Indmedica Home | About Indmedica | Medical Jobs | Advertise On Indmedica
Search Indmedica Web
Indmedica - India's premier medical portal

Journal of the Academy of Hospital Administration

The Costing of Common Otologic Surgical Procedures so as to Develop Standard Approach for Introduction of a Package System of Charging the Patients

Author(s): Shyama S. Nagarajan, R.K. Sarma, R.C. Deka

Vol. 12, No. 2 (2001-07 - 2001-12)

Introduction

Package service was started on an experimental basis on CTVS and NS centres of AIIMS in 1993.37 It was intended to reduce the expenses incurred by the patient on medicine and consumables, as the supply would be procured in bulk, from the supplier through rate contract. This was expected to reduce the extra 20-25 % charge on each item which they would have otherwise paid as individuals. This package service relieved the patients relatives from going repeatedly at odd hrs to chemists shops / super bazar. The advantage of such a package was that the patient after depositing money, became free from worries and tension about procuring medicines and equipment needed for the treatment. It was now the responsibility of the hospital to procure everything for the patients' treatment. This saved to the patient and his relatives lot of agony, making them feel satisfied with the services. The success of this scheme in C.N. Centre encouraged the hospital administrators to develop a cost package system for the entire hospital, particularly for the therapeutic and diagnostic procedures. In order to implement such a package service program, all the departments were assigned the responsibility to workout the cost of consumables and allied expenses for each procedure in their respective departments. However, at present no cost accounting system is functional in the institute, because of which the management is not a position to ascertain the cost incurred in providing a particular service (Tata consultancy services). There is so means of locating centres incurring higher than the expected costs in providing the services, thereby depriving management of a tool on which to base any action.

The existing financial accounting system is restricted mainly to meet the statutory requirements and provide information of cost department-wise. Further, the breakup on expenses in each department is also not available. The management is not in a position to consolidate the function wise information from the available data and there by determine the cost of providing a particular service. It was therefore decided to design a suitable cost accounting system for the institute, with an emphasis for the hospital activities. Therefore, in order to have a uniform module for costing, a need for a scientific study on costing of hospital service at AIIMS has been felt.

We know that surgical procedures are bound by norms and follow a common protocol, they have been identified as ideal for such a study. This is also because of the fact that surgery is a self contained, result oriented procedure with a well defined man power and material utilisation. An analysis of the workload in surgical disciplines, done from the retrospective data of 1996-1997, shows that maximum no. of surgeries were conducted in the Department of ENT. Out of a total of 90029 surgeries in main hospital. 22861 were conducted in the Department of ENT alone, which in 25.4% of total surgeries. This could be because of the reason that the surgeries are conducted on a day care basis. This is also a step into the vision of administrators to promote Day Care procedure. Therefore it was proposed to conduct the study in the Department of ENT.

This study of costing in Department of ENT will also be a step into completion of the previous study of August 95 by "Gupta V" on the Organisation and Layout of Day Care procedure in Department of ENT in AIIMS". This would evaluate14 the feasibility and cost effectiveness of having a separate Day Care Centre in future. The module of costing thus developed can also be used by other departments, to charge their clinical services after neutralising the inflation rates and apportioning them to each patient or per bed. Therefore, keeping in mind the above facts a study has been designed with the following Aims and Objectives.

Aim

To study the costing of common Otologic Surgical Procedures so as to develop astandard approach for introduction of a package system of charging the patients.

Objectives

  1. To study the common Otologic services and identify the most commonly practiced procedures at AIIMS.
  2. To study the workload and resource utilization pattern for the same.
  3. In depth study of selected procedures, which come as short admission in main Otorhinolaryngological OT so as to work out the activity based costing for them.
  4. Develop a standard of costing method so as to apply such norms for charging similar clinical services rendered in the hospital

Materials and Methods

An observational study was carried out for 15 days to study organisation and layout of otorhinolaryngological services provided in OPD, ward and operation theatre. This was done to reaffirm the findings of Kumar Vipin on "Organisation and Layout of Otorhinolartyngological Day Care Services" in Aug 95.

Records from July' 96 to June'99 was reviewed to study the workload of otorhinolaryngological services in its OPD and workload of surgery. Further, from the same records, the commonly carried out otologic procedures were assorted. From these the procedures which were carried out on short admission basis (Day Care Procedures) were picked up for the purpose of costing.

A prospective study for 6 months duration from Jan 99 to July 99, was carried out to find out the cost of each selected otologic procedure. Since it was found that each patient who undergoes surgery first comes to OPD; after being diagnosed goes to various departments e.g. lab medicine for blood and urine, radiology for X-ray and CT scan, audiogram etc. From here the patient comes on the next date for surgery as a short admission (i.e., admission for 1 day) and comes to OPD after this for further follow ups on day 1, day3, day 10 and after 6 months on for review treatment of complications and perhaps a second operation. Therefore, it was deemed necessary to draw a PERT (Programme Evaluation and Review Technology) chart to define the total cost incurred in each otologic surgery.)

