the specialty equipment list). The overhead commodities cost of eachmain OR and endoscopy procedure, without including specialty equipment,was determined to be $55.18 and $21.29 respectively.

Institutional Overhead (f’— I

The Institutional Overhead report was obtained by Fred Kegarise in thefinance department. Only 75% of these numbers were used in our modelsince this report includes Mott and Kellog hospitals along with the mainhospital. We obtained 75% by dividing the cases performed in the mainhospital by the total number of cases performed in the University ofMichigan Hospital, which these numbers in the report represent.

Each item was allocated either by case or by time according to the natureof the item. For example, billing was allocated by case since the time of

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the procedure was independent of the time spent on billing for the case.Employee benefits, however, were allocated according to time sincestaffing is based on surgical hours and employee benefits is directlyrelated to staffing. An itemized listing can be found in the Appendix

Besides allocating by time and case, some items were also multiplied bythe square footage ratio of main operating rooms to endoscopy rooms.These items include housekeeping/building and exchange cart supplies. Asecond intermediate step was also performed for admitting and 0/Pregistration. These were allocated over inpatient and outpatient cases.

Even though the institutional overhead is an indirect cost, there stillexists variance between cases due to time of case and if the procedurewas performed in the main OR or endoscopy rooms. This breakdown andcalculations can be found in the Appendix I.

FINDINGS / CONCLUSIONS

The findings for the use of the model on the six specific surgeries are asfollows:

1) The operating rooms appear to be making money in all areas ofthe surgical spectrum, i.e., from endoscopies to livertransplants. See Figure 1.

2) Profit margins are large with the longer, more complicatedtypes of surgery. However, profit margins are lessfor both the gastroscopy and colonoscopy due to the reality ofincomplete third party reimbursement.

3) A huge percentage of the costs associated with the endoscopyprocedures is from the indirect institutional overhead. SeeFigure 2.

4) The special equipment component of the endoscopy procedures isvery small at $2.54 per case. At the same time a patient flowbottleneck seems to develop on occassion with colonoscopiesrelated to equipment breakdown. For example, only 4colonoscopes were functional on 4/7/89. The quantity offunctional gastroscopes was felt adequate at 8.

7

Cost Breakdown

/ J,%%%%%%ss\ 34.4%

I%%%%%%%%%%%IIIIIII

R%%

. F,,

- 1.0%

10.2%

S S SF F — — —55%%%%

p

‘——F,——

F——‘‘S

52.5%

4 o/• . /0

6.2%.

Liver Transplant

Institutional Overhead

[] Overhead Labor

0 Variable Labor

Overhead Commoditites

Q Variable Commodities

Gastroscopy

11.5%

40.8%

33.2%

Profit Margins10000••

8000 -

02

C”= 6000-

EiCost

4000-

Charge

2000

0Colon Gast Cath .Hyster CABG Liver

Procedure

RECOMMENDATIONS

1. Purchase 3-4 additional colonoscopesa Cost component small over 10 years and 3000

cases/yrb. Would alleviate patient flow bottleneckc. Should increase lifetime of existing scopes

2. Raise flat fees for endoscopy procedures?a. Must remain competitiveb. These procedures generate revenue from subsequent

therapeutic/surgical procedures

3. Move endoscopy rooms to an off site?a. Would decrease institutional overhead?b. Would avoid parking structure/complex building layoutc. Would still need to retain one room to service inpatients

4. Use our cost based modela. Spreadsheet quick and easy to useb. Will maintain cost accounting basis for future monitoring

1. Can follow trend as surgical time increases/decreases2. Can follow trends for procedures involving specialty

equipment3Can follow trend as pharmacy or materials managementmove a satellite into OR

5. Enhance model in futurea. Price initial non-chargeable supplies from preference cardsb. Make use of counts of lap sponges, sutures, gloves, etc. for

cost accounting purposesc. Include scope maintenance costs in endoscopy specialty

equipment (currently not included)

10

1

APPENDIX I

Variable Labor

Projected 1988-89 Salaries

Nursing (1 .05)($30,000)/1\productive hours = $19.95 per hourTechnician (1 .0l)($23,600 roductive hours = $15.10 per hour

Weighted Average Salary 1’

Main OR [.75($1 9.95) + .25($1 5.10)] = $18.74 per hourEndoscopy [.80($1 9.95) + .20($1 5.1 0)] = $18.98 per hour

Benefits Percentage = 22%

Surgery

Main OR 2 nurses for caseEndoscopy I nurse for case

Set Up

Main OR 1 nurse for 1/2 hourEndoscopy 1 nurse for 1/6 hour

Final Equation

Main OR 2(1 .22)($18.74)t + (1 .22)($18.74)(1/2) =

$45.73t + $11.43

Endoscopy 1(1 .22)($18.98)t + (1 .22)($18.98)(1/6) =

$23.16t + $3.86

where t represents the length of the case in hours.

