NR 533 Week 3 Cost per Case Worksheet Example

Cost Per Case Worksheet: One Day on a 12-Bed Palliative Care Unit Built Upward From Nursing Minutes, Chaplain and Social Work Time, Supplies, Drugs and a Traced Share of the Building, Arriving at $1,583

Student Name

College of Nursing, Chamberlain University

NR 533: Financial Management in Healthcare Organizations

Instructor Name

Month Day, Year

Cost Per Case Worksheet: One Day on a 12-Bed Palliative Care Unit Built Upward From Nursing Minutes, Chaplain and Social Work Time, Supplies, Drugs and a Traced Share of the Building, Arriving at $1,583

Why Build the Cost

Nobody at our hospital has written down what one day on the inpatient palliative care unit costs. The finance office reports the unit's total expenses each month and divides by patient days, which gives an average but says nothing about what the day consists of. That average is also what the hospital uses when it negotiates daily rates with the two hospices that send patients to us for general inpatient care. If the rate is below the real cost of a day, every hospice referral loses money, and the unit's growing hospice volume, which rose sharply in March, would deepen the loss.

This worksheet builds the cost of one ordinary patient day from the bottom up. It follows the logic of time-driven activity-based costing, in which the cost of a service is the time each resource spends on it multiplied by the cost per minute of that resource, plus the materials consumed. A systematic review found that the method has been used across many clinical settings and often exposes costs and waste that averages hide (Keel et al., 2017). The worksheet is simpler than a full costing study, but it follows the same principle: count the minutes, price the minutes, then add what cannot be counted in minutes.

Step 1: Time

I measured time from the unit's own records rather than from standards. Nursing time comes from the staffing records for the first quarter of the year: registered nurses worked an average of 7.8 hours per patient day and nursing assistants 3.7, which together match the 11.5 worked hours per patient day in the unit's budget. Social work and chaplaincy time comes from their activity logs, which record minutes by patient: 40 minutes and 30 minutes per patient day on average. The unit manager and unit clerk spend time that serves all patients equally, so their combined cost is divided by the quarter's patient days.

Physician and nurse practitioner visits are not included. The palliative medicine group bills for its own professional services and pays its own costs, so its time is not a hospital cost.

Step 2: Price per Hour

Each role's time is priced at its loaded hourly cost, meaning average pay including differentials plus benefits at the hospital's rate of 31%. For registered nurses this is $84 an hour, for nursing assistants $41, for social workers $60 and for chaplains $52. These figures come from the finance office's position cost report. Loaded rates matter here because the worksheet will be compared with a daily payment, and a day's cost to the hospital includes benefits as well as pay.

Step 3: Materials

Supplies and pharmaceuticals are taken from the budget's per-day amounts of $38 and $95, which match the unit's actual spending over the past twelve months reasonably well once unusual months are set aside. March, when bowel obstruction treatment and a drug shortage pushed pharmaceutical spending to $123 a day, is treated as an exception rather than a typical day.

Step 4: Facility and Overhead

Some costs cannot be counted in minutes. Housekeeping, dietary services, utilities, laundry and depreciation on the building and equipment are allocated to the unit by the finance office by square footage and patient days. Divided by the unit's patient days, these come to $412 a day. Hospital administration, including information technology, human resources and finance, is allocated at 9% of all other costs, following the hospital's cost report method.

The Worksheet

Table 1 sets out the cost of one ordinary patient day.

Table 1

Cost of One Patient Day, Inpatient Palliative Care Unit

What the Worksheet Shows

Nursing time is the largest cost by far. Registered nurse and nursing assistant time together are $806.90, just over half of the total and more than three-quarters of the direct cost. This is what a palliative day is: continuous symptom assessment, repositioning, mouth care, family support and long stretches in the room during a patient's last hours. The worksheet makes clear that any change in the cost of a day will come mostly from nursing hours, and that reducing them would change the care itself.

Facility costs are the next largest. They are also the least within the unit's control, since they are allocated by formulas set elsewhere. A day on our unit carries the same facility cost per square foot as a day on a surgical unit, even though our rooms are larger to accommodate families, which raises our share.

The worksheet also shows what the cost does not include. It does not include professional fees, which are billed separately, and it does not include the costs of a patient's final day, which are often higher: nursing time on a day of death averaged about two hours more than an ordinary day in the quarter I reviewed.

Using the Worksheet

The hospital's current contract rate for general inpatient hospice care is $1,150 a day. The worksheet puts the cost of an ordinary day at $1,583, so every hospice general inpatient day loses about $433 before the higher cost of a day of death. With hospice days now a third of the unit's volume, that gap is significant. The worksheet does not argue that the unit should take fewer hospice patients. Palliative care has been associated with lower overall hospital costs for seriously ill patients (May et al., 2018), and what the unit is worth to the hospital reaches past its own cost center. But the contract should be negotiated knowing what a day costs, and the next reimbursement brief will set this figure beside what each payer actually pays.

The worksheet should be updated each year when pay rates, benefit rates and allocations change. Its method also allows a second version for a day of death, and a third for a patient receiving a continuous infusion, so that the hospital can see which days lose the most and why.

References

Keel, G., Savage, C., Rafiq, M., & Mazzocato, P. (2017). Time-driven activity-based costing in health care: A systematic review of the literature. Health Policy, 121(7), 755-763. https://doi.org/10.1016/j.healthpol.2017.04.013

May, P., Normand, C., Cassel, J. B., Del Fabbro, E., Fine, R. L., Menz, R., Morrison, C. A., Penrod, J. D., Robinson, C., & Morrison, R. S. (2018). Economics of palliative care for hospitalized adults with serious illness: A meta-analysis. JAMA Internal Medicine, 178(6), 820-829. https://doi.org/10.1001/jamainternmed.2018.0750