cost benefit analysis
DESCRIPTION
COST BENEFIT ANALYSIS. WILLIAM CHARNEY,DOH. Politics of Cost Benefit. Money is politics, politics is money in healthcare. Cost Benefit is political. Being right and cost-justified does not always lead to program funding. - PowerPoint PPT PresentationTRANSCRIPT
![Page 1: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/1.jpg)
COST BENEFIT ANALYSIS
WILLIAM CHARNEY,DOH
![Page 2: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/2.jpg)
Politics of Cost Benefit
• Money is politics, politics is money in healthcare. Cost Benefit is political.
• Being right and cost-justified does not always lead to program funding.
• US is 27th on the list for providing per capita occupational safety for its workers @ $3.97 per worker.
![Page 3: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/3.jpg)
Understanding the Politics of Cost-Benefit
• Budgeting for occupational programs should be an ethical issue not economic.
• Every hospital has an Ethics Committee. Get on the agenda
• Alliances with labor
• Struggle for $ on Health and Safety Committee
![Page 4: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/4.jpg)
ADDING THE COST OF INJURY
• MOST COST BENEFIT ANALYSIS DOES NOT PROPERLY INCLUDE THE COSTS OF THE EMPLOYEE INJURY. WITHOUT THE COST OF THE INJURY RATIONALIZING EXPENDITURES AND BENEFITS IS IMPOSSIBLE.
![Page 5: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/5.jpg)
The Science of Cost Benefit
• Cost Benefit Analysis is a science that must be understood before true injury costs can be determined and understood
• It is extremely rare that leaders of our healthcare systems understand or have studied the science of cost-benefit analysis regarding injury rates
![Page 6: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/6.jpg)
OPENING OF FINANCIAL DOORS
• COST BENEFIT ANALYSIS(CBA) IS THE KEY TO OPENING THE FINANCIAL DOORS TO PURCHASE AND PROGRAM JUSTIFICATION. TOTAL COSTS INCLUDES:
• DIRECT COSTS
• INDIRECT COSTS
![Page 7: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/7.jpg)
DIRECT COSTS
• DIRECT COSTS ARE CONSIDERED THE FOLLOWING:
• DIRECT COMPENSATION FOR REPORTED LOST TIME INCIDENTS
• MEDICAL COSTS
• INCREASE IN WORKERS COMP PREMIUMS
![Page 8: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/8.jpg)
INDIRECT COSTS
• INDIRECT COSTS ARE CONSIDERED:
• LOST WORKDAYS(WAGES X HOURS LOST)
• LOST TIME FOR MANAGERS AND REDUCED PRODUCTIVITY DUE TO INJURY
• 21% DECREASE IN WORKER PRODUCTIVITY
![Page 9: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/9.jpg)
INDIRECT COSTS CONT.
• OVERTIME PAID TO OTHERS DURING LOST WORKDAYS
• PERSONNEL AND TRAINING TIME TO HIRE REPLACEMENTS
• COST OF EMERGENCY TREATMENT
• COST FOR LIGHT DUTY
• RECRUITING COSTS/CLAIM PROCESS
![Page 10: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/10.jpg)
APPLICATIONS
• INTERGRATING THE DIRECT COST OF THE INJURY INTO THE ANALYSIS
• INTERGRATING THE INDIRECT COST
• ANALYZING THE COST OF EQUIPMENT
• ANALYZING TRAINING COST
• ANALYZING DEPRECIATION COST
![Page 11: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/11.jpg)
INDIRECT COST SIMPLE METHOD
• INDIRECT COST COMPUTATION IS CONSIDERED 4X THE DIRECT COST
• (SOURCE:Fragala, “How to contain injury in healthcare: Ergonomics, 1966. Charney,Cost benefit analysis for back injury. Journal of Healthcare Safety and Infection Control; Dec. 2000.
![Page 12: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/12.jpg)
Archives of Internal Medicine
• Peer review article states indirect costs to be a factor of 2x
• Source: Archives of Internal Medicine, “Occupational injury in the US: July 28th, 1997 pp1557-1568
![Page 13: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/13.jpg)
Formula Using Profit Ratios
• Estimated Cost Savings Divided by Profit Ratio = Dollars Not Having to be Billed
• Ex: Hospital Spends 170,000 on Lift Teams or Equipment calculates a savings in one year of WC of $54,000 divided by 2.8% profit ratio equals 2 million dollars not having to be billed to cover injuries.
![Page 14: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/14.jpg)
Cost Benefit for Back Injury
• Back injury is one of the highest compensable injuries in healthcare
![Page 15: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/15.jpg)
BUREAU OF LABOR STATISTICS
• THE BUREAU OF LABOR STATISTICS NOW C LASSIFIES HEALTH CARE PATIENTS AS DIRECT CAUSE OF ON THE JOB INJURY
![Page 16: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/16.jpg)
CAUSES OF INJURY
• MANUAL LIFTING IS THE PRIMARY CAUSE OF BACK INJURY IN HEALTHCARE WORKERS. THE NINE MOST COMMON MANUAL LIFTS EXCEED THE NIOSH UPPER LIMITS FOR LIFTING AND MOST ENTER THE MICROFRACTURE RANGE OF 6400NF
![Page 17: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/17.jpg)
FORMUALAS FOR CALCULATION
• BUSINESS PLAN CALCULATIONS REQUIRE;
• DIRECT COST OF INJURY(COMP AND MEDICAL)
• MULTIPLY BY FACTOR OF 4X
• COST OF EQUIPMENT
• COST OF TRAINING
![Page 18: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/18.jpg)
COST BENEFIT ANALYSIS FOR 0 LIFT
• O LIFT HAS 2 TECHNOLOGIES: LIFT TEAMS AND O LIFT REPLACING MANUAL LIFTING WITH MECANIZATION. PREPARING THE COST BENEFIT IS CENTRAL TO GETTING THE FUNDING
![Page 19: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/19.jpg)
• MECANICAL EQUIPMENT IS MANDATORY FOR SUCCESS : TWO STUDIES HAVE SHOWN THAT COST FOR EQUIPMENT IS PAID FOR WITHIN 12-15 MONTHS OF PURCHASE.
