1. Cost Benefit Analysis of Computerization in Hospitals: A Marginal Cost Approach Dr. Haroon Khan Associate Professor Department of Pathology Pakistan Institute of Medical Sciences (PIMS) Islamabad Laboratory Director Kulsum International Hospital Blue Area, Islamabad

2. Objective To conduct a COST BENEFIT ANALYSIS of COMPUTERIZATION in hospitals. Study was carried out in Pakistan, Philippines and Afghanistan. 2

3. Observed Hospital PAKISTAN: Pakistan Institute of Medical Sciences (PIMS) – Computerized Benazir Bhutto Hospital (BBH) – Manual PHILLIPINES: Mambusao Hospital – Computerized Bailan District Hospital – Manual AFGHANISTAN: French Medical Institute for Children – Computerized Bhamyan Hospital – Manual 3

4. Introduction Computerization in Healthcare; An active target of economic feasibility studies. In Pakistan, hospitals even in major cities DO NOT have this facility. Potentiality of higher Inaccuracy rates, Critical Delays, and Recording Errors. 4

5. Previous Contribution Many people done a great job on this subject; Mishelevich et al, 1979 – defines Cost Benefit Analysis Mannle, 1997 – Reduced Transaction, Improved Retrieval, Improved Clinical Decision Making Bates et al, 1999 - Prospective Randomized Controlled Trial Bernstam et all, 2000 – CPRs (Com. Patients Records) Wang et al, 2003 – Cost Benefit Analysis 5

6. Previous Contribution (Cont’d……) Kuperman and Gibson, 2003 – CPOE (Computerized Provider Order Entry) Shekelle et al, 2006 – HIT & EHR (Health Information Tech & Elect. Health Records) Patil et al, 2008 – EMR System Himmelstein et al, 2010 – Quality & Cost Zlabek et al, 2011 – Effects of EHR & CPOE 6

7. Tests/Procedure - Studied Four types of Tests at each hospital studied: Blood Glucose Urine R/E Blood Urea Complete Blood Count (CBC) 7

8. Costing for Study Costs going into each test: Salary – Technician’s and Pathologist Consumables – Reagents, Chemicals Laboratory Equipment Stationary – Papers & Printings Computerization – – Hardware (Fixed) – Software (Maintenance) 8

9. Methodology Method used for analysis: Marginal Costing Technique “Holding other things constant, it looks at costs that are incurred at margin.” 9

10. Methodology (Cont’d…….) Cost Apportioning Technique: To allocate each type of Cost to each type of Test Ratio of Total Number of glucose tests to total tests used to apportion each cost. Similarly applied to the other three test types 10

11. Methodology (Cont’d…….) Marginal Cost (i): Total of the Apportioned Costs(monthly) Average Number of tests in a month. Where; (i)= (Glucose, Urea,Urine R/E, CBC) 11

12. Results Computerized solutions for Laboratory test recording and reporting lower the per unit costs of all tests substantially. Economies of Scale. Additional costs of computerization (installation and maintenance) do not hamper this cost- saving effect. The salaries of additional staff used for manual recording and reporting do not allow for an efficient number of tests to be performed. 12

13. Results (Cont’d……….) Cost/ 100 Tests (in USD) Comparison b/w PIMS & BBH PIMS BBH Glucose 15.21 29.96 Urine R/E 27.59 30.65 CBC 24.84 26.70 Blood Urea 13.67 14.74 13

14. Cost Breakdown of Glucose Test @ BBH (Manual) 14 Total Cost/100 Tests - 29.96 USD

15. Cost Breakdown of Glucose Test @ PIMS (Computerized) 15 Total Cost/100 Tests – 15.21 USD

16. Results (Cont’d……….) Cost/100 Tests (in USD) Comparison b/w FMIC & Bhamyan FMIC Bhamyan Glucose 716.17 1613.65 Urine R/E 916.93 1166.23 CBC 804.08 1269.96 Blood Urea 798.17 1706.44 16