Variable Commodities /

Percentage of total med/surg supplies that are chargeable - 53.4%

Patient Non-Chargeables

(1 - .534)($6,563,705) = $3,058,687t_1 ‘.

__rj•Total Main OR Endoscopy

Med/Surg Supplies $3,058,687 $2,963,265 $95,422Bedding/Linen/Laundry $473, 147 $458,386 $14,761Total Non-Chargeables $3,531,834 $3,421,651 $110,183

Main OR

Average length of case = 2.77 hoursProjected 1988 - 89 cases = 13,496 cases2.77 hours/case X 13,496 cases = 37,384 hours37,384 hours - 13,496 first hours = 23,888 remaining hours

= 47,776 remaining half hours$3,421,651 = 13,496x + 47,776(.1875x)

Variable Commodities Cost =

$152.39 + $28.57(2t-2)

where t is the length of the surgery in hours (t must begreater than or equal to 1).

Endoscopy

$110,183/6004 cases = $18.35

Overhead Labor V•

1989 Total Budgeted Dollars per caseV

V

P & A Office Nurs. P & A AFSCME TotalMain OR $13.18 $20.76 $14.90 $49.81 $98.65/caseEndoscopy $13.18 $20.76 $14.90 $13.52 $62.36/case


Total Projected 1988 - 89 Overhead Commodities $1,344,925Less equipment depreciation $834,022Less annual lithotrypter maintenance $125,000Less annual heart lung maintenance $8.885

$377,018

Overhead Commodities (without depreciation)/case =

$377,01 8/1 9,500 cases = $19.33

Projected 1988 -89 equipment depreciation $834,022Less specialty equipment depreciation -$350.31 3General depreciation $483,709

Main OR $483,709/i 3,496 cases = $35.84Endoscopy $1 1,794*/6004 cases = $1.96

Total Overhead Commodities/caseMain OR $19.33 + $35.84 = $55.18Endoscopy $19.33 + $1.96 = $21.29

* see Appendix Ill for the items included in the Endoscopy depreciation

Institutional Overhead Allocation

Description by case by hour

Employee benefitsHISPurchasingAdmittingBillingGeneral Admin. $45.45Hous/BIg. (main) $58.02Hous/BIg. (endo) $47.37Lin. & LaundryCafeteria $1.38Nurs. Admin. $12.23Surg. SuppliesServ. Unit Mgmt.0/P RegistrationEx. Cart Sup. (main) $18.70Ex. Cart Sup. (endo) $15.27Medical RecordsNursing School $ 3.16

Inpatient case percentage = 58%Outpatient case percentage = 42%

$4.95

$9.06

-lfl

$3.74

$8.69$8.36

$16.95

$1 9A3

$ .61

Square Footage PercentageMain = 93%Endo 7%

fiI’s

Hours Per YearMain = 38422Endo = 3542Total = 41964 hours

- ‘-

:

APPENDIX II

SPECIALTY EQUIPMENT DEPRECIATION LIST

Equipment

Cardiac Bypass SurgeryBypass Unit \Circulatory Assist iøHeart Lung Machine 1

Intraaortic Balloon 4

Endoscopy ProceduresColonoscope lGastroscope-t-. &

GynecologyLaser Surgical )

$940$1,069

NeurologyStereotactic InstrumentStereotactic Frame i

OrthopedicsBone Cutter ‘.

