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Case Dialysis Assistance Inc.

In: Business and Management

Submitted By kusaiwudai
Words 719
Pages 3
Part A: Cost concerns at Dialysis
Dialysis Assistance is a full-service dialysis clinic for patients with kidney problems. Typically these patients cannot be cured, but they can maintain their current quality of life by a dialysis treatment. There are two types of patients, the hemodialysis patients (HD) and the peritoneal dialysis patients (PD). The HD-patients need more intensive monitoring. They visit the hospital three times a week where their blood is cleansed with a specialized dialyzer machine. Alternatively PD-patients are treated at home (once a week) via easier techniques that use standard supplies. This treatment is monitored by staff-visits of ‘Dialysis Assistance Inc.’. The following information is available with regard to these treatments.

TOT HD PD
Treatments 12.000 8.000 4.000
Direct Costs (supplies) $860.000 $550.000 $310.000
General overhead $1.170.000 ? ?

Currently there is a discussion going on about cost allocation. Using the number of treatments as allocation base is one option that most hospitals tend to use. Some hospitals use the direct cost base as an allocation base for overhead. Nevertheless, the alternative is a more detailed analysis of overhead: The general overhead for these treatments consists of two activities namely (1) nursing services (with skilled A-level and lower skilled B-level staff) and (2) specialized dialyzes machine activity. Full-time equivalents and the % of machine usage are potential allocation bases. Following data is available for analysis:

Nursing:
$810.000 wage cost  $600.000 for A level and $210.000 for B-level

Staff for HD treatment: 5 A-level staff (full-time) 1 B-level (full time)
Staff for PD treatment: No A-Level staff 2 B-level (one employed for 50%)

Specialized machining:
Remaining part of overhead depreciation on dyalizer machines

Only 5% of all dialyzer machine…...

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