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Simulation: What does it really cost?

McIntosh, Cate; Macario, Alex; Flanagan, Brendan; Gaba, David M

Simulation in Healthcare: The Journal of the Society for Simulation in Healthcare: July 2006 - Volume 1 - Issue 2 - p 109
Abstracts: Abstracts Presented at the 6th Annual International Meeting on Medical Simulation: ABSTRACT # 1473 - POSTER BOARD # 98
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1Hunter New England Skills & Simulation Centre, Newcastle, Australia, 2Department of Anesthesia, Stanford University, Stanford, CA, 3Southern Health Simulation & Skills Centre, Melbourne, Australia

Editor’s Note: FULL ABSTRACTS are arranged numerically by the Abstract #. Refer to the Abstract Listing Pages for the Abstract # that corresponds to the - POSTER BOARD #. Abstracts are presented as they were submitted except for minor formatting.

Conflict of Interest statements located at the bottom of each abstract.

Abstract publication made possible in part under contract W81XWH-06-0282, Telemedicine and Advanced Technology Research Center.

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Introduction:

Simulation based training is increasingly recognised as a part of health care education and as a means to improve patient safety. The number of centres worldwide has increased exponentially since 1994. However, little is known about the economics of simulation centres. The objective of this study was to determine how much it costs per hour to run a simulation centre. These data make it possible to calculate how much to it is required to charge per course in order to cover costs.

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Methods:

We calculated the hourly cost for our model simulation centre applying a ’bottom-up’ or micro-costing technique. Fixed (overhead) and variable costs were estimated