I @$3,470/$1 ,470

/$6,415

UrologyLithotrypter L

Average Depreciation/Year

79.2

$6,790

3

/LfQQ

e sj-oo

APPENDIX III

(Endoscopy General Equipment L

3 Tektronix Physio Monitors (EKG’s)3 Olympus Lecturescopes q7c-

3 Oxi Meters-øo Io

6 Cambridge Stretchers i’e. 57/3 Airshields BP Monitors ‘W7.7,

3 Valleylab Electrosurgery Units y 1605%

3 Craftsman Supply Carts —,

3 Olympus Cold Light Source ..c7cv/,0 - O

1 Acmi Heater Probe Unit 0

(‘S..

so 50. i

5-

c1’.i

7.O

3 Q 6.

;.

c7_1’1. /

INPUT DATA FOR ENDOSCOPY ROOMS

NAME OF CASE COLONOSCOPY

input Data For Each Particular Case

Length of case (hours) 0.50Chargeable supplies (Cost)Specialty instrumentsPharmacy / otherSpecialty equipment dep./maint. 2.54Inpatient service (0 or 1) 0.00UMH charge 509.00

I II I

• II I

Input Data For Each Year

I

I• I

I II I

Variable Labor Costs

I

II I

vg. nursing labor cost per hour 19.95(avg. technician labor cost per hour 15.10Senefits percentage 0.22

I I

Variable med/surg supplies

Total charge by case 18.35I I

Overhead CommoditiesI II I

Total endoscopy depreciation per year 11794.00Total general overhead commodities : 377018.00Total cases (main + endo) per year 19500Total endoscopy cases per year 6004

Overhead Labor

I I

Total overhead labor cost per case 98.65

Indirect Expenses

I

II I

Inst. overhead allocated by case 51.13Inst. overhead allocated by hour 1 138.87dmitting cost by case 8.690/P registration cost by case 090 I

U.

Direct Expenses

TOTAL OPERATING F:OON COST IN ENDO PER PROCEDURE

• I-

I I I

18..35O.Oc)0.00

— c)C) :I — —— I II I —— —

18 ‘..-._, I

I II I

1.96’)54I4_. I

19 I,

I I

I II I

I I

I II I

• —— _——— I II — — I I

I I ‘I cn II I

I I I II I 1 1

: 98.65I I,_ — — I

: 175.13I I II I I

I I II I I

I II I

I I II I

I II I

121.47I —— ____ I —— —— I II — —

—— I_ —

121.47I I I• I I

296.59

45..720_SC) :

11.43

34.29

Variable Labor CostsSurgical TimeSetup Cost

Total Variable Labor Costs

- Non—chargeable SuppliesChargeable SuppliesSpecialty InstrumentsPharmacy / other

Total Variable Commodities

C) General Equipment DepreciationSpecialty Equipment DepreciationGeneral Overhead Commodities

Total Overhead Commodities

Totaf Overhead Labor

Total Direct Expenses

Indirect Expenses

Total Institutional Overhead

Total Indirect Expenses

Total Cost Per Procedure

UMH charge

Expected Prof it Margin

I II I

509.00 :I II_ — I

I ‘IjI 1*1 *I I

INPUT DATA FOR ENDOSCOPY ROOMS

NAME OF CASE GASTRDSCOPY

Input Data For Each Particular Case

Length of case (hours) 0.50Chargeable supplies (Cost)Specialty instrumentsPharmacy / otherspecialty equipment dep/maint. 3.47Inpatient service (0 or 1) oooUMH charge 363.00

a II I

• I

I II I

I II I

• II I

• Ia I

• 19 e II .7J aI •=• 1()I LI. -

I — •_. I

a I

• aI I

• II *

1SI *

I II I

I Ia I

• Ia I

11794.00377018.00

I ‘ °O0 •1,_s I

a 60fl4 •a a• II aI II I

• aI I

• 98a .D._I aa II I

I II I

I Ia a



Avg. nursing labor cost per hourAvg. technician labor cost per hourBenefits percentage


Total charge by case


Total endoscopy depreciation per yearTotal general overhead commoditiesTotal cases (main + endo) per yearTotal endoscopy cases per year

Overhead Labor

Total overhead labor cost per case

Indirect Expenses

Inst. overhead allocated by case 51.13Inst. overhead allocated by hour 138.87Admitting cost by case 8.690/P registration cost by case 0.90

Direct Expenses

TOT1L OPERITING ROOM COST IN ENDO PER PROCEDURE

a a a• I I

jI I

Cl. 00 1 1I C>. Cx) I I

‘:. cc :I I — — — aI I — — — I

I I I II I • - ,_$ i

121.47— —— — I —— I I

I a —

I 12147 I

A II f,_I_J_ I I -,

0.50 1a Ii 1I I I I• I.L•—t•• I I I

• —. I I aI I — I I

34.291.I II I



Non—chargeable SuppliesChargeable SuppliesSpecialty InstrumentsPharmacy / other


General Equipment DepreciationSpecialty Equipment DepreciationGeneral Overhead Commodities


