The Growing Popularity of Magnetic Resonance Imaging - Essay Example

Capstone Project John Jones Introduction With the growing popularity of Magnetic Resonance Imaging (MRI) among providers and patients alike the purchase of a portable MRI for our orthopedic clinic makes sound financial sense. The population of the city is increasing rapidly, due in a large part to the ever-expanding employer base in the locale. First there should be a little history of the MRI. Doctor Raymond Damadian is generally credited with showing magnetic resonance created different images for such things as tumors and by 1979, along with the beginnings of widespread use of superconductors, innovations by British physicist Peter Mansfield led to the MRI that we know today (Ellard). The technology grew rapidly in the nineties. Not surprising, by 2009 first-world countries such as Japan (Number 1) and the United States (Number 2) had the highest population of both the machines and the incidence of use. Meanwhile developing countries such as Mexico (last place) and had the lowest amount of scanners. Curiously enough, even though several Brits were credited with MRI innovations, the United Kingdom ranked third from the bottom in machines, although it was close to the middle in incidents of use (OECD). The same OECD statistical study shows for 2009 that the United States was second in incidents of use (just behind Greece) at an average of 91.2 per one thousand population. So it is that I as the administrator propose that our orthopedic clinic purchase its own MRI scanner, rather than outsourcing the service as has been done in the past and will be an opportunity to excel financially and continue to garner support from our customers, the patients, as well as bringing in new ones. Discussion Although at first glance the relatively high purchase price of the machine itself and the hiring of additional staff (including an experienced radiologist and technicians is way too much, especially in this time of recession, I will show that having our own machine will be advantageous and in this paper I will attempt to convince you owners of the clinic, our physicians, to come on board with this. After all it is you in the organizational structure that owning our own machine will have the biggest impact on. With outsourcing you have to order the MRI and staff then has to refer the patient to the independent clinic. You then have to wait for the results to be returned, knowing you are in a queue behind other physicians/clinics and have no more priority than anybody else. The patients will also be pleasantly surprised to learn that their required procedures will be accomplished in-house. People are way too used to having the one-stop shopping experience of box stores like Wal-Mart. Just like that, they expect their complete medical needs to be taken care of at the clinic. It is frustrating for them to leave work or school for an appointment, only to be told that they must make another appointment for an MRI, only to return to our clinic once again, when the results are available. It will also be advantageous to the staff in that sending patients down the hall to an in-house clinic will be much easier than keeping up with referrals. It is true that along with the growth of our community, there is increased competition for MRI business, as several low-cost radiological clinics have come to be. Yet that would still be outsourcing and the benefits of not doing that are discussed above. Also it is a common perception that the radiology field is a tight job market and it is true that the Government predicts the availability of jobs will grow by some twenty-eight per cent in the next ten years, due to the rapid aging of the post World War II baby boomer generation (BLS). Yet a quick glance of such career services as Monster, LinkedIn and Facebook shows that there are many experienced radiological professionals looking for work. The doctors, using their own peer services, should be able to determine if there is a candidate field for the radiologist himself. The Human Relations Approach as described by Lewis & Packard would be the ideas I would put forth to manage the strategic goals associated with this opportunity. Another would be the bureaucracy, which purpose is to provide equal treatment of all employees, reliance on expertise, skills, and experience relevant to the position, no extra organizational prerogatives of the position, specific standards of work and output, and extensive record keeping dealing with the work and output, establishment and enforcement of rules and regulation that serve the interest, and recognition that rules and regulations bind managers as well as employees this list summarizes some of the standards and mission that are implemented by my employer (Lewis). Appraisal mechanisms depend on the use of some kind of mechanism to form the basis of rating employee performance. Performance appraisal is the process of assessing how well employees are doing their jobs (Williams, 2011). Three types of appraisal mechanisms that will be discussed as following: Behaviorally Anchored Rating Scales, Management by Objectives and Critical Incident Techniques. Behaviorally Anchored Rating Scales is an appraisal method that measures behavior against levels of performance. BARS combine elements from critical incident and graphic rating scale approaches. The supervisor rates employees according to items on a numerical scale (Lewis & Packard, 2012). There are five major steps that are used in developing behaviorally anchored rating scales, or BARS. A list of specific kinds of critical incidents (examples of effective and ineffective behavior) would be illustrated. The incidents are then clustered into groups or performance dimensions. Another way of motivating the team to go along with the new in-house MRI concept is what is known as McClellands Human Motivation Theory. In this practice, regardless of gender or racial makeup, humans have three basic needs, achievement (make certain goals), affiliation (a sense of belonging), and power (influence over others). If you recognize the specific ways those needs for members of your team and tailor them as such, employees will be much more motivated and eager to accomplish the mission, in this case the implementation of the MRI (Mind Tools). The $1,200,000 initial cost for the MRI machine does sound like an excessive amount to pay as an initial start-up cost. However the average lifespan of the machine is ten to fifteen years (Advisory) and coupled with the optional extended life-of-the-machine warranty (along with free software upgrades and replacement), its total costs based upon the entire estimated fifteen years equates to $110,000 per annum ($1,200,000/15 + $30,000 [per year]). Another major cost would be the estimated $500,000 annual salary (including benefits) just for the staff radiologist. Therefore, I am including the following budgets for your consideration and approval, based upon different scenarios (Bianca). Also it is assumed that the average ortho MRI fee in the US is between $1,500 and $2,000. However, Medicare reimbursement averages around $500 for a pelvic MRI (iCAD). So for purposes of this budget discussion I will consider $1,000 as a standard figure. Line-item budget for personnel costs TITLE QTY ANNUAL COSTS TOTAL Radiologist 1 $500,000 $500,000 Technician 4 $60,000 $240,000 Total Personnel Costs $740,000 Functional budget to calculate personnel costs per MRI procedure Annual Personnel Costs: $740,000 Divided by Projected number of MRI procedures per year: 10,000 Costs per MRI procedure: $74 Clinic budget for providing health care services for 3000 patient visits SALES $ 3,000,000.00 (3000 MRI X $1000) PERSONNEL $ 740,000.00 RENT $ 100,000.00 MRI MACHINE $ 110,000.00 OTHER EXPENSES $ 50,000.00 TOTAL EXPENSES $ 1,000,000.00 PROFIT $ 2,000,000.00 Conclusion As you can see from pre-tax profit figure in the above budget, the purchase of the machine would be more than taken care of in the first year alone, considering 3,000 MRI. Actually that is a conservative estimate, for figures show upwards of 10,000 procedures. Even if the clinic were to waive pro bono out-of-pocket expenses for certain Medicare patients (a definite tax write-off!), the profit margin would still be very good, along with the other advantages already discussed. From my perspective as the Administrator I would say the purchase makes a very logical choice and recommend we do so. References Ellard, David, “History of MRI” University of Manchester, February 8, 2000, Web, September 26, 2012, http://www.isbe.man.ac.uk/personal/dellard/dje/about_me/about_me.htm. OCED, “Medical Technologies 2011” Organization for Economic Co-operation and Development, November 23, 2011, Web, September 26, 2012, http://www.oecd-ilibrary.org/sites/health_glance-2011-en/04/02/index.html?contentType=/ns/StatisticalPublication,/ns/Chapter&containerItemId=/content/serial/19991312&itemId=/content/chapter/health_glance-2011-30-en&mimeType=text/html. Bureau of Labor Statistics (BLS), “Radiologic Technologists”, Occupational Outlook Handbook, March 29, 2012, Web, September 27, 2012, http://www.bls.gov/ooh/healthcare/radiologic-technologists.htm. Lewis, Judith and Packard, Thomas (2012), Management of Human Service Programs, 5th Edition, Belmont, CA: Cengage. Williams, Chuck (2011), MGMT4, Belmont, CA: Cengage. The Advisory Board Company, “New Mobile 3T MRI Option Presents Lower Cost Alternative for Adoption of Cutting-Edge Technology”, June 16, 2010, Web, September 27, 2012, http://www.advisory.com/Research/Technology-Insights/The-Pipeline/2010/06/New-Mobile-3T-MRI-Option-Presents-Lower-Cost-Alternative-for-Adoption-of-Cutting-Edge-Technology. Mind Tools, “McClellands Human Motivation Theory”, Web, September 27, 2012, http://www.mindtools.com/pages/article/human-motivation-theory.htm. Bianca, Audra, “The Advantages of a Line-Item Budget”, Houston Chronicle, Web, September 27, 2012, http://smallbusiness.chron.com/advantages-lineitem-budget-10404.html. iCAD, “Reimbursement Guide”, Web, September 27, 2012, http://www.icadmed.com/support/reimbursement/documents/ReimbursementGuideforWebsite.pdf. Read More