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Improving hospital-based programs II.

Article Excerpt
III. Justify the Program's Existence

"The allied health administrator must be prepared to justify the institution's expense of sponsoring hospital-based educational programs."

--Dan Shock

Those comments were made by a radiography program administrator in an article published in Radiologic Technology in 1990, (20) and they still hold true today. Hospital-based radiography programs exist to educate and train highly qualified radiographers. Doing so without regard to the financial impact a program has on the sponsoring and affiliate organizations ultimately has spelled the demise of many certificate programs. To remain viable, hospital executives must have a clear understanding of the program's financial benefits.

Return on Investment

In business circles, executives weigh the financial impact of an investment based on a projected dollar return over time. This return is simply termed return on investment, or ROI, which is calculated along with intangible benefits in a business case to justify an investment. Executives may decide in favor of an investment if the business case projects an agreeable ROI.

Hospital-based radiography programs are an investment. The sponsoring and affiliate organizations invest time and money in supporting the program. Hospital-based educational programs exist because of the organization's support.

Cost Avoidance

Radiography programs do not necessarily exist just to generate a profit. However, when executives are encouraged to cut costs, such programs are at risk due to their fixed-cost nature. Unfortunately, many program directors have not given due diligence to justifying their programs financially. Financial justification for educational programs is based primarily on avoiding costs that would be incurred if the program did not exist. These costs include but are not limited to:

* Marketing and advertising dollars associated with recruiting technologists or graduates from other programs for vacant positions.

* Orientation expenses associated with a training period for new employees, generally 4 to 6 weeks.

* Temporary staffing costs incurred when the demand for technologists greatly exceeds supply.

* Costs associated with reduced overtime and higher-salary PRN use.

In and of themselves, avoided or reduced costs associated with hiring program graduates cannot justify a program's existence. Programs also must look for revenue streams and cost-sharing arrangements constantly to offset their fixed operating expenses.

Revenue Streams Tuition

Revenue sources alone should not be expected to offset the program's operating expenses, yet they are essential in justifying the program's existence. The most notable revenue source is student tuition. The amount of tuition charged per student should be balanced between keeping the program competitive with the market and offsetting a portion of the program's operating expenses.

CMS Reimbursement

Another potentially significant revenue stream is CMS (Centers for Medicare and Medicaid Services) reimbursement for medical education expenses. The Medicare Code of Federal Regulations, CFR Section 413.85, allows for payments to hospitals under Medicare Part A for the cost of allied health education programs that meet the Medicare definition of approved educational activities. (21) Medicare's share of the hospital's radiography program is determined as a percentage of program costs compared to inpatient and outpatient radiology charges. This reimbursement can offset much of the program's operating expenses and significantly justify the program's existence.

Charitable Sources

Programs also might wish to explore educational grants and charitable sources of funding. Equipment manufacturers and contrast media vendors routinely budget grant money for donations to nonprofit organizations for education and training purposes. Such funding can be very valuable in offsetting expenses associated with the educational process. However, to avoid conflicts of interest, pharmaceutical and equipment manufacturers must follow business practices that meet PhRMA (Pharmaceutical Research and Manufacturers of America) and NEMA (National Electrical Manufacturers Association) guidelines. (22, 23) It would behoove program directors to become familiar with these guidelines and any internal policies on corporate relations before applying for or accepting grants.

Cost Sharing

Interestingly, while the Preston and Comello...

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