The cloud over MT schools: can we justify their cost? – Free Online Library Essay

Sand clear of the blackboard. In the current fiscal crunch,
hospitals are apt to use the budget axe to chop away their medical
technology schools.

One laboratorian recently published a cost-benefit analysis that
favored maintaining MT education at her institution. The title of that
article posed a question that administrators ask: “How Much Does an
MT Program Cost the Hospital?” (MLO, March 1984). In other words,
“How much would we save if we closed our school?”

Recent developments have made that question all but inevitable.
Many years ago, most schools paid for themselves. Instruction consumed
little cost and effort, and students spent most of their time doing
minor chores and simple tasks around the laboratory, thus freeing the
staff for more important work.

As registry organizations instituted more rigid requirements,
hospital instruction grew more costly and student labor decreased.
Meanwhile, third-party payments for hospital care grew tighter,
culminating in last year’s debut of prospective payament.

As a result, many MT programs face the axe for financial cuts if
not outright elimination. In our 320-bed hospital, the program’s
continued survival has been called into question by administrators
annually for the past five years.

When we ask how much the school costs the hospital, it seems
obvious that thousands of dollars could be saved each year by ending the
program altogether. But the situation is a good deal more complex. For
an accurate cost-benefit analysis, we must also consider what the school
and its services are worth–that is, how much it would cost to run a
freestanding educational institution offering the same facilities and
curriculum. That cost, we suspected, would differ dramatically from the
dollar savings achieved by closing the school.

Our laboratory decided to find out. After we had painstakingly assembled all relevant data, we made a gratifying discovery: Our MT
school was a bargain in terms of what it offered to students.
Here’s how we reached that conclusion.

Any attempt to determine the exact cost of running a medical
technology school involves a tangle of accounting problems. Instructors
divide their time among lecturing, teaching while performing tests,
supervising students, and performing nonteaching tasks. While students
do cost the laboratory money, they contribute significantly to patient
service. Clearly it takes two sets of books to pin down complete and
accurate figures.

The financial report we produced, which is summarized in Figures I
through VI, attempts to answer two key questions: What is our program
worth in dollars and cents, or what is its value? And how much would we
save if we closed it?

We began by putting a price tag on lectures, as shown in Figure I.
Our pathologists are active participants, principally presenting the
clinical aspects of medical technology–the rationale of test selection
and interpretation. Their involvement is essential to developing
technologists who are true professionals rather than mere technical
personnel. Lectures by our lab consultant emphasize recent advances in
the field. Teaching at this level raises the average lecturer’s
salary to $30 an hour.

But keep in mind that even if the program closed, pathologists
would still receive the same salry as before. That’s part of the
distinction between the value of the program and the savings achieved by
closing it down. Also bear in mind that value is important from the
student’s point of view. If tuition is raised, for example, is the
student still getting his or her money’s worth?

The cost of bench instruction is also shown in figure I. The mean
salary for bench instructors includes fringe benefits, which constitute
more than 30 percent of base pay for full-time employees. Figure II
completes our cost picture with the salaries for our technical director,
the only staff member who works almost exclusively for the school, and
our typist. Typing and copying costs are high because students receive
copies of every lecture, a system we use to speed the pace of class

All these direct costs are summed up in Figure III. We added
overhead–caculated, as for the lab itself, at 40 percent of
expenditures. What, then, would it cost to run the MT program
independently? According to our analysis, the total required outlay or
value of the program is $120,862, or $13,429 per student in a full class
of nine.

We next examined revenues and cost savings attributable to the MT
program. It was difficult to estimate the amount of clinically
productive work performed by students during school hours because
there’s variation from section to section and from day to day.
Figure IV shows the productive time we finally settled on, multiplied by
the starting salary of a CLA-level technician to yield $12,150 worth of
patient service.

After three months’ training, students may apply for part-time
weekend work in the laboratory, performing only procedures for which
they are qualified, of course. As substitutes for our regular medical
technologists, who earn $10.32 per hour, they represent a salary savings
of $2.22 per hour. Multiply that by more than 1,400 hours of weekend
service a year, and you get $3,100 in annual savings.

