Abhijit Chakravarty1, Jyotindu Debnath2. 1. Commandant, Military Hospital Jhansi, C/O 56 APO, India. 2. Professor, Dept of Radiology, Armed Forces Medical College, Pune 411040, India.
Abstract
BACKGROUND: Life cycle costing analysis is an emerging conceptual tool to validate capital investment in healthcare. METHODS: A preliminary study was done to analyze the long-term cost impact of acquiring a new 3 T MRI system when compared to technological upgradation of the existing 1.5 T MRI system with a view to evolve a decision matrix for correct investment planning and technology management. Operating costing method was utilized to estimate cost per unit MRI scan, costing inputs were considered for the existing 1.5 T and the proposed 3 T machine. Cost for each expected year in the life span of both 1.5 T and 3 T MRI scan options were then discounted to its Net Present Value. Net Present Value thus calculated for both the alternative options of 1.5 T and 3 T MRI machine was charted along with various intangible but critical Figures of Merit (FOM) to create a decision matrix for capital investment planning. RESULT: Considering all fixed and variable costs contributing towards assumed operation, unit cost per MRI procedure was found to be Rs. 4244.58 for the 1.5 T upgrade and Rs. 6059.37 for the new 3 T MRI machine. Life Cycle Cost Analysis of the proposed 1.5 T upgrade and new 3 T machine showed a Net Present Value of Rs. 42,148,587.80 and Rs. 27,587,842.38 respectively. CONCLUSION: The utility of life cycle costing as a strategic decision making tool towards evaluating alternative options for capital investment planning in health care environment is reiterated.
BACKGROUND: Life cycle costing analysis is an emerging conceptual tool to validate capital investment in healthcare. METHODS: A preliminary study was done to analyze the long-term cost impact of acquiring a new 3 T MRI system when compared to technological upgradation of the existing 1.5 T MRI system with a view to evolve a decision matrix for correct investment planning and technology management. Operating costing method was utilized to estimate cost per unit MRI scan, costing inputs were considered for the existing 1.5 T and the proposed 3 T machine. Cost for each expected year in the life span of both 1.5 T and 3 T MRI scan options were then discounted to its Net Present Value. Net Present Value thus calculated for both the alternative options of 1.5 T and 3 T MRI machine was charted along with various intangible but critical Figures of Merit (FOM) to create a decision matrix for capital investment planning. RESULT: Considering all fixed and variable costs contributing towards assumed operation, unit cost per MRI procedure was found to be Rs. 4244.58 for the 1.5 T upgrade and Rs. 6059.37 for the new 3 T MRI machine. Life Cycle Cost Analysis of the proposed 1.5 T upgrade and new 3 T machine showed a Net Present Value of Rs. 42,148,587.80 and Rs. 27,587,842.38 respectively. CONCLUSION: The utility of life cycle costing as a strategic decision making tool towards evaluating alternative options for capital investment planning in health care environment is reiterated.
Keywords:
1.5 T/3 T MRI; Life cycle costing; Radiodiagnosis; Technology acquisition
Authors: Joanna M Wardlaw; Will Brindle; Ana M Casado; Kirsten Shuler; Moira Henderson; Brenda Thomas; Jennifer Macfarlane; Susana Muñoz Maniega; Katherine Lymer; Zoe Morris; Cyril Pernet; William Nailon; Trevor Ahearn; Abdul Nashirudeen Mumuni; Carlos Mugruza; John McLean; Goultchira Chakirova; Yuehui Terry Tao; Johanna Simpson; Andrew C Stanfield; Harriet Johnston; Jehill Parikh; Natalie A Royle; Janet De Wilde; Mark E Bastin; Nick Weir; Andrew Farrall; Maria C Valdes Hernandez Journal: Eur Radiol Date: 2012-06-09 Impact factor: 5.315