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Technical Cost of CT Examinations¹

¹ From the Department of Radiology, Massachusetts General Hospital and Harvard Medical School, 32 Fruit St, Boston, MA 02114. From the 1998 RSNA scientific assembly. Received March 3, 2000; revision requested April 24; revision received June 16; accepted July 11. Supported in part by GE Medical Systems. Address correspondence to S.S. (e-mail: saini.sanjay@mgh.harvard.edu).

	ABSTRACT

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PURPOSE: To measure the technical cost of different categories of computed tomographic (CT) examinations.

MATERIALS AND METHODS: For fiscal year 1997, the technical costs of performing CT examinations in a tertiary care academic medical center were measured. Costs were divided into labor and nonlabor categories. Indirect departmental costs were fully allocated according to activity-based methods. Hospital overhead costs were set at 85% of the departmental budget. Physician costs, including those related to image interpretation were not included. The technical cost of CT was determined on a per technical relative value unit (RVU) basis and on a per examination basis. For the latter, the technical cost of nonenhanced CT, contrast material–enhanced diagnostic CT, and interventional CT procedures were determined.

RESULTS: In fiscal year 1997, 45,599 examinations (22,158 [48.6%] abdominal and/or pelvic, 12,115 [26.6%] head and neck, 6,572 [14.4%] thoracic, 1,593 [3.5%] interventional, and 3,161 [6.9%] other) were performed with five CT scanners for a technical RVU output of 254,461. Of 45,599 examinations, 31,007 (68%) were performed with intravenously administered contrast medium. Overall labor costs were $1,744,653, and nonlabor costs were $2,912,282. The cost of a hypothetical CT examination with a mean technical RVU of 5.58 was $189. The overall cost per examination was $150 for nonenhanced CT, $237 for contrast-enhanced CT, and $462 for interventional CT.

CONCLUSION: Although CT is based on sophisticated technology, the mean technical cost of a diagnostic CT examination is less than $200.

Index terms: Computed tomography (CT), utilization • Cost-effectiveness • Economics, medical • Radiology and radiologists, socioeconomic issues

	INTRODUCTION

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In the current environment of managed health care, there are constant market-driven pressures to curtail escalation in health care expenditures. With respect to radiologic services, management of the utilization of computed tomography (CT) and magnetic resonance (MR) imaging has recently gained popularity. These high-technology diagnostic imaging examinations are considered to be costly, which together with high utilization are perceived to be important contributors to the overall increase in health care spending (1,2).

The purpose of our study was to determine the technical cost of CT examinations in a tertiary care academic medical center. Because the cost of CT varies depending on the complexity of the imaging protocol, the technical costs were determined for different categories of CT examinations.

	MATERIALS AND METHODS

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The technical cost of CT was determined for fiscal year 1997 (October 1, 1996, to September 30, 1997). Specifically, we measured costs by using activity-based accounting methods and did not concern ourselves with hospital charges or reimbursement rates. In this study, only the technical cost of performing diagnostic CT was determined. The overall methods applied were adopted from the 1996 University HealthSystem Consortium Radiology Cost and Benchmarking Study (3). The investigators measured overall departmental costs and reported the mean cost per technical relative value unit (RVU) for the radiology department as a whole. We adopted this method to calculate the technical cost of CT and extended the approach to analyze costs for different categories of CT examinations. These categories included nonenhanced diagnostic CT, contrast material–enhanced diagnostic CT, and interventional CT.

Description of CT Procedure
Our hospital is a full-service tertiary care academic medical center with approximately 800 beds; it provides both inpatient and outpatient CT services. During fiscal year 1997, the hospital had five CT scanners, four of which (HiSpeed Advantage; GE Medical Systems, Milwaukee, Wis) were state of the art with helical scanning capabilities and used exclusively for diagnostic examination. The fifth (HiLight Advantage; GE Medical Systems) was an older nonhelical scanner that was dedicated to interventional procedures. One of the diagnostic CT scanners was housed in the emergency ward and was used largely for patients being evaluated there.

