What is Benefit Analysis and how can benefit analysis help me operate my business more efficiently?

Almost every industry from automobile to mining has to respond to requests from EPA for Risk Benefit Assessments reports and the company’s higher management requests for Cost Benefit Analysis reports.

In the long-term care industry Benefit Analysis can be used effectively to operate the business more efficiently.  For Example:

Risk Benefit Assessments

1. If a resident’s family sued a facility for medication errors, the plaintiff settlements can range from $91,041 to $1,000,000^1,2 with an average settlement of $530,247.  The special app we are developing to prevent medication errors would greatly reduce the possibility of medication errors. 
    
   For example, suppose our electronic charting module license fee was $6,000 per year.  When the special medication tracking app is operational, the risk benefit to cost ratio for our clinical software would be: 88:1 (i.e. the risk of using paper records for medications documentation is 88 times more expensive than the lease of the software). Note the above figures do not include any state surveyor’s citation costs.
    
2. Suppose a facility uses oxygen tanks to supply oxygen to residents who are dependent on oxygen to survive.  Suppose the responsible employees were not sufficiently documenting oxygen use and let the tank run dry, as a result the resident died.
   
   What would be the cost of a human life?  What would be the costs in terms of citations, lawsuits, legal fees to the facility, the responsible employees, and possible felony convictions?  In this case our risk benefit to cost ratio would be: ?:1.  Note - We have an app that, when operational, should prevent the above from happening.

Our Nurses’ Notes and Doctors’ Orders software module can help reduce these and other risks as we have incorporated employee accountability as part of the logic built into the software. 

Cost Benefit Analysis

1. Electronic Check-In/Check-Out and Payroll Processing Cost – Data collected at a test facility showed that our electronic system versus their paper record system provided a savings of $13,777 over five years.
    
2. Scheduling – By using our scheduling software reports Scheduled Underutilized Report & Scheduled Overtime Cost Report they were able to dramatically reduce their overtime labor cost.
    
   
3. Electronic Records – The switch from paper to electronic records will save time and money.  It would take an efficiency expert to evaluate every department in a facility to determine the cost savings of electronic records.  From our past experience, we believe a conservative benefit to cost ratio estimate would be 6:1 to 10:1.  

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¹ Nursing home plaintiff settlements and verdicts - thirty-sixth months of data (2001-2003).

² Iyer, P. W. 2006. Nursing home litigation: investigation and case preparation. 2nd ed., Lawyers & Judges Publishing Company Inc.