Question

What economic analysis tool would be best for assessing the wisdom in adding hours and staff to a family practice clinic? Describe how the term opportunity cost would come into the analysis and the information it would provide to the decision-making process.

Answer 1

Treatment cost analysis tool (TCAT) is commonly used economic tool to assess the costs of outpatient treatment i.e.treatment cost of a family patient clinic. It is also used in minimizing outpatient treatment expenses and predicting future staffing needs of the hospitals and family patient clinics. There has been significant changes in the treatment methodology staff training and treatment services in USA. Many new TCAT tools such as Cost Data Audit instrument (CDAI) and Uniform System of Accounting and Cost reporting (USACR) also are designed to analyze micro cost elements of the private nursing centers and out patient clinical institutions.

The cost data audit instrument (CDAI) is in fact the best tool to assess the efficiency of clinical firms. Audit of clinics is best mechanism to measure the overall impact of any change in manpower strength, technology and working conditions of a clinic on its healthcare services. It analyses various input costs such as wages and salaries, maintenance and up-gradation cost of machine, operation costs etc of clinics based on a set of specific standards. In fact, clinical audit is the continuous process of weighing the cost and treatment efficiency of the clinics until the desired quality objective of a clinic is not fulfilled.

The opportunity cost also appear in the CDAI or clinical auditing process. For example while analyzing costs and benefits of two clinical equipment if it appears that second clinical machine has more cost efficient than the first one but the clinic still uses the first clinical equipment then the opportunity cost of the clinic is loss or additional cost incurred from not employing second machine. Same principle also applies to manpower hiring in clinics. The opportunity cost of not hiring skilled employees or increasing working hours by clinics is also determined in the same way. The opportunity cost in clinics is the part of a treatment analysis method as it helps the clinical firms to minimize their overall costs, restructure treatment packages and generate high revenue in the future.