• (Source: Garg and Charney)
![Page 20: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/20.jpg)
FORMULAS FOR CALULALTION
• 2 FORMULAS FOR CALCULATION OF EQUIPMENT
• 1 VERTICAL, LATERAL AND SIT TO STAND DEVICE PER MEDICAL WARD
• I VERTICAL, LATERAL AND SIT TO STAND FOR EVERY 8-15 PATIENTS
• ONE LATERAL TRANSFER STRETCHER PER ER TRAUMA ROOM
![Page 21: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/21.jpg)
Garg Equipment Formula Ratio
• Based on number of patients needed to be transferred: 2 total lifts per 17-24 patients and 3 total lifts for 33 to 50 patients
• Sit to Stand: 6 sit to stand 42-50 patients
• Re-positioning Equip: 10 devices 42-50 patients
![Page 22: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/22.jpg)
DEPRECIATION COST FORMULA
• MECHANICAL EQUIPMENT LIFE EXPECTANCY IS 7-10 YEARS IF PROPERLY MAINTAINED.
• SOFT PARTS NEED REPLACING MORE FREQUENTLY(MATTRESSES, SLINGS ETC.
![Page 23: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/23.jpg)
Some success studies
• OSHA cited over 50+ studies showing a positive cost benefit for “0” Lift
• Texas Hospital: Fragala: Added Lift equipment WCB costs reduced from $111,159 to $743
• Garg: 7 Nursing Home Study: Injury rates reduced by 62%
![Page 24: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/24.jpg)
Studies (cont)
• Surrey Memorial:Bruening 1996: no lift policy reduced injuries by 96%
• Lawrence Memorial: Fragala: Lift aids on 2 high risk units: Lost time hours dropped 43%
• Charney: 60 bed Tampa Nursing Home: No lift, ceiling lifts: Lost time dropped to 0
![Page 25: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/25.jpg)
British Colombia Study
• A one year study replacing floor lifts with ceiling lifts showed a payback period of 4 years.
• Payback period shorter when indirect costs included
• Perspective of facility itself, benefits exceeded costs by 6 to 1 or a rate of return of 17.9%25
![Page 26: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/26.jpg)
British Colombia Study (cont)
• 65 ceiling lifts installed
• reduced injury rates by 58% within 1 year
• Patient Lifting injury costs pre $83,000
• Patient Lifting injury costs post $27,000
• re-positioning pre $113,000
• re-positioning post $65,000
![Page 27: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/27.jpg)
• Payback 3.9 years
• Benefit cost ratio 2.53
• Internal rate of return 8.1%
• Source: Speigel, et al Implementing a resident lifting system: AAOHN vol 50, no.3 March 2002
![Page 28: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/28.jpg)
CBA in Needlesticks
• Adding the cost of the stick to the mathematics of Cost-benefit makes safety devices cheaper than non-safety
• GAO calculates that a low post-exposure cost is $500 per stick, a moderate is $1500 per stick and a high is $3000 per stick.
![Page 29: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/29.jpg)
CBA in Latex Exposure
• Peer review studies show that going to a non-latex facility is cheaper than paying for the costs of maintaining a latex environment.
![Page 30: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/30.jpg)
JUSTIFICATION RATIOS
• SOME HOSPITALS AND LTC FACILITIES WILL HAVE HIGHER JUSTIFICATION RATIOS THAN OTHERS. THE PROGRAM IS BASED AS MUCH UPON RISK PREVENTION AS COST. ONE PERMANENT DISABILITY CAN COST A SYSTEM OVER $100,000.
![Page 31: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/31.jpg)
BARRIERS TO SUCCESS
• WORKERS COMP COSTS IN MOST SYSTEMS IS ONLY 1% OR LESS THAN TOTAL OPERATING COST BUDGET.
• DEPARTMENTAL AND SYSTEM COSTS FOR BACK INJURY CAN BE WELL HIDDEN AND INSULATED
• “HIGHER PRIORTIES” MYTHS
• CEOS,CFOS NOT TRAINED IN CBA
![Page 32: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/32.jpg)
ROADS TO SUCCESS
• MANY STUDIES NOW SHOWING GREAT CBA BENEFITS.
• SOME STATES HAVE ERGO LEGISLATION.
![Page 33: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/33.jpg)
Calculating the costs:OSHA
• Each prevented injury or illness resulting in time away form work saves $28,000
• each serious injury or illness avoided saves $7000
• Source: OSHA e-compliance assistance tools
![Page 34: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/34.jpg)
Studies on indirect costs
• Peer review studies on the 1:1 all the way to 10:1 ratio of indirect costs to direct costs.
• Source: Charney, Journal of Healthcare Safety and Infection Control; vol 3 no2 and Fragala...
![Page 35: COST BENEFIT ANALYSIS](https://reader033.vdocuments.net/reader033/viewer/2022051316/568145bd550346895db2c716/html5/thumbnails/35.jpg)
CONCLUSION
• EVERYWHERE PEER REVIEW SCIENCE LOOKS THERE IS A POSITIVE(+) COST BENEFIT ANALYSIS TO IMPLEMENTING SAFETY PROGRAMS IN HEALTHCARE