Cost-Benefit Analysis Assessment Capella
Cost-Benefit Analysis Assessment Capella
This proposal will intensify the cost-benefit analysis for purchasing an MRI machine and how this machine could aid in the alignment of the institution needs of a physician group. The group wishes to inquire about the purchase of the MRI machine and how it will impact service delivery and patient care (Allen et al., 2020). The aim of the analysis would further be on how the impact of the machine will impact the care services by examining the cost and benefits associated with the MRI machine purchase for the Clinic. Therefore, the proposal will look at cost against benefits over a period, review the overall cost, and advise if the purchase of the machine would have a general benefit for the Clinic.
The Cost and Benefit of Purchasing Equipment for a Clinic
Costs
Currently, the Clinic is spending about $500,000 per year to outsource other clinics’ MRI services. The Clinic aims at a long-term investment that would be effective in reducing the cost and saving substantial money in the long run. The Cost-Benefit analysis was conducted to examine all the aspects related to cost and their accompanying benefits. The thought of buying an MRI machine will be the highest cost for the organization. Despite the machine’s high price, one can decide to purchase a second-hand MRI machine which costs a comparatively lower amount of about $150,000. However, the state-of-the-art machine fresh from the manufacturer would cost as high as $3 million. Clinics are always advised to go for the Magnetom Aera 1.5T MRI machine, which costs about $1.2 million. The machine with this specification will offer the critical needs to the Clinic. The projected cost of the device comes with the cost of transportation and installation. However, the Clinic would be ready to incur the cost-of-service fee of approximately $17,000 per year. The fee charged includes the cost of the system upgrade, maintenance service, and the routine check that should be done on the machines to determine its all-time efficacy.
In ensuring that the machine will undertake the needs of the patients, MRI coils will have to be part of the budget that the Clinic will incur. The coils will be required for all body parts, such as the spine, brain, foot, and shoulder. The function of these coils differs depending on the type of machine bought by an organization. However, for the device proposed for this Clinic, the coil will aid in transmitting and receiving signals from the MRI machine. These signals will be important in producing the image being examined, such as the spine, brain, shoulder, or foot. The absence of a coil on the MRI machine would imply that the radiologist would not have an image to view. The radiofrequency transmitted to the object on the machine would need a receiver to transfer the data to a computer to interpret the image (Beker et al., 2017). The cost of coils that would augment the MRI machine for the Clinic would amount to $384,000. This amount includes the price of all types of coils required for different areas of the body.
The personal with skills to operate the machine would be an added cost that the Clinic will incur. The complexity of MRI machines requires skilled radiologists who will be operating the machine and MRI techs who are proficient in the technical operation of the MRI. The reduced number of these personnel has increased their demand across the health care system, which has elevated the prices for hiring such professionals. The cost of hiring two MRI techs and a radiologist would be $323,000 per year.
The MRI machine project would as well require a building structure/maintenance. The machine requires its solitary structure, not
where only activities rated to the machine would occur. This need requires that the Clinic build the structure meant for MRI with the correct specifications as required by the manufacturer. For the building housing, the MRI scan should have minimal vibrations because the vibrations reduce the quality of the image (Beker et al., 2017). The Clinic will incur the cost of building a structure for the machine at $150,000. This amount will include developing building from scratch to undertake all MRI sessions within the Clinic. Besides, the Clinic also incurs an initial cost of $44,000 for the Ferra Guard safety Detectors. These detectors identify any ferromagnet hazards that can harm users. It offers valuable objective data that would determine the safety of the magnetic emissions from the machine.
The service contract for the machine will be $16,800 per year. This amount that the manufacture would be charging each year for the overall maintenance done of these machines. Timely maintenance of the MRI machine would effectively increase its work output and service to the people. The increased efficiency of the machine translates to the profitability of the device in the Clinic. Another additional cost that the Clinic would incur is IV contrast vials/ needles at $25,000 each year. Staff training sessions would cost $8,000, while the increased electricity (D-beaker) would cost $3,000.
Benefits
Despite the vast amount that the Clinic would incur in purchasing and maintaining the MRI machine, it also comes with its benefits. The number of patients seen on site would increase each year after the installation of the machine. For instance, the Clinic would register $96,000 from co-payment the first year, and the second year it would increase to $105,600. The third-year will have $115,200, and the fourth year will have $124,000. Some of the non-monetary benefits that the machine would bring to the Clinic include quick results turnarounds, increased clinic productivity, high client satisfaction, elevated patient access to care. Besides, the Clinic would remove the outsourcing fee of $445,000 per year that it used to incur before purchasing the machine. The insurance reimbursement fee would be from the significant percentage of the Clinic’s benefits from the device.
Conclusion
According to the performed Cost-benefit analysis, the total cost that the Clinic would incur over five years for incurring the machine would be $2,665,144.61. On the other side, the total projection of the benefits after five years would be $6,261,143.87. These figures show that the total net profit that the Clinic would earn from the purchase or investment in the MRI machine would be $3,595,999.26 after five years. Therefore, buying the MRI machine for the Clinic would be beneficial to the Clinic in terms of monetary and non-monetary benefits.
References
Allen, B. D., Schiebler, M. L., Sommer, G., Kauczor, H. U., Biederer, J., Kruser, T. J., … & Hazen, G. (2020). Cost-effectiveness of lung MRI in lung cancer screening. European radiology, 30(3), 1738-1746. https://doi.org/10.1007/s00330-019-06453-9
Beker, K., Garces-Descovich, A., Mangosing, J., Cabral-Goncalves, I., Hallett, D., & Mortele, K. J. (2017). Optimizing MRI logistics: prospective analysis of performance, efficiency, and patient throughput. American Journal of Roentgenology, 209(4), 836-844. DOI: 10.2214/AJR.16.17698