Financial ROI Model – Hospitals
This model is structured around the following components:
- Hospital profile
- Benefits (Financial impact over time)
- Costs (Financial impact over time)
In order to create a tool flexible enough to permit the analysis of diverse type of blood center operations and sizes, the team developed a Microsoft Excel-based tool to calculate the various cost and benefit elements and allow for “what if” quantitative analysis.
The structure of the model starts with the definition of general parameters for describing the key attributes of a hospital related to blood transfusion:
(1) Operating volumes describing the product flow in units and the headcount involved.
(2) Facility Configuration parameters allow for scaling the operations based on the size and type of area : blood bank or patient care units. Patient care units are characterized by the level of usage of transfusion services. For example, large usage care units comprise operating rooms, ICUs, emergency rooms. Each one of these site types is associated with a pre-defined configuration of RFID equipment, allowing a more accurate estimate of the investment in technology needed by the entity under analysis.
(3) Financial Parameters convert activity units (hours or blood products) into monetary values. The value of a blood product is estimated using a weighted average of the blood product mix used by the individual institution. Labor cost is always estimated including the full payroll benefits on top of basic salaries.
In addition, the internal rate of return, a benchmark annual rate commonly used by financial analyst in health care to evaluate capital investments, is used by the model to translate monetary values occurring at different periods of time into a common equivalent present value. The model uses a scheme of five years horizon by allocating cost and benefits in each year during the ramping up of the technology and adoption of the new processes within a particular organization. In general, it is expected that new technologies will pay off within this period of time.
|Number of transfusion of RBCs per year||18,194|
|Number of transfusions of Platelets per year||3,461|
|Number of transfusions of Plasma Per year||7,137|
|Number of transfusions of Cryopercipitated AHF per year||1,838|
Number of units/transfusion (Avg)
|Total number of transfusions per year||30,629|
|% of emergency transfusions||2%|
Total number of regular transfusions per year
Number of bags returned per year
Number of bags sent to disposal per year
|Average number of bags in stock||615|
Site Configuration- Hospital (32,000 transfused units/year example)
Large Blood Bank Sites
|Medium Blood Bank Sites||0|
|Large blood usage Care Units||7|
|Medium blood usage Care Units||27|
Financial / Wage Parameters
Average value of one bag of product
Blood Bank Staff
|MD/RN average hourly wage||39.96|
|Supervisor hourly wage (fully loaded)||48.30|
|Annual internal rate of return (IRR) used for decision-making||6.27%|
Over the course of 12 months a team of transfusion medicine practitioners and process engineers dissected the current practices in the participating hospitals and produced a set of RFID-enabled processes that promised to increase efficiency, reduce errors and reduce wasted products.
Efficiency benefits were quantified at every step of the process by allowing faster and safer processes. Error elimination/reduction has two major effects:
1) Decreasing wasted time needed to trace error source, documentation and rework.
2) Reducing the chances of mistransfusion and its consequences.
This second effect was quantified using a separate model, but not translated to financial terms yet. The safety model developed by the same team is described in this page
The model incorporates a step-by-step estimate of the current vs the improved effort requirements for each major process where RFID is incorporated.
The model assumes that the blood center implementing RFID lacks the necessary infrastructure to support the RFID-enabled processes and therefore must purchase and install the required hardware and software.
The costs are divided into two categories:
- One-time start-up costs
- Recurring operating costs associated with RFID-enablement.
One time costs include the cost of RFID readers, required IT infrastructure, software purchase and integration, system implementation and training, and a temporary decline in productivity. Recurring operating costs include the cost of purchasing and applying RFID tags to product bags, annual software licensing fees, and system support and maintenance. All recurring costs, with the exception of RFID tags, are assumed to be constant over the five year period.
Auto-ID based tracking system developed as a result of a National Institute of Health STTRGrant secures FDA 510(k) pre-market clearance, SysLogic initiates transfer to S3Edge. S3Edge, Inc. welcomes the announcement by the Food & Drug Administration (FDA) that iTrace for BloodCenters, the trac...
Nov. 20, 2012—The Transfusion Medicine RFID Consortium reports that it has submitted the results of a radio frequency identification pilot to the U.S. Food and Drug Administration (FDA), as part of a request for 510(k) clearance of the blood-tracking solution. The consortium's membership includes...
Auto-ID based tracking system developed as a result of the National Institute of Health STTR Grant, enters commercialization phase ...
July 19, 2012 - Production pilots were completed in June for the RFID solution at both the blood center and the hospital. BloodCenter of Wisconsin (Milwaukee) conducted an eight-week pilot from blood donation through packing and shipping to hospital customers, including both whole blood and...