Limitation of the Study:

This study has been conducted keeping in mind the aims and objectives and following the methodology under certain limitations. They are as follows :

  1. Short duration of study for a period of 6 months. Hence difficult to cost all the centres which are indirectly helping to run the ENT services.
  2. No meters to measure the electricity consumption at the cost centres (Which is a semi variable asset). This makes it difficult to measure the exact electrical consumption.
  3. No meters to measure the water consumption at the various cost centres.

The Medical and Diagnostic equipment are supposed to be depreciated at the rate of 33.33% (schedule XIV of corporate laws). There is no entry of each equipment about the date they were installed and condemned. Further, many equipment have served beyond their useful life. This posed a difficulty in calculating depreciation of assets.

There is no in house classification of the inventory existing in the institute. Therefore, it is difficult to charge the rate of depreciation of each type of equipment and machinery in use.

The surgical instruments which loose sharpness gets condemned are replaced of and on, without any handing and taking over of inventory record from store section.

The supplies instruments and equipment to one cost centre from different sources for e.g. the hospital store, the main stores and from the funds of the department itself. There is no detailed inventory record store section or the cost centre no proper handing taking over is carried out.

For the surgical instruments it is ideal to have technological costing by knowing the use coefficient of instruments. However, the surgeons are not able to opine how many uses each instrument will last during its life rather they are able to quote the life of instrument as defined by the manufacturer (excluding the loss of instrument of it breaks).

There is no formulary of surgical and medical items existing for patients who are not employees of the institution. Therefore it is difficult to define which should be purchased by the patients and which would be supplied by the hospital stores, leading to the doubling of supplies at one time and scarcity of supply at another time.

Last, but the most important reason is that there is, no cost accounting system existing, therefore it is difficult to state the income and expenditure of a cost centre per annum.

Observations and Discussion

Analysis of observation carried out from the costing of selected procedures and the questions put forth to the Doctors and the Patients shows that :

  1. Cost of Day Care Surgery is less than cost incurred if the patient is hospitalised and treated. For e.g. the total cost of Mastoidectomy and Stapedectomy have gone up because of additional cost of in patient care per bed.
  2. Day Care Surgery is cost effective for the hospital as well as the patient.

To the hospital it reduces the expense incurred per patient. Although the patient today procures their medicines and disposable, it is still only 20-25 % of the total expenditure. And inpatient admission becomes an additional cost of bed occupancy on the hospital, over and above the expenditure on Day Care Surgery.

To the patient it saves the loss of wages due to hospitalisation and gives relief to the relatives in terms of expenditure incurred by lodging in Delhi and the tension there in.

With this Day Care Surgery the doctors are also satisfied and are able to extend their services to more number of patients within the same 300 working days. Hence, time saved is money saved. However, the doctors feel the need for a separate Day Care Centre, to cater to the load, which has been further substantiated by the present costing exercise. This separate Day Care Centre would also reduce the waiting time.

To the hospital this can be a source of income because, now more number of patients can be treated in the same set up.

This would mean optimum utilisation of resources both in terms of man, material and the infrastructure.

Cost of care in AIIMS (Government Sector) is far less than the cost in the Corporate Sector. Profit is the motive in the Private Sector.

This would go a long way in building a good public relation and in furtherence of our commitment to the cause of society.

One of the difficulties encountered during the study was apportioning the depreciation to the office equipment and the diagnostic accessories. This was because of the fact that there were no recorded facts as to when a particular equipment was purchased, by whom, where it is used and when condemned. This poses a serious problem for a logical and comprehensive inventory management. Similar to the package for cost accounting in Data Base, we can have a package for Inventory Management. We need only to feed in the data and it would automatically process it and keep it updated.

The average waiting time for a Myringoplasty in AIIMS is 2 years with 12..3 surgeries per day in the ENT OT. We have only Operation Theater with two OT tables to operate. Further ENT ward has only 37 beds. However, people of various walks of life from different parts of country converge to AIIMS for the high-tech service provided by renowned specialists. Further, the use to techniques lasers, laproscopic surgeries have reduced the need for post operative hospitalisation. This has reduced the ALS of hospital, increased patient satisfaction because now they do not loose wages during sickness. It has also reduced the cost of care per patient because now the patient need not pay for inpatient care. All the above points 90 in favour of having a separate Day Care Centre. It is not only cost effective but also is efficient way of utilisation of meagre resources, reducing the load from the main hospital. It would also increase the overall efficiency in terms of professional as well as patient satisfaction. This would go a long way in building a good Public Relation and in furtherence of our commitment to the cause of society.

Shyama S. Nagarajan, R.K. Sarma, R.C. Deka
Department of Hospital Administration and Otorhinolaryngology AIIMS, New Delhi
The study has been conducted by:
Dr. Shyama S. Nagarajan
MHA Resident, Department of Hospital Administration,
AIIMS, New Delhi in the year 1998-1999.

Access free medical resources from Wiley-Blackwell now!

About Indmedica - Conditions of Usage - Advertise On Indmedica - Contact Us

Copyright © 2005 Indmedica