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The administrator of Liberty Hospital has been asked to perform an activity analysis of the emergency room (ER). The ER activities include cost of quality
The administrator of Liberty Hospital has been asked to perform an activity analysis of the emergency room (ER). The ER activities include cost of quality and other patient care activities. The lab tests and transportation are hospital services external to the ER for determining external failure costs. The result of the activity analysis is summarized as follows: Activities Activity Cost Patient registration $ 6,500 Verifying patient information 9,700 Assigning patients 13,000 Searching/waiting for doctor 9,200 Doctor exam 4,900 Waiting for transport 17,500 Transporting patients 16,200 Verifying lab orders 14,500 Searching for equipment 8,200 Incorrect labs 11,300 Lab tests 17,000 Counting supplies 19,000 Looking for supplies Staff training Total 8,200 4,800 $160,000 Required: 1. Select the following Pareto chart of the ER activities. 3. Use the activity cost information to determine the percentages of total ER costs that are prevention, appraisal, Internal failure, external failure, and other patient care activities. Quality Cost Classification Prevention Appraisal Internal failure External failure Other patient care Total Activity Cost Percent of Total Department Cost % % % % % % 4. Determine the percentages of the total ER costs that are value-added and non-value-added. Value-added Non-value-added Total Activity Cost Percent of Total Department Cost % % 5. The ER has % of its total costs as non-value-added. Internal failure and external failure costs represent % of the total costs
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