Over the past few years, work-flow management in CT has migrated toward a technologist-driven model, where responsibility for patient throughput—including coordination of work flow among the scanners, triage of urgent cases, placement of intravenous lines, monitoring of contrast material injections, and preliminary quality control of images—is performed by technologists. During our study, typically two technologists operated each scanner, with overall work-flow coordination provided by a floor technologist who was not assigned to a CT scanner. Except for interventional cases, there was no dedicated nursing coverage for CT.

Technologist full-time equivalents (25.30) assigned to CT and fully allocated full-time equivalents (management, 2.92; nursing, 0.65; secretarial, receptionist, and scheduling, 4.57; transcription, 2.19; film librarians, 5.08; inpatient transport, 3.25; miscellaneous, 1.09) were 45.05. The scanners operated 7 days a week, with two shifts on weekdays and one shift on weekends; the emergency ward scanner also had a third overnight shift.

For all examinations, comprehensive standardized scanning protocols as determined by staff radiologists were used. For example, 10,591 (47.8%) of 22,158 abdominal and/or pelvic examinations were performed with intravenously administered contrast medium (we followed the American College of Radiology Guidelines on the indication for nonionic contrast media), and a typical abdominal-pelvic examination consisted of the aquisition of 80–100 images (15 or 20 hard-copy images per sheet). Examination protocols were established by residents and fellows at the start of the day. The images were reviewed after the technologist completed the examinations. Although provision of the full details on how and why this model for work flow was developed is beyond the scope of this article, the overall goal was to maximize scanner productivity without compromising patient experience, examination comprehensiveness, or teaching and/or research objectives. An important aspect of this goal was the introduction of weekly 1-hour meetings during which technologists were trained by radiologists, nurses, and specialists.

Measurement of Costs
For fiscal year 1997, we measured the direct and departmental indirect expenditures, which included labor costs and nonlabor costs, incurred in the performance of CT examinations. The category of direct labor costs included salary expenses (including overtime) for technologists and the CT manager. The category of direct nonlabor costs included the cost of equipment leasing, equipment servicing, use of contrast medium, medical-surgical supplies, and film. Indirect labor costs (eg, departmental managers, nurses, secretaries, receptionist and/or scheduler, transcriptionists, patient transporters) and indirect nonlabor costs (eg, nonmedical supplies, linen) that were shared by different cost centers within the department were allocated to CT by responsible managers on basis of resources consumed for CT examinations. Thus, all direct and departmental indirect costs were included in the analysis. However, since institutional overhead costs were not measured, they were estimated to be 85% of departmental budget, as determined by the finance department of the hospital.

Cost Determination Study
Two methods were used to calculate the cost of CT. The numbers were rounded to the nearest whole number because even with the use of these two methods, the results are imprecise.

RVU-based method.—The first method was based on the RVU scale. In this analysis, we used the technical component of the RVUs with the Current Procedural Terminology codes for CT published in the Federal Register to determine the total number of RVUs for the CT examinations performed in our institution on the basis of the hospital billing records for fiscal year 1997 (4). Total costs divided by total technical RVUs allowed determination of the CT cost per technical RVU. Then, on the basis of technical RVU values assigned for common CT examinations, we calculated the technical cost of head, chest, abdominal, and pelvic CT examinations, performed with and without intravenously administered contrast medium, on the basis of Current Procedural Terminology codes. These CT examinations accounted for 80.5% (36,718 of 45,599 examinations) of the total output for the analysis period. In addition, the cost of CT-guided biopsy was also determined.

Examination-based method.—The second method was designed to assess the mean costs of diagnostic and interventional CT. For this analysis, we allocated costs specific to interventional procedures to the interventional CT examinations. This included the salary cost of one full-time–equivalent technologist, the equipment servicing cost of the scanner (which was exclusively used for interventional CT procedures), the nursing cost allocated to that scanner, and the cost of supplies used in interventional procedures. This method allowed separate measurement of costs for diagnostic and interventional CT examinations. For diagnostic CT examinations, the process was extended to measure costs for nonenhanced and contrast-enhanced CT examinations. Hence, the cost of contrast media, intravenous supplies, and labor (estimate of technologist effort dedicated to place the intravenous line) were allocated to only the contrast-enhanced examinations.