Total Overhead Labor

I—

I I II I I

• aI I

• i c:It_ I I.L_-Jc, I I

a - 117 a• I I

19.33 1I a I• I —— I

• I ‘I,l 77 Ia a .1-.!I aI I I• a I

• 9B • I.DJ I I

I I I

I 176.06 1Total Direct Expenses I

E_Total Institutional Overhead


Total Cost Per Procedure 1 297.52 1a I-I a

UtIH charge I I : 363.00 1I I * II I I I

Expected Profit Margin 1 65.48

/

INFUT DATA FOR MAIN UI-

NAME OF CASE Hysterectomy


Length o-f case (hours 1)Chargeable supplies (Cost)Specialty instruments

. Pharmacy / otherSpecialty equipment dep./maint.Inpatient service (0 or 1)UMH charge



Avg nursing labor cost per hourAvg. technician labor cost per hourSene-f its percentage


Initial hour chargeAdditional hal-f hour charge


Total main OR depreciation per yearTotal general overhead commoditiesTotal cases (main + endo) per yearTotal main OR cases per year

Overhead Labor


Indirect Expenses

4 5t_)— — I

78 AL- ‘_, I

1 00—— a

2467.00

a aa a• aa aI aa aI j9 r aI 7,J a

a 15.10a Ia aa aI - aa aa a

a aa 9 Ia J.i.. aa 357Ia - aa aa aa aI I

a aa a

483709.00 a

• 377018..0O a

19500 a

13496a aa aI aI I

a aI I

93 ‘a I• .,_J i

a aa aI Ia aa aa I

Inst. overhead allocated by case 51..13Inst. overhead allocated by hour 15295Admitting cost by case 8.690/P registration cost by case 0.90 1

Direct Expenses

TOTAL OFERATING ROOM COST IN MAIN PER PROCEDURE

I4C

1’I Ia i

I 4 Cr. Ia ._J_ a

a iiI — I

I ____._____ I ___ ______ aa a — a

a ‘7j7 17 II I

I C’ -a a aI SaJ4 . I

78.46:O..000.00 :

a aI I a

748.10I a a Ia — I — —— a I

748.10a a aa a a

1 1549.93a i -I Ia I I I

• a 467CO •a I .s..

• a aa a a

a ‘ 917.07 aa a



Indirect Expenses

Variable Labor Costs 1Surgical TimeSetup Cost

Total Variable Labor Costsa aa I

a a


Total Variable Commodities : 430.84I I I aI a I I

I I a a

General Equipment Depreciation 35.84* Specialty Equipment Depreciation 1 0.00 1

General Overhead Commodities 1 19.33 1• I p a• I I I

Total Overhead Commodities : 1 55.18

I LC I Ia ica.c,.J a aa • — — aI a a

801.83a a II a a

I I aa a a

I a aa a a

a

a aa a a

I a Ia a a


Total Indirect Expensesa

Total Cast Per Procedure 1

UMH charge

Expected Profit Margin

INPUT DATA FOR MAIN OR

NAME OF CASE Liver Transplant


Length of case (hours >= 1)Chargeable supplies (Cost)Specialty instrumentsPharmacy / otherSpecialty equipment dep. /iriai nt -

Inpatient service (0 or 1)UMH charge

1 1 50-

123.241 - 00

8243.. 00

19.. 9515. 10

--I-

I Ia I


I

II a

V I II I

Variable Labor Casts

a

aI I

Avg.. nursing labor cost per hour -

Avg. technician labor cost per hour8enef its percentage

Variable rned/sLtrg supplies I

Initial hour charge 152.39 1Additional half hour charge 28.57

V

- I I


—

a a— I I

Total main OR depreciation per year 483709.00Total general overhead commodities 377018.00 1Total cases (main ÷ endo) per year 19500 1Total main OR cases per year 13496

Overhead Labor V

I

II I

Total overhead labor cost per case 98.65

Inst overhead allocated by case 51.13Inst. overhead allocated by hour 15295Admitting cost by case : 8.690/P registration cost by case 0.90 1