We also factored in the recruitment and training money we save by
hiring our own graduates. We usually replace two employees per year.
It costs an estimated $8,800 to recruit and indoctrinate a technologist
trained elsewhere. By tapping our program’s alumni for lab
positions, we save $17,600 every year. Finally, when $15,000 is added
in for tuition and book payments, total school-generated revenues and
cost savings come to almost $48,000.

By subtracting this estimate of the school’s total revenue and
cost reductions from the value of the program, we arrived at a net
annual operating loss of $72,929, or about $8,000 per student (see
Figure V).

This is not the amount that the hospital would save by closing the
school, however. We estimated the monetary gain from ending the program
in Figure VI, and it is a considerably lower sum. In short: If the MT
school were terminated, savings would amount to only $27,352 a year, or
$3,039 per student–quite a different figure from the program’s
estimated value of more than $13,000 per student.

A note abot our procedures: Some of the data used to arrive at this
conclusion are solidly documented, such as reduced hours for the
technical director and typist and elimination of guest lecturers, books,
and photocopying. The largest cost item, technologist lectures and
benchwork, involved some guesswork, as did our estimate of patient work
by students.

We had proved our point: Before a hospital decides to do away with
its MT program, it must consider nonfinancial as well as financial
reasons. Anticipating an administration response, we presented the
major arguments on both sides. These were the main nonfinancial reasons
to terminate the program:

* Longer turnaround, reduced service quality. Phlebotomists
provide our principal contact with the public. If they aren’t
highly skilled, patients complain, and the laboratory’s image
suffers. Most students, while they tend to learn quickly, experience
some difficulty at first. Inexperienced phlebotomists can also slow
down an entire department’s work, since they take longer to perform
each collection and have a higher rate of missed patients. In our
laboratory, students who continue to cause problems are given assistance
in developing proper skills and attitudes.

* Low demand for technologists. Until a few years ago, most of our
students found jobs before completing their training. Times have
changed. Although the majority of our graduates find employment, they
must spend more time looking for it. In fact, our program now includes
coaching in job-hunting and resume preparation. Some graduates who have
strong ties to the area must accept less attractive jobs.

* Rigid scheduling. Under the prospective payment system, work
schedules will probably change significantly, with medical technologists
working more night and weekend shifts. since bench training is highly
structured, instructors may run into trouble scheduling additional
compensatory time during regular hours.

* Overqualified staff. Since we hire many of our own graduates, we
sometimes fill technician positions with technologists. Budget
pressures and the increasing number of simplified or automated tasks may
mandate lowering the ratio of technologists to technicians and other
less highly trained employees.

On the positive side, we cited some excellent nonfinancial reasons
to continue the program. These reasons tended to be more difficult to

* Job enrichment. It’s well known that students have a
stimulating and challenging effect on the laboratory staff, keeping
pathologists and technologists on their toes. Most instructors enjoy
their role. If significant personnel cuts become necessary, however,
the added responsibilities of teaching may simply be overwhelming.

* Recruiting benefits. As we mentioned, the school provides us
with a familiar, capable pool of candidates. We can fill vacancies
selectively at little cost.

* Flexible scheduling. Students can ease scheduling as well as
complicate it. Without their 1,400 or so hours of part-time work a
year, our permanent employees would face more weekend assignments.
Reduced student availability on weekends would create more day-to-day
scheduling problems and possibly a drop in morale.

* Creative input. Aside from benchwork, each student completes a
practical research project. These projects enrich both the students and
the laboratory. Many have led to changes in our instrumentation and
procedures. Of the eight or nine student projects initiated every year,
we implement about one-third

Since we prepared our report, the hospital’s administration
has decided to authorize the school’s existence for another year.
Tuition will be raised 100 per cent, however, from a current $1,500 to
$3,000 to help close the gap between revenue and costs, and a further
$1,500 increase is planned for the following year. It remains to be
seen how this increase will affect school enrollment, but our
calculations show that the program wil continue to be a bargain for

For this year, the important point is that the school will survive.
An important part of that survival is the ongoing awareness among
students and administrators that the value of high-quality technologist
training should count as much as its cost does.


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