Benchmarking, hospital cost comparisons. (30 minutes) Brigitte Radeau is the newly appointed president of Universit de Flandres.

Benchmarking, hospital cost comparisons. (30 minutes) Brigitte Radeau is the newly appointed president of Université de Flandres. The H6pital de l'Université is a major problem for her because it is running large deficits. Patrick Ruelle, the chairman of the hospital, tells Radeau that he and his staff have cut costs to the bare bone. Any further cost cutting, he argues, would destroy the culture of the hospital. He also argues that the use of detailed cost studies is totally inappropriate for a medical institution because of

(a) the inability to have well-defined relationships between inputs and outputs, and

(b) the problem of even defining what is a good output for a hospital. He notes that he is ‘fed up with people equating continuous improvement at Hopital de l Université

with continued cost reduction. This is only a cost accountant’s view of the world. Our top priority is to help doctors save lives and to help people recover their health’

Radeau hears about a new benchmark cost analysis service offered by Etoile des Neiges, SA. She asks Ruelle to hire Etoile des Neiges to provide a benchmark cost report that pertains to Hopital de Université. Ruelle is not enthusiastic about doing so, but he complies with her request. The report includes the following: bhy9

REQUIRED 1. Do you agree with Ruelle that the use of detailed cost studies at H6pital de P Universite is totally inappropriate? Explain your answer and comment on Ruelle’s reasoning.
2. What inferences do you draw from the Etoile des Neiges benchmark cost report on Hopital de l'Université?
Se What use might Radeau make of the Etoile des Neiges benchmark cost report?
4. What criticisms might you anticipate Ruelle would make of the Etoile des Neiges benchmark cost report?
5. What factors other than cost might Radeau consider in evaluating Ruelle’s performance and that of Hopital de Université ?

Transcribed Image Text:

a. Aggregate Hospital Cost Comparison (average = 1.00) Hospital E Hospital C Hospital J 0.69 0.70 0.70 Hospital A 1.19 Hpital de l'Universit 1.20 Hospital O 1.21 b. Diagnostic-Group Cost Comparison HOPITAL DE DIAGNOSTIC GROUP L'UNIVERSIT MARKET AVERAGE 25TH PERCENTILE AVERAGE OF BEST QUARTILE (0-25TH) Angina, chest pain FFr 230,000 FFr 205,000 FFr 173,000 FFr 153,000 Asthma, bronchitis 154,000 131,000 104,000 90,000 Skin disorders, cellulitis 96,000 92,000 65,000 58,000 Renal failure and dialysis 76,000 55,000 42,000 36,000 Diabetes 67,000 51,000 37,000 31,000 Gastroenteritis 120,000 185,000 160,000 128,000