Cost-Benefit Analysis
Read the following article which describes some of the current
conflicts that...

Question

Cost-Benefit Analysis
Read the following article which describes some of the current 
conflicts that grew out of recent efforts by HCOs to increase quality and 
decrease cost.
Nolan, T., & Bisognano, M. (2006, April). Finding the balance 
between quality and cost. Healthcare Financial Management, 60(4), 
67–72. (AN XXXXXXXXXX)
The authors describe the conflict between caregivers, who see 
themselves as protectors of quality and patients, and finance professionals, who 
see themselves as protectors of the organization's resources and bottom line. 
However, working together, finance professionals and caregivers can design 
improvement activities that both increase quality and reduce costs.
In this assignment you will apply the formula presented in the 
article and then analyze improvement activities that could occur in a fictitious 
hospital. The minimum and maximum values are provided for each component of the 
formula. You will create a spreadsheet that calculates the minimum and maximum 
value for the formula given the range of inputs.
Use the following information for a fictitious hospital:

Minimum
Maximum

Average wage/hour
$19.50
$21.45

Worked hours/patient day
4.2
5.04

Patient days/admission
3.5
4.55
Using a spreadsheet:

Calculate the lowest and highest total wages/admission.
Vary the value of each component within its range to calculate possible 
values for total wages/admission. Select at least two values within the 
allowable range for each of the three components.
Determine which of the three components has the greatest impact on the total 
wages/admission as the component ranges from its minimum to maximum 
value.
Based on the calculations, answer the following questions in a 
2-page Word document:

As a nonclinical administrator, which of the three components would you 
focus your efforts on in order to reduce costs? Why?
For each of the three components, describe how actions taken by the HCO can 
reduce cost and also improve quality.
Prepare a report with both the spreadsheet and the Word documents. 
(You may embed the spreadsheet in the Word document.) Apply APA style to format 
your documents.

Grading Criteria

Maximum Points

Created a spreadsheet with formulas to calculate 
total wages/admission.

8

Calculated total wages/admission for the lowest, 
highest, and two other values for each component.

8

Analyzed calculations to identify the impact of 
components on total wages/admission.

8

Selected one component as important to reducing 
costs, and gave reasons.

12

Recommended actions to reduce cost and improve 
quality for each component.

12

Applied APA standards for writing style, spelling, 
grammar, and citation of sources.

4

Total

52

Robert · Accepted Answer

The report aims to study the given article by T. Nolan and M. Bisognano on the conflicts 
between quality and costs in the case of a HCO. On the basis of such study, it seeks to 
analyse improvement activities that could occur in a fictitious hospital and have an impact on 
reducing the costs in hospitals. It is seen that the three components for salary costs in 
hospitals are average wage per hour, worked hours per patient day, and patient days per 
admission. Let us study for each of the three components, how the actions taken by the HCO 
can reduce cost and improves the quality.  
In the case of the first component, average wage per hour, improvements can be brought 
about by reducing costs and improving quality. Actions to reduce costs and improving quality 
would include reducing wastage of costs associated with high cost of contract labour such as 
nurses from a temporary agency. By employing full time staff, the HCO can not only reduce 
the high cost of contract labour or nurses from a temporary agency, but can also take 
advantage of the training and experience of the in house, full time staff. It can also take steps 
to carry out proper planning and scheduling of nurses so that the high pays linked with 
overtime are avoided.

Cost-Benefit Analysis Read the following article which describes some of the current conflicts that grew out of recent efforts by HCOs to increase quality and decrease cost. Nolan, T., & Bisognano, M....

Solution

Answer To This Question Is Available To Download

Related Questions & Answers

Submit New Assignment

	Minimum	Maximum
Average wage/hour	$19.50	$21.45
Worked hours/patient day	4.2	5.04
Patient days/admission	3.5	4.55

Grading Criteria	Maximum Points
Created a spreadsheet with formulas to calculate total wages/admission.	8
Calculated total wages/admission for the lowest, highest, and two other values for each component.	8
Analyzed calculations to identify the impact of components on total wages/admission.	8
Selected one component as important to reducing costs, and gave reasons.	12
Recommended actions to reduce cost and improve quality for each component.	12
Applied APA standards for writing style, spelling, grammar, and citation of sources.	4
Total	52