	RESULTS

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The total number of CT examinations performed in our institution in the fiscal year 1997 was 45,599, for a total technical RVU output of 254,461. Of these, there were 12,115 (26.6%) head and neck, 6,572 (14.4%) thoracic, 10,969 (24.1%) abdominal, and 11,189 (25.5%) pelvic CT examinations. The total expenditure for CT was $4,656,935. This included labor costs of $1,744,653 and nonlabor costs of $2,912,282. The detailed breakdown of these costs is shown in Table 1.

There were 29,554 nonenhanced and 14,452 contrast-enhanced examinations. The expenditure on resources used for contrast-enhanced examinations, including labor, contrast medium, and supplies, was $677,196. When these costs were attributed to only the contrast-enhanced examinations, the mean radiology cost of a nonenhanced diagnostic CT examination was $81, with a total cost, including hospital overhead, of $150; the mean radiology cost of a contrast-enhanced diagnostic CT was $129, with a total cost, including hospital overhead, of $237. The per examination costs are summarized in Table 3.

	DISCUSSION

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Our findings show that the mean cost of a diagnostic CT examination with the per examination method ($179) and the RVU method ($189) is similar. However, findings from a more in-depth analysis suggest that the cost per technical RVU is not as reliable. For example, the technical cost for CT-guided biopsy on the basis of a technical RVU allocation of 7.87 was appropriately $267, slightly more than that of diagnostic contrast-enhanced thoracic CT, with which a technical RVU of 6.74 translated to an overall cost of $228. However, a diagnostic thoracic CT examination performed without contrast medium followed by one with contrast medium had a technical RVU assignment of 8.43 that translated to an overall cost of $285, which made it more costly than CT-guided biopsy. In comparison, the examination-based method provided more sensible costs, with an overall technical cost of $150 for diagnostic nonenhanced thoracic CT, $237 for diagnostic contrast-enhanced thoracic CT, and $462 for CT-guided biopsy.

Although investigators have reported actual costs for specific types of CT examinations, our findings are not dissimilar from the findings recently reported by Rhea et al (5). They found that the technical cost of a pelvic CT examination without intravenously administered contrast medium was $233. Our findings suggest that the technical cost of a nonenhanced pelvic CT is lower ($150 with the examination method). These differences are due to variations in the method of cost allocation. For example, in the study by Rhea et al, costs for departmental resources, such as scheduling, nursing, and hospital overhead, that were shared among imaging modalities were allocated to individual modalities on the basis of its percentage of department RVUs. Since CT is a common examination with a relatively high RVU per procedure, this approach results in the allocation of a disproportionately large percentage of the cost of shared resources and indirect expenses to the cost of a CT examination. For example, in our department, CT is 28% of the total departmental RVU but accounts for only approximately 13.6% of the examinations and 19% of overall departmental budget. Thus, an RVU-based allocation of common resources will result in the overallocation of costs to CT when a percentage of examination–based allocation may be more appropriate. Thus, in the case of scheduling, transport, and transcription costs, the cost allocation to CT may be better estimated by using patient volume rather than percentage of RVUs.

These observations of the cost of CT examinations have important implications in the delivery of health care. The lower-than-perceived cost of CT examinations indicates that when used appropriately, these examinations may be even more cost-effective than previously thought. Furthermore, when administrative costs of managing utilization are considered, the overall reduction in spending may be small. More important, when utilization is managed in a setting where the products are made internally, the savings are even less because overhead costs (departmental and institutional) are not eliminated when examinations are not performed.

An important limitation of our analysis is that some of our costs are based on estimates. For example, the hospital overhead was estimated to be about 85% of the departmental budget. This represents a large component of the total cost, and small differences can lead to large errors. This imprecision is unavoidable in any study on cost analysis, as some parameters are impossible to quantify. However, by using an aggressive institutional overhead rate, we believe the final cost is, if anything, overestimated rather than underestimated. We should once again emphasize that these costs do not include the cost of interpreting CT results or the cost associated with a physician’s role in patient throughput, such as establishing protocols. In our study, we did not address this cost component, which requires a similarly comprehensive activity-based cost accounting approach.

