Cost-effectiveness Analysis for Technology Acquisition

BackgroundIn a developing country with limited resources, it is important to utilize the total cost visibility approach over the entire life-cycle of the technology and then analyse alternative options for acquiring technology.MethodsThe present study analysed cost-effectiveness of an “In-house” magnetic resonance imaging (MRI) scan facility of a large service hospital against outsourcing possibilities. Cost per unit scan was calculated by operating costing method and break-even volume was calculated. Then life-cycle cost analysis was performed to enable total cost visibility of the MRI scan in both “In-house” and “outsourcing of facility” configuration. Finally, cost-effectiveness analysis was performed to identify the more acceptable decision option.ResultTotal cost for performing unit MRI scan was found to be Rs 3,875 for scans without contrast and Rs 4,129 with contrast. On life-cycle cost analysis, net present value (NPV) of the “In-house” configuration was found to be Rs-(4,09,06,265) while that of “outsourcing of facility” configuration was Rs-(5,70,23,315). Subsequently, cost-effectiveness analysis across eight Figures of Merit showed the “In-house” facility to be the more acceptable option for the system.ConclusionEvery decision for acquiring high-end technology must be subjected to life-cycle cost analysis.