Expert Answer:Walden Cost-Effective Analysis of CAM for Splendid

  

Solved by verified expert:this Application Assignment, you will: 1) complete a cost-effective analysis using the data provided in this week’s course documents, 2) create a 9- to 12-slide PowerPoint presentation of your CEA results, and 3) prepare a 1- to 2-page document containing your presentation talking points.Please be aware that you will submit three files for this assignment.Part I: The CEAUsing the data provided in the Splendid Hills Hospital scenario, insert the fixed and variable costs associated with each CAM alternative into the spreadsheet. The data will be entered into the cells shaded green. Do not enter data in the cells shaded in red. The spreadsheet will automatically calculate annual costs. Once you have your cost results, you and the committee will be able to propose the most cost-effective CAM alternative. Save your results in the Excel spreadsheet for submission.Part II: The Presentation of the CEAIn order to communicate your results, you will prepare a professional presentation for delivery to the members of the senior leadership team. You will prepare a PowerPoint slide deck comprised of 9–12 slides (not including title and reference slides). The following are the minimum slide expectations:Title slideDiscuss the concept of complementary and alternative medicine (CAM)Identify the three CAM alternatives being considered with brief description of eachIdentify the purpose and assumptions associated with a cost-effective analysis (CEA)Share why a CEA was appropriate for determining the CAM alternativeIdentify the FC, VC, and TC for acupunctureIdentify the FC, VC, and TC for massage therapyIdentify the FC, VC, and TC for spinal manipulationDiscuss which alternative is considered the most cost-effective given the CEA resultsDiscuss and support your recommendations for assessing the clinical outcomes following the rollout of your chosen CAM alternativeReferences slideRefer back to the Optional Resources, in Week 1, if you need a refresher on using PowerPoint.Part III: Talking PointsIt is important that professional PowerPoint slides remain uncluttered. Having talking points, or notes, to accompany your slides helps provide your audience with additional information while maintaining uncluttered visuals. For each of your content slides (not the title and reference slide), write a brief paragraph explaining the information on the slide. Then, compile these paragraphs into a 1- to 2-page document for submission.Your written assignments must follow APA guidelines
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Acupuncture
Fixed Costs (FC)
Acupuncturist
Clerical Staff
Total FC:
Variable Costs (VC)
Q&A Brochure
First Visit Brochure
Steps of Care Brochure
Acupuncture Needles
Total VC:
Total Cost (TC):
Hourly Rate
Dedicated hrs per
week
$0.00
Cost per Client
Anticipated
number of clients
per year
$0.00
TC per Client
#DIV/0!
Labor costs per
client
#DIV/0!
#DIV/0!
#DIV/0!
Number of weeks per
year
Annual Cost
$0.00
$0.00
$0.00
$0.00
$0.00
Annual TC
$0.00
Massage Therapy
Fixed Costs (FC)
Massage Therapist
Clerical Staff
Total FC:
Variable Costs (VC)
Brochure (1 / client)
Massage Lotion (8oz.)
Total VC:
Total Cost (TC):
Hourly Rate
Dedicated hrs per
week
Anticipated
number of clients
per year
$0.00
TC per Client
#DIV/0!
Number of weeks per
year
#DIV/0!
#DIV/0!
#DIV/0!
$0.00
Cost per Client
Labor costs per
client
Annual Cost
$0.00
$0.00
$0.00
Annual TC
$0.00
Spinal Manipulation
Fixed Costs (FC)
Hourly Rate
Dedicated hrs per
week
Labor costs per
client
Number of weeks per
year
Chiropractor
Radiologist
X-Ray Technician
Clerical Staff
Total FC:
Variable Costs (VC)
Brochure (5 / client)
Total VC:
Total Cost (TC):
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
#DIV/0!
$0.00
Cost per Client
Anticipated
number of clients
per year
$0.00
TC per Client
#DIV/0!