17. Future of Study This study lays the groundwork for conducting Marginal Cost Studies in both other hospitals, and other departments. A similar approach using CAT analysis can be used to gauge the cost advantage of introducing any type of computerized solutions in the health sector. Similar analyses can be carried out in other departments at medical institutions: - Radiology - Clinical Studies - Remote Health Service systems - And others…. 17

18. Development of A Cost Analysis Widget Tool will allow health sector administrators and Policy developers to plug in their cost figures and Get immediate and structured results including: 1.Cost per test data 2.Graphical/Visual breakdown of results 3.Sensitivity Analysis of the results (for variation in the key cost factors). 4.Cost-Benefit Analysis if revenues/utility of improved services are added to the analysis. 18

19. Development of A Cost Analysis Widget ost Analysis Widget 19 We intend to develop an electronic application based on our cost calculation template

20. Comparison - Pakistan 20 Cost Comparison between Computerized and Non-Computerized (Manual) Testing. Costs (USD) Computerized PIMS %age of total cost Manual BBH %age of total cost Laboratory reagents, syringes, cotton wool, test tubes $6.50 32.87% $6.50 24.43% Laboratory Registration Counter costs (Monthly) $0.82 5.38% $1.08 4.08% Laboratory Staff Salaries (monthly) $2.54 16.68% $12.60 47.34% Laboratoryequipment $1.10 7.26% $3.80 14.27% OPD Registration Counter Costs (Monthly) $0.64 4.20% $2.63 9.88% Cost of Computerization (Monthly) $1.02 6.74% Xx xx Fixed Costs for Computerization $0.58 3.82% Xx xx Total Costs $13.20 $26.61 Total Number of Glucose Tests5,490 2,518

21. Comparison - Afghanistan 21 Cost Comparison for a Glucose Test (Computerized vs Manual). Costs (USD) Computerized (FMIC)Manual (Bhamyan) Laboratory Solutions and Chemicals181.9114 Syringe5.226 Monthly Costs Laboratory Registration and Report Counter27.8xx Monthly Staff Salaries Laboratory207.5352 (Apportioned) Costs of Laboratory Equipment2,573.201,931 Monthly Costs Out-Patient Registration9.22 Monthly Costs of Computerization802.6xx Fixed Costs of Computerization23.9xx OPD Costs0.327 Total Cost3,8322,451 Number of Glucose Tests535193 Cost Per Hundred Tests 716.181613.65

22. Comparison - Philippine 22 Cost Comparison for a Glucose Test Costs (USD) Computerized (Mambusao) Non Computerized (Bailan) Laboratory Solutions and Chemicals1464.8 Syringe108xx Monthly Costs Laboratory Registration and Report Counter29190.09 Monthly Staff Salaries Laboratory9309236.44 (Apportioned) Costs of Laboratory Equipment8462516.79 Monthly Costs Out-Patient Registration9.2xx Monthly Costs of Computerization175xx Fixed Costs of Computerization2071xx OPD CostsXx3 Total Cost12561.23011.12 Number of Glucose Tests535429 Cost Per Hundred Tests2347.89701.89

23. Sensitivity Analysis (Effect of Fixed Costs of Computerization for PIMS) 23 Sensitivity Analysis (Effect of Fixed Costs of Computerization for PIMS) Monthly Fixed Comp. CostsCost per hundred Glucose TestsVariation Size 1373 41.34 x0.25 2745 23.92 x0.5 4118 18.11 x0.75 5490 15.21 Original Figure 6863 13.47 x1.25 8235 12.31 x1.5 9608 11.48 x1.75 10980 10.85 x2.0

24. Sensitivity Analysis (Effect of Fixed Costs of Computerization for PIMS) 24

25. Acknowledgement IDRC – Int’l Development Research Centre, Canada PANACeA – PAN Asian Collaboration for Evidence-based e-Health Adoption and Application. Mr. Asim Ansari for presentation. 25

26. Have a Nice Day…….. 26