Direct Expenses

TOTL OPERATING ROOM COST IN MAIN PER PROCEDURE

I‘ 411.01 ‘

Li... —I1 I —I— f’ 4. I /11= 7) a av C(r 1 di..) L d LI OF OS . S - ..J * .‘ 4..-

Surgical Time 1150Setup Cost 11.43

Total Variable Labor Costs 1 537.20 1, I

Non—chargeable Supplies 1 752.36Chargeable Supplies 1 2025.64Specialty Instruments I o.:o :Pharmacy / other 0.00 1

Total Variable Commodities 2776.00

C) General Equipment Depreciation 35.84Specialty Equipment Depreciation 1224

* General Overhead Commodities I 19.33a a a aa a a a

Total Overhead Commodities 178.42 1I I I II I I I

Total Overhead Labor I 98.65 .1I I a II I I a

Total Direct Expenses 1 3592.27

I I

Indirect Expenses

I I I II a S I

I I 9 4 a,a a .1. .1. .1...) * I

I a — I II I I I

: 1918.75 1I a II I I I



UMH charge



8243.00a a

a I ‘I Ia I 4-LI.i. 17 9


NAME OF CASE CABO


LenQth of case (hours >=Chargeable supplies (Cost>Specialty instrumentsPharmacy / otherSpecialty equipment dep./maint.Inpatient service (C) or 1)UMH charge



6 . f)0214731

123.241 — 00

8732.00

I II I

I I

I II I

I I

I I

Avg. nursing labor cost per hour 19.95Avg. technician labor cost per hour 15.10Benef its percentage 0.22


Initial hour charge 1 152.39Additional half hour charge 28.57

I II - I


Total main OR depreciation per year 483709.00Total general overhead commodities 1 377018.00Total cases (main + endo) per year 1 19500Total main OR cases per year 13496

Overhead Labor


Indirect Expenses

98 ‘.o_

Inst. overhead allocated by case I 51.13 IInst. overhead allocated by hour 1 152.95 IAdmitting cost by case 8.69 10/P registration cost by case 0.90 1

TOTAL OPERATING ROOM COST IN MAIN PER PROCEDURE

Direct Expenses

Variable Labor Casts 45.72Surgical Time : .ooSetup Cost I 11.43 1

I I I II I I I

Total Variable Labor Costs I 285.75 1

Non—chargeable Supplies 438.09 1Chargeable Supplies I 2147.31Specialty Instruments I 0.00Pharmacy / other 0.00 1 I

Total Variable Commodities 1 2585.40

I I I II I I I

General Equipment Depreciation 35.84Specialty Equipment Depreciation 123.24 1General Overhead Commodities I 19.33

I I I Ia — a a

Total Overhead Commodities 178.42I I I II I $ I

1 98.65:Total Overhead Labor


Indirect Expenses


I I I II I I I

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a a I II I I II I cr-yr Ia I I I

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Total Cast Per Procedure 4125.73 1a aI I I

UMH charge I

Expected Profit Margin I I 4606.27 1

(


NAME OF CASE Right Heart Caheter


Length of case (hours >= 1) 1.00Chargeable supplies (Cost) 158.00 1Specialty instrumentsPharmacy / otherSpecialty equipment dep./maint.Inpatient service (0 or 1) 1.00UMH charge 1002.00



AVg. nursing labor cost per hour 19.95Avg. technician labor cost per hour 15.10Eenefits percentage 0. 22

I II I


a I

Initial hour charge 152.39Additional half hour charge 28.57

V I I


a

II I

Total main OR depreciation per year 4837t:9.ooTotal general overhead commodities : 377018.00Total cases (main + endo) per year 19500Total main OR cases per year : 13496

Overhead Labor

Total overhead labor cost per case 98.65a Ia a

Inst. overhead allocated by caseInst. overhead allocated by hourAdmitting cost by case0/P registration cost by case

51. 13152.95

8.690.90

TOTAL OPERATING ROOM COST IN MAIN PER PROCEDURE

Direct Expenses

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i.oo :• ii 11’ I I

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310.39I I

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3584 :: 0.00I I I II .&j,.... I

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: 55.18I I I II - I I I

: 98.65I I I II I I I

521.36 II I I II I I I

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73413

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General Equipment DepreciationSpecialty Equipment DepreciationGeneral Overhead Commodities




Indirect Expenses




UMH charge


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