Pain services: acute: Economic evaluation of an Acute Pain Service (APS): can break-even analysis be helpful?

Abstract

Contemporary publications have shown that an APS contributes to decreased postoperative morbidity and mortality, increased patient satisfaction and improved health related quality of life. At SW the APS has helped decrease the length of stay (LOS) in the gastrointestinal oncology department an average of 1.5 days despite the fact that the APS staffing is below the Canadian benchmark. To justify an increase in APS resource allocation we are evaluating the economics of the APS, including break-even analysis. The formal description of break-even point is the unit sales volumes that a company needs so that its revenues equal its operating expenses resulting in a zero profit-loss. The analysis calculates a break-even point based on fixed costs, variable costs per patient, and savings per patient. Corresponding to the three key assumptions of a formal break-even analysis we assumed that 1) the APS provide a one in-hospital day decrease in LOS for a saving of $1,000 per patient; 2) Average per-patient variable cost extracted from the APS budget; 3) monthly fixed costs = (all APS expenses \N APS variable cost). Physician reimbursement cost calculations not included in this your model since it is not a part of the APS budget. Consulting only 16 patients per month would be the break-even for the APS budget structure. Currently the APS is consulting 278 patients per month. Increasing APS staffing by one acute care nurse practitioner (ACNP) will increase the break-even point for the APS to 33 patients per month. Therefore, it would be still economically beneficial for our health care institution if a third ACNP were hired, while the other desired institutional goals of improving patient satisfaction and meeting accreditation standards in pain management would also be achieved. Break-even analysis can be a useful tool in the economic evaluation of an APS.