The cloud over MT schools: can we justify their cost?
One laboratorian recently published a cost-benefit analysis that favored maintaining MT education at her institution. The title of that article posed a question that administrators ask: "How Much Does an MT Program Cost the Hospital?" (MLO, March 1984). In other words, "How much would we save if we closed our school?"
Recent developments have made that question all but inevitable. Many years ago, most schools paid for themselves. Instruction consumed little cost and effort, and students spent most of their time doing minor chores and simple tasks around the laboratory, thus freeing the staff for more important work.
As registry organizations instituted more rigid requirements, hospital instruction grew more costly and student labor decreased. Meanwhile, third-party payments for hospital care grew tighter, culminating in last year's debut of prospective payament.
As a result, many MT programs face the axe for financial cuts if not outright elimination. In our 320-bed hospital, the program's continued survival has been called into question by administrators annually for the past five years.
When we ask how much the school costs the hospital, it seems obvious that thousands of dollars could be saved each year by ending the program altogether. But the situation is a good deal more complex. For an accurate cost-benefit analysis, we must also consider what the school and its services are worth--that is, how much it would cost to run a freestanding educational institution offering the same facilities and curriculum. That cost, we suspected, would differ dramatically from the dollar savings achieved by closing the school.
Our laboratory decided to find out. After we had painstakingly assembled all relevant data, we made a gratifying discovery: Our MT school was a bargain in terms of what it offered to students. Here's how we reached that conclusion.
Any attempt to determine the exact cost of running a medical technology school involves a tangle of accounting problems. Instructors divide their time among lecturing, teaching while performing tests, supervising students, and performing nonteaching tasks. While students do cost the laboratory money, they contribute significantly to patient service. Clearly it takes two sets of books to pin down complete and accurate figures.
The financial report we produced, which is summarized in Figures I through VI, attempts to answer two key questions: What is our program worth in dollars and cents, or what is its value? And how much would we save if we closed it?
We began by putting a price tag on lectures, as shown in Figure I. Our pathologists are active participants, principally presenting the clinical aspects of medical technology--the rationale of test selection and interpretation. Their involvement is essential to developing technologists who are true professionals rather than mere technical personnel. Lectures by our lab consultant emphasize recent advances in the field. Teaching at this level raises the average lecturer's salary to $30 an hour.
But keep in mind that even if the program closed, pathologists would still receive the same salry as before. That's part of the distinction between the value of the program and the savings achieved by closing it down. Also bear in mind that value is important from the student's point of view. If tuition is raised, for example, is the student still getting his or her money's worth?
The cost of bench instruction is also shown in figure I. The mean salary for bench instructors includes fringe benefits, which constitute more than 30 percent of base pay for full-time employees. Figure II completes our cost picture with the salaries for our technical director, the only staff member who works almost exclusively for the school, and our typist. Typing and copying costs are high because students receive copies of every lecture, a system we use to speed the pace of class time.
All these direct costs are summed up in Figure III. We added overhead--caculated, as for the lab itself, at 40 percent of expenditures. What, then, would it cost to run the MT program independently? According to our analysis, the total required outlay or value of the program is $120,862, or $13,429 per student in a full class of nine.
We next examined revenues and cost savings attributable to the MT program. It was difficult to estimate the amount of clinically productive work performed by students during school hours because there's variation from section to section and from day to day. Figure IV shows the productive time we finally settled on, multiplied by the starting salary of a CLA-level technician to yield $12,150 worth of patient service.
After three months' training, students may apply for part-time weekend work in the laboratory, performing only procedures for which they are qualified, of course. As substitutes for our regular medical technologists, who earn $10.32 per hour, they represent a salary savings of $2.22 per hour. Multiply that by more than 1,400 hours of weekend service a year, and you get $3,100 in annual savings.
