Analysis of production factors, costs, and process efficacy in the radiology department of a local health agency in Italy.

PURPOSE: To calculate the itemised and overall costs (including staff, technical equipment, and materials) of the services of a radiology department in order to ensure clearer communications between the service providers and clients concerning the service and its costs. The analysis was carried out in the radiology department of a city general hospital. MATERIALS AND METHODS: An Activity Based Cost Analysis was used to study the production process for each type of service delivered, considering all the direct and indirect costs. These calculations resulted in an itemised list of costs per service that included all of the cost components of a radiological examination, overcoming the limits of cost accounting based on specific factors only (e.g. physician time used). The contents of the itemised cost analysis - human resources, equipment and consumables, gathered from the staff were compared with the actual consumption data for a 4-month period of normal activity. The evaluation was completed by an analysis of the quality perceived by clients relative to the levels and costs of the service. RESULTS: Itemised cost analyses were obtained and verified for 72 categories of services defined by similar types and costs. Thanks to this process-oriented approach, costs could also be differentiated by patient referral group (in-patient, out-patient, emergency department) to compare the impact on the organisation of the three patient categories. Emergency department and in-patient services were found to have a greater impact than out-patient services, and the latter proved more cost-effective than the other two. Emergency department services were found to be considerably less cost-effective due to the fact that the service is guaranteed 24 hours a day / 7 days a week, but seldom fully exploited. While confirming that the Regional charges are inadequate, our analysis supplied all the data needed to precisely evaluate the cost drivers and to update the charges to reflect the actual costs. As regards quality, the patients judged the processes positively, but as a result of their growing expectations they expressed a need for more information. CONCLUSIONS: This itemized cost analysis has proved to be an excellent tool for communicating service costs, and can be used effectively as a benchmarking instrument to verify the cost-effectiveness of similar services, especially if integrated with an in-depth quality analysis (to be carried out by all clients). The results obtained have allowed us to determine the impact of service delivery processes on patients from various referral categories and to develop an up-to-date internal price list that better reflects the actual costs compared to current charges.