Another important limitation of our findings is that costs reported may be unique to our institution and may not be applicable to other settings. Costs can vary substantially depending on the type of practice (hospital vs imaging center), workload, case mix, and workers. For example, according to the Technology Marketing Group (7), of the 22.6 million CT procedures performed in 1996–1997 nationwide, comparatively fewer (32%) examinations were performed without use of contrast medium. The overall distribution was also different, with 36% head and neck, 31% abdominal and pelvic, 16% thoracic, and 11% spine CT examinations. In addition, the nationwide mean output per CT scanner of 3,440 is considerably lower than the output of 9,120 examinations (or 11,002 examinations when only diagnostic scans are analyzed with the four diagnostic CT scanners). Regardless, our study findings do give an overall sense of what costs are, and they are useful for a comparison of costs of different types of examinations performed in an institution.

The universally adopted coding and billing system contributes its own peculiarities to the costs. For example, when multiorgan (neck, chest, abdominal, and pelvic) examinations are performed in a patient with lymphoma in a single visit, each component is coded as a contrast-enhanced examination, although in actuality only a single dose of contrast medium is administered. This practice leads to a decrease in the mean cost of CT examinations, since, as in this example, only one dose of contrast medium would have been administered for the four examinations. Furthermore, when the total cost of such a multiple examination study is calculated (four times the cost of a contrast-enhanced diagnostic CT examination), the overall costs are overestimated. A better approach would require that the second, third, or fourth examinations be counted on a marginal cost basis, in which case the total cost will be much lower. Fortunately, these multiorgan studies are not common, and the effect on final examination costs is likely to be small.

In conclusion, our methods have important limitations, however, our findings suggest that although CT is based on sophisticated technology, it is not as costly as commonly thought. While we categorized CT examinations into several broad categories (diagnostic with and without contrast enhancement and interventional), ideally we need to determine the cost of each CT protocol. For example, in the category of nonenhanced CT, a CT examination performed with a kidney stone protocol (in which no oral contrast medium is administered and the whole abdomen and pelvis is imaged in a single breath hold) should cost less than a cervical spine CT examination in a patient with trauma, which typically has a longer examination time. From this perspective, our study may appear to be an oversimplification of a highly complex situation. However, more complex analyses would require measurement of cost as function of examination time and may be possible in the future as better information systems are adopted.

	FOOTNOTES

 
See also the editorial by Forman (pp 25–26 ) in this issue.

Abbreviation: RVU = relative value unit

Author contributions: Guarantor of integrity of entire study, S.S.; study concepts, J.H.T., S.S., L.A.L.; study design, S.S.; definition of intellectual content, S.S.; literature research, R.S.; data acquisition, R.S., L.A.L.; data analysis, S.S., R.S.; manuscript preparation, S.S., R.S.; manuscript editing and review, all authors; manuscript final version approval, S.S.

	REFERENCES

TOP ABSTRACT INTRODUCTION MATERIALS AND METHODS RESULTS DISCUSSION REFERENCES

 

1. Baker ME, Hesselink D, Borkowski GP, Modic MT. Cost accounting in radiology: building a cost model using hospital-based, commercially available software. AJR Am J Roentgenol 1998; 171:7-12.[Free Full Text]
2. Hillman BJ. New imaging technology and cost containment. AJR Am J Roentgenol 1994; 162:503-506.[Abstract/Free Full Text]
3. University HealthSystem Consortium. Radiology cost and productivity benchmarking study Oak Brook, Ill: University HealthSystem Consortium, 1996.
4. Kirschner CG, Davis SJ, Jackson JA, et al. Physicians current procedural terminology: CPT ’97 Chicago, Ill: American Medical Association, 1996.
5. Rhea JT, Rao PM, Novelline RA, McCabe CJ. A focused appendiceal CT technique to reduce the cost of caring for patients with clinically suspected appendicitis. AJR Am J Roentgenol 1997; 169:113-118.[Abstract/Free Full Text]
6. Horngren CT, Foster G, Datar SM. An introduction to cost terms and purposes. In: Horngren CT, Foster G, Datar SM, eds. Cost accounting: a managerial emphasis. 8th ed. Englewood Cliffs, NJ: Prentice Hall, 1994; 25-58.
7. Technology Marketing Group. Benchmark report: CT 1996/97 Des Plaines, Ill: Technology Marketing Group, 1997.

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