We also factored in the recruitment and training money we save by hiring our own graduates. We usually replace two employees per year. It costs an estimated $8,800 to recruit and indoctrinate a technologist trained elsewhere. By tapping our program's alumni for lab positions, we save $17,600 every year. Finally, when $15,000 is added in for tuition and book payments, total school-generated revenues and cost savings come to almost $48,000.
By subtracting this estimate of the school's total revenue and cost reductions from the value of the program, we arrived at a net annual operating loss of $72,929, or about $8,000 per student (see Figure V).
This is not the amount that the hospital would save by closing the school, however. We estimated the monetary gain from ending the program in Figure VI, and it is a considerably lower sum. In short: If the MT school were terminated, savings would amount to only $27,352 a year, or $3,039 per student--quite a different figure from the program's estimated value of more than $13,000 per student.
A note abot our procedures: Some of the data used to arrive at this conclusion are solidly documented, such as reduced hours for the technical director and typist and elimination of guest lecturers, books, and photocopying. The largest cost item, technologist lectures and benchwork, involved some guesswork, as did our estimate of patient work by students.
We had proved our point: Before a hospital decides to do away with its MT program, it must consider nonfinancial as well as financial reasons. Anticipating an administration response, we presented the major arguments on both sides. These were the main nonfinancial reasons to terminate the program:
* Longer turnaround, reduced service quality. Phlebotomists provide our principal contact with the public. If they aren't highly skilled, patients complain, and the laboratory's image suffers. Most students, while they tend to learn quickly, experience some difficulty at first. Inexperienced phlebotomists can also slow down an entire department's work, since they take longer to perform each collection and have a higher rate of missed patients. In our laboratory, students who continue to cause problems are given assistance in developing proper skills and attitudes.
* Low demand for technologists. Until a few years ago, most of our students found jobs before completing their training. Times have changed. Although the majority of our graduates find employment, they must spend more time looking for it. In fact, our program now includes coaching in job-hunting and resume preparation. Some graduates who have strong ties to the area must accept less attractive jobs.
* Rigid scheduling. Under the prospective payment system, work schedules will probably change significantly, with medical technologists working more night and weekend shifts. since bench training is highly structured, instructors may run into trouble scheduling additional compensatory time during regular hours.
* Overqualified staff. Since we hire many of our own graduates, we sometimes fill technician positions with technologists. Budget pressures and the increasing number of simplified or automated tasks may mandate lowering the ratio of technologists to technicians and other less highly trained employees.
On the positive side, we cited some excellent nonfinancial reasons to continue the program. These reasons tended to be more difficult to quantify:
* Job enrichment. It's well known that students have a stimulating and challenging effect on the laboratory staff, keeping pathologists and technologists on their toes. Most instructors enjoy their role. If significant personnel cuts become necessary, however, the added responsibilities of teaching may simply be overwhelming.
* Recruiting benefits. As we mentioned, the school provides us with a familiar, capable pool of candidates. We can fill vacancies selectively at little cost.
* Flexible scheduling. Students can ease scheduling as well as complicate it. Without their 1,400 or so hours of part-time work a year, our permanent employees would face more weekend assignments. Reduced student availability on weekends would create more day-to-day scheduling problems and possibly a drop in morale.
* Creative input. Aside from benchwork, each student completes a practical research project. These projects enrich both the students and the laboratory. Many have led to changes in our instrumentation and procedures. Of the eight or nine student projects initiated every year, we implement about one-third
Since we prepared our report, the hospital's administration has decided to authorize the school's existence for another year. Tuition will be raised 100 per cent, however, from a current $1,500 to $3,000 to help close the gap between revenue and costs, and a further $1,500 increase is planned for the following year. It remains to be seen how this increase will affect school enrollment, but our calculations show that the program wil continue to be a bargain for students.
For this year, the important point is that the school will survive. An important part of that survival is the ongoing awareness among students and administrators that the value of high-quality technologist training should count as much as its cost does.
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|Author:||Umiker, William O.; Yohe, Susan|
|Publication:||Medical Laboratory Observer|
|Date:||Nov 1, 1984|
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