1.Use the worksheet to calculate the cost and margins of the three different office visits using:

a)RCC method

b)TDABC

2.What explains the difference in costs using the two methods?

3.Suppose DPOS dedicates the following resources to handle all office visits: 2.5 surgeons, 2 Ambulatory Service Representatives, 2 Registered Nurses, and 1 Clinical Assistant. During the year the office performs 4,400 Plagiocephaly visits, 2,200 Neoplasm visits, and 1,800 Craniosynostosis visits. Calculate the quantities and cost of used and unused capacity for the four types of personnel, and the total cost of unused capacity for the year. How can Dr. Meara reduce the costs of unused capacity?

4.Use the accompanying Excel worksheet to calculate the costs and margins of the different orthopedic casts using the TDABC method?

5.Compare the TDABC costs and margins with those calculated using the hospital's existing RVU system. What differences occur and why?

6.Should the two TDABC pilots be extended throughout the hospital or should senior hospital management just allow such local initiatives to arise spontaneously, based on local physician interest?

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DPOS Assignment Worksheet Resource Weeks per year Less: Vacation & Holidays Less: Training and Leave Available weeks per year Hours per day Less: Breaks, training, meetings Available hours Surgeon Less: Estimate of Research & Education time (%) Clinical Hours per day Cllinical minutes available per day Clinical minutes available per year Annual Cost per person Capacity cost rate ($ per minute) $ 52 4 ### 46 8 1.5 6.5 52 4 2 46 8 1.5 6.5 25% 6.6 0% 6.5 0% 6.5 522,720 $ 89,700 $ 18 22 40 Medical Diagnosis Cost per patient vis Plagiocephaly Neoplasm skin excision Craniosynostosis $ RN 52 6 2 44 10 1.2 8.8 Personnel process times (minutes) Plagiocephaly Neoplasm skin excision Craniosynostosis Plastic Surgery Dept. Charges Costs Reimbursement RCC: Ratio of costs-to-charges Average DPOS reimbursement rate ASR Surgeon 134,550 8 55.5 10.5 ASR 23 20 23 RN 12,449,500 7,469,700 7,967,680 64% Capacity Question Surgeon ASR RN Plagiocephaly Neoplasm skin excision Craniosynostosis 18 22 40 8 56 11 23 20 23 Number of personnel 2.5 2 2 ORTHO Assignment Worksheet Resource Costs Salary and Fringes Billing Support Malpractice Insurance Professional Expenses Administrative Support Departmental Administration Miscellaneous, other Total Ambulatory Orthopedic Plaster/Cast Service Surgeon Technician Representative $ 440,000 $ 73,160 $ 52,370 62,000 48,000 38,100 26,900 20,000 10,000 10,000 58,000 $ 693,000 $ 83,160 $ 62,370 Available Time Maximum, after weekends Vacation, holidays, leave, etc Available Days per year Maximum hours per day Less: research, teaching, and other Less: breaks Available hours per day Available hours per year Available minutes per year Cost per minute 261 41 220 12.0 4.5 7.5 1,650 99,000 $ 7.00 $ Procedure Long leg cast application, cotton padding Long leg cast removal, cotton padding ### 30 231 7.5 1.50 6.0 1,386 83,160 1.00 $ 261 30 231 7.5 1.50 6.0 1,386 83,160 0.75 Minutes - 13.0 - Long leg cast application, Gore-Tex padding Long leg cast removal, Gore-Tex padding Petrie long leg cast application Petrie long leg cast removal Clubfoot cast (hospital; initial visit) - 13.0 - 13.0 17.0 17.0 - Clubfoot cast (hospital; replacement visit) Clubfoot cast (hospital; final visit) 13.0 - 22.0 8.0 - Procedure Long leg cast, cotton padding Long leg cast, Gore-Tex padding Petrie long leg cast Clubfoot cast (initial visit) Indirect Direct Supplies (Part Materials of Direct Costs) 44.70 1.60 156.10 1.60 94.40 1.60 10.40 1.60 Labor Clubfoot cast (4x replacement visits) Clubfoot cast (final visit) Clubfoot cast (6 total visits, incl. initial & final) $ 10.40 - 1.60 - 52.00 $ 8.00 Cast Room Data Number of different club foot casts 5 Indirect Supplies (cost per procedure, Alliance calculates only for billed events) $ 1.60 Indirect hospital costs are given using Alliance System's overhead factor of approxiamately 50% of total non-phys CA 52 4 2 46 8 1.5 6.5 0% 6.5 $ 71,760 5 ### 10 Average reimbursem Total cost Charge ent TDABC Profit $ - $ 350 224.00 $ $ - $ 350 224.00 $ $ - $ 350 224.00 $ - CA CA 5 5 10 1 Annual Quantity 4,400 2,200 1,800 RCC RCC Cost Profit 210.00 $ 14.00 210.00 $ 14.00 210.00 $ 14.00 Total Direct Costs Indirect Hospital Costs (Given for case purposes) $ 57.40 $ 122.01 $ 107.73 $ 15.66 Total Costs Average Average Profit/ Charge Reimbursement Procedure $ 523.00 $ 366.10 $ 584.00 $ 408.80 $ 181.00 $ 126.70 - $ $ 18.36 4.32 $ $ 93.42 $ 1,690.00 $ approxiamately 50% of total non-physician direct costs. - $ 1,183.00