A study published in Bone & Joint Research on various surgical trial designs vis-a-vis the learning curve, showed that the learning curve varies for different procedures. The study states: For hip fracture fixation the operating time does not level off until the surgeon has done 20 to 30 of these operations.1 For reduction of uncomplicated congenitally dislocated hips it may be slightly fewer as the performance seems to level after 10 to 20 procedures and can be accelerated with appropriate simulation training.2 For arthroscopy of the knee, a simulation study suggests that consultant level skills are not reached until 170 procedures have been carried out.3 Thus although the actual number might vary, there will always be a certain number of cases a surgeon needs to have performed before his/her proficiency has plateaued.

As the director of operations at a newly formed surgical unit of a hospital, you are tasked to assign costs to hip surgeries your unit is planning to do this year. As part its long-term plan, your unit plans to primarily focus on hip fracture fixation procedure because it comprises a majority of the hip procedures that are performed. Based on the Bone & Joint article, you deduced that the reasonable learning rate for the procedure is 70%. In order to be validate of your estimate of the learning rate, you have your surgical team perform six trial procedures and recorded the following observation on the hours to complete each of the six surgeries:

Patient Observed Number. Time (Hours) 1 10.000 2 7.500 3 6.500 4 5.600 5 5.000 6 4.800

a. Based on this information is your initial estimate of the procedures learning rate justified? Explain and show proof. (5 points)

For questions (b) to (f), and (h), use the learning percentage (round to the nearest percentage) based on the first-six surgeries by your surgical team.

b. How long should it take for the surgical team to perform the 40th hip fracture fixation procedure? Show detailed solution here. (5 points)

c. Assume that based on past information, the labor rate per hour for the surgical team rate is $3,000 per hour. How much will be the total labor cost of the 40th iteration? Show detailed solution here. (5 points)

Suppose that you are preparing a cost budget and revenue projection for this procedure for the first 40 surgeries. In addition to the labor cost information provided in (C), based on the standard accounting practice of your hospital, the overhead cost applied is 250 percent of the total labor cost. Further, as part of the hospitals billing practice, a gross margin of 175 percent of labor and overhead combined is tacked on in charging/billing the patients insurance for the procedure. Use this additional information to answer parts (d), (e), and (f).

d. How much will be your total cost (labor and overhead) budget for the first 40 procedures? Show detailed solution here. (5 points)

e. How much will be your estimated total gross margin for the first 40 procedures? Show detailed solution here. (5 points)

f. How much will be your estimated total billing (revenue) for the first 40 procedures? Show detailed solution here. (5 points)

g. Assuming that the completion time (T1) of the first unit remains unchanged, but you discovered after doing the 40th hip surgery that the actual learning rate for the job is 80%. How does this discovery affect your units operational and financial performance? Support your discussion with numbers (show a detailed solution here) using the information presented in (b) and (c) above. (10 points)

h. Create a scatter plot (one graph) with n (number of surgeries) on the horizontal axis and total labor cost, overhead, gross margin, and total billing as the data (y-axis). Use the learning percentage in your response to (a) in computing the costs. Label the graph completely. (10 points)

Show work using excel, thanks!