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Letters to the Editor |
R. A. Bell and Associates, 3660 Dove Hollow Road, Encinitas, CA 92024, e-mail: rabell@prodigy.net
Editor:
The article by Dr Saini and colleagues in the January 2001 issue of Radiology (1) deserves praise for its detailed analysis of departmental costs. I agree with the editorial by Forman (2) about this same issue in that topics explored in such articles serve the readership by demystifying cost-accounting methods, providing benchmark data, and emphasizing the benefits of research in operational management.
Considering the careful delineation in the article about the actual computed tomographic (CT) cost components, I was surprised that the authors accepted the estimate of overhead (85% of departmental direct and indirect) costs of the hospital without any apparent review. The authors’ recognition that "This represents a large component of the total cost, and small differences can lead to large errors" is laudable for its honesty, but their further claim that such "imprecision is unavoidable in any study on cost analysis, as some parameters are impossible to quantify" is troubling. Electing to ignore the accuracy of such an important contributor (representing about half the total cost) must render any further calculation highly questionable.
Others have explored overhead contribution. For magnetic resonance (MR) imaging, Evens et al (3) estimated indirect costs (primarily overhead) as 50% of fixed and variable costs, excluding depreciation. In my analysis of actual overhead expenses for outpatient MR imaging centers, the percentage was typically in the range of 15%–25% of these factors (4). If Dr Saini and colleagues’ total of approximately $4.66 million for actual departmental CT costs in the fiscal year 1997 is accepted, the 85% estimate allocates an additional $3.96 million for hospital overhead. Liberal estimates of overhead components yield only about one-third of this amount (Table). One must question whether the hospital administration has markedly inflated the CT overhead estimate to provide funds for traditionally nonprofitable sectors such as the emergency department. If so, such inflation should not be included in the analysis of the actual CT technical costs.
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In the current era of cost-conscious medicine, it is vital that financial reviews of radiologic procedures be as accurate and complete as possible. According to Sunshine et al (5), radiology services represent only about 3.5% of the total medical cost in the United States, an extraordinary value considering the effect of radiologic diagnoses, interventional procedures, and radiation oncology. However, our discipline remains a "lightning rod" for complaints about expensive instruments and tests. Applying potentially erroneous overhead factors may substantially overinflate actual costs and exacerbate the perception of cost-unconsciousness in radiology.
REFERENCES
This article has been cited by other articles:
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  D. T. Gray, W. Hollingworth, C. C. Blackmore, M. A. Alotis, B. I. Martin, S. D. Sullivan, R. A. Deyo, and J. G. Jarvik Conventional Radiography, Rapid MR Imaging, and Conventional MR Imaging for Low Back Pain: Activity-based Costs and Reimbursement Radiology, June 1, 2003; 227(3): 669 - 680. [Abstract] [Full Text] [PDF]
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