Annual TC
$0.00
Annual Cost
$0.00
$0.00
Anticipated number of
clients per year
Anticipated number of
clients per year
Annual Cost
$0.00
$0.00
$0.00
Annual Cost
$0.00
$0.00
$0.00
Anticipated number of
clients per year
Annual Cost
$0.00
$0.00
$0.00
$0.00
$0.00
Cost-Effective Analysis for Proposed Alternative Interventions
for Unresolved Lower Back Pain
March 1, 2013
Pain Management Clinic, Patient Education Department, Physical Therapy Department, and
Business Office of Splendid Hills Hospital
You recently conducted a cost-effectiveness analysis (CEA) of alternative interventions for the
Pain Management Clinic of Splendid Hills Hospital. You were assisted by staff and practitioners from the
patient education department, pain management clinic, physical therapy department, and members of the
business office. The hospital has been seeking opportunities to incorporate more complementary and
alternative medicine (CAM) into its existing service offerings. The CEA will be used to help the Chief of
Staff determine which unconventional intervention to recommend for funding and support in FY 2014.
Historically, western prepared practitioners have been skeptical of CAM and, therefore, a bit resistant to
its mainstreaming in health care. With that said, there is a growing body of evidence to support the
combination of complementary medicine and conventional medical therapeutic interventions.
The first alternative is acupuncture. This is an ancient process, rooted in Eastern medicine, where
thin, solid needles are strategically inserted in the body, and then are carefully manipulated by the
practitioner. The next alternative is massage therapy. In this intervention, long, smooth strokes, kneading
and other movements are used to focus on superficial layers of muscle. The last intervention to consider is
spinal manipulation. This is an intervention where certain areas of the spine are moved using massage,
articulation, and high velocity/low amplitude thrusts. Manipulation involves encouraging the “stiff” area
of the spine to begin moving again, and comprises soft tissue massage, gentle mobilization movements
(articulation), and firmer carefully controlled movements (high velocity low amplitude thrusts—HVTs)
which stretched the stiff part often accompanied by a series of “clicks” or “pops.”
The objective of all of these interventions is to help patients find relief from lower back
discomfort when more conventional medical interventions seem to fall short of expectations. An in-depth
review of the literature revealed that each CAM approach has been effective in managing chronic lower
back pain for a number of clients. Each is considered relatively safe when performed by certified or
licensed professional.
There are certainly intangible benefits associated with each therapy. For example, many patients
report being pain free after years of intolerable discomfort. Others reported being able to resume leisurely
and work-related activities that were not possible due to the back pain prior to receiving complementary
and alternative medical interventions. You and the other members of the committee know that in addition
to the intangible benefits there are those that can be measured in dollars and cents. These include a
reduced number of doctor visits; less reliance on pain management medications; and lower lost productive
time at work. These tangible and intangible benefits are not quantified for the purposes of the CEA. The
plan is that once an alternative is identified and implemented, it will be evaluated using a cost benefit
analysis (CBA) at a later date.
Intervention Costs (FC and VC)
In order to decide which therapy to recommend for funding, you and the other members of your
team identified the relevant costs (fixed and variable) associated with each alternative on a per client and
annual basis, as well as developed financial assumptions which were used to estimate the costs. Fixed
costs (FC) remain more of less unchanged irrespective of the volume of clients seen. However, in reality,
all costs will tend to vary over time. Generally speaking, labor is considered a variable cost; however, in
health care we typically consider labor a semi-fixed cost or FC. For example, fixed costs, for purposes of
the CEA include hourly wages for the staff and any equipment used in the provision of care. Variable
costs (VC) vary with output, so the greater the volume of clients see the greater the VC. For the CEA, the
VC will include patient education materials and consumable supplies used in the provision of care.
Financial Assumptions
It was assumed that the pain management clinic, which will incorporate the chosen CAM
alternative into their existing services, will have 150 clients, for the first year of operation, which will be
appropriate for this new service. It was also assumed that the provider will be contracted (non-benefited)
with the hospital and will be expected to dedicate a total of 10 hours per week at the facility providing
care to clients. This includes time to not only evaluate and treat the clients, but also provides ample time
for charting and other necessary paperwork. It is assumed that the provider will only be available 50
weeks per year allowing 2 weeks for rest and relaxation (vacation). The hospital will allot a total of 2
hours per week of one (1) clerical worker who will assist in scheduling; ensuring patient education
materials are stocked and available; coordinating resources necessary to meet the clients’ needs; and place
follow-up calls with clients and other persons connected with the clients’ care. For the spinal
manipulation alternative, the hospital will need to retain the services of an outside Radiologist to read the
radiographs. This is estimated to take a total of one (1) hour per week. There will also be a need to an Xray Technician, who will be responsible for taking the radiographs and sending them to the Radiologist.
The Technician will be employed by the hospital and supporting this alternative shouldn’t consume more
than an hour per week. It was assumed that each alternative will routinely provide appropriate patient
education materials (take-away pieces) for their clients, and that this cost will vary based on the market
value of these collaterals. Under spinal manipulation, the clients would receive five (5) appropriate
brochures at $.61 apiece; for massage therapy the clients a single brochure at a cost of $.19; and finally
the acupuncture service would provide three (3) separate brochures at a unit price of $18 apiece.
Completing the CEA
In order for the committee to complete the CEA, you had to determine the labor costs associated
with each alternative; the cost of the patient education materials; the cost of consumable supplies; and
then calculate the annual and per client costs (FC and VC) for each alternative. Based on labor research
and input from Human Resources, you were able to determine that an experienced, doctor prepared,
licensed acupuncturist will cost $50 per hour; an experienced, certified message therapist with cost $62
per hour; and an experienced, licensed Chiropractor, with a PhD, will cost $105 per hour. The clerical
worker is paid $11.00 per hour and is benefited, so this amounts to an additional 10% to the hourly rate
for an adjusted hourly compensation of $12.10. For the spinal manipulation alternative, there are
additional labor costs, which needed to be taken into consideration. The X-ray technician who will be
needed to take the radiographs of the clients’ back will cost $23 per hour plus an additional 10% for
benefits which will come to an adjusted hourly rate of $25.30.
The annual FC (i.e., salaries) was calculated using the following formula: (hourly rate of
compensation * number of hours dedicated to these clients per week) * 50 weeks in a given year. (See
table 1) To determine the FC cost per client, the following formula was applied: (hourly rate of
compensation * number of hours dedicated to these clients per week) * 50 weeks in a given year)/150
anticipated clients during the rollout year. (See table 1). To calculate the VC (i.e., patient education
materials and consumable supplies) for each alternative, we applied the following formula: unit cost of
brochures and consumable supplies * the anticipated total number of clients in a given year. (See table 1)
To get the annual cost (FC and VC) for each of the three (3) CAM alternatives, the committee simply
added the annual FC plus the annual VC to reach the total cost (TC). (See table 1)
Table 1: Cost Effective Analysis of CAM Alternatives
Item
Cost Per Patient
Annual Cost
Fixed Costs: Acupuncture
Contracted, experienced, doctoral
prepared Acupuncturist @
$50.00/hr for a total of 10
dedicated hrs/wk
$166.67
Clerical support @ $12.10/hr,
including benefits, for a
dedicated 2 hrs/wk
$8.07
$25,000
$1,210.00
Variable Costs: Acupuncture
Q&A Brochure
$18.00
$2,700.00
First Visit Brochure
$18.00
$2,700.00
Steps of Care Brochure
$18.00
$2,700.00
Acupuncture Needles
$3.50
$525.00
Total Cost for Acupuncture
$232.24
$34,835.00
Fixed Costs: Massage Therapy
Contracted, experienced,
certified Massage Therapist @
$62/hr for a dedicated 10 hrs/wk
$206.67
Clerical support @12.10/hr,
inclusive of benefits, for a
dedicated 2 hrs/wk
$8.07
$31,000.00
$1,210.00
Variable Costs: Massage Therapy
Various brochures with display
(anticipate one (1) per client)
$0.19
$28.50
Massage lotion (8 oz. bottle) per
client
$9.35
$1,402.50
Total Cost for Message
Therapy
$224.28
$33,641.00
Fixed Costs: Spinal Manipulation
Contracted, experiences, PhD
prepared, licensed, Chiropractor
@ $105.00/hr for a dedicated
10hrs/wk
$350.00
$52,500.00
Clerical support @12.10/hr,
inclusive of benefits, for a
dedicated 2 hrs/wk
$8.07
$1,210.00
Contracted, licensed, Radiologist
@ $72/hr estimating an 1hr/wk
of service
$24.00
$3,600.00
X-ray Technician @ $25.30/hr,
inclusive of benefits, for an
estimated 1 hr/wk
$8.43
$1,265.00
Variable Costs: Spinal Manipulation
Patient education brochures
(assume 5 per client)
$3.05
$457.50
Total Cost for Spinal
Manipulation
$393.55
$59,032.50
You and the Resources Management Committee have all the data you need to make a decision. You have
agreed to prepare the PowerPoint Presentation for the Chief of Staff. You last task for the data given is to
prepare a table that lists the cost per patient and annual costs for each option. This will be one of the slides
you present.
Assignment: Choosing an Alternative: Which Option is the Most Cost-Effective?
The medical field is constantly changing. As a health care manager, you will manage the budget and
provide quality care to clients in this changing environment. A cost-effective analysis (CEA) provides one
method to manage change. A CEA is a form of economic analysis that allows management to explore a
number of alternatives for providing care to clients based solely on the fixed costs (FC) and variable
costs (VC) associated with each alternative. The CEA process assumes each alternative will achieve the
desired outcome and that a thorough review of the existing body of literature on each alternative has
been explored by the organization. A CEA does not analyze the actual or perceived benefits associated
with each alternative and factor that into the analysis. In fact, analysis of benefits is a separate process
that should take place following the implementation of a chosen alternative.
To prepare for this Application Assignment, imagine you have been hired by Splendid Hills Hospital. The
vice president of finance has asked you to work with an interdisciplinary committee to conduct a costeffectiveness analysis (CEA) and to recommend a cost-effective CAM option. Based on the committee
recommendation, one of the three proposed CAM options (spinal manipulation, acupuncture, and
massage therapy) would be implemented to care for clients with chronic lower back pain where more
conventional therapies have been largely ineffective. You and the committee have collected the fixed
costs (FC) and variable costs (VC) associated with each CAM alternative. Review the course document in
your Weekly Resources entitled, “ Cost-Effective Analysis for Proposed Alternative Interventions for
Unresolved Lower Back Pain.” Search the Walden Library for scholarly sources to support CAM options.
To complete this Application Assignment, you will: 1) complete a cost-effective analysis using the data
provided in this week’s course documents, 2) create a 9- to 12-slide PowerPoint presentation of your
CEA results, and 3) prepare a 1- to 2-page document containing your presentation talking points.
Please be aware that you will submit three files for this assignment.
Part I: The CEA
Using the data provided in the Splendid Hills Hospital scenario, insert the fixed and variable costs
associated with each CAM alternative into the spreadsheet. The data will be entered into the cells
shaded green. Do not enter data in the cells shaded in red. The spreadsheet will automatically calculate
annual costs. Once you have your cost results, you and the committee will be able to propose the most
cost-effective CAM alternative. Save your results in the Excel spreadsheet for submission.
Part II: The Presentation of the CEA
In order to communicate your results, you will prepare a professional presentation for delivery to the
members of the senior leadership team. You will prepare a PowerPoint slide deck comprised of 9–12
slides (not including title and reference slides). The following are the minimum slide expectations:
Title slide
Discuss the concept of complementary and alternative medicine (CAM)
Identify the three CAM alternatives being considered with brief description of each
Identify the purpose and assumptions associated with a cost-effective analysis (CEA)
Share why a CEA was appropriate for determining the CAM alternative
Identify the FC, VC, and TC for acupuncture
Identify the FC, VC, and TC for massage therapy
Identify the FC, VC, and TC for spinal manipulation
Discuss which alternative is considered the most cost-effective given the CEA results
Discuss and support your recommendations for assessing the clinical outcomes following the rollout of
your chosen CAM alternative
References slide
Refer back to the Optional Resources, in Week 1, if you need a refresher on using PowerPoint.
Part III: Talking Points
It is important that professional PowerPoint slides remain uncluttered. Having talking points, or notes,
to accompany your slides helps provide your audience with additional information while maintaining
uncluttered visuals. For each of your content slides (not the title and reference slide), write a brief
paragraph explaining the information on the slide. Then, compile these paragraphs into a 1- to 2-page
document for submission.
Your written assignments must follow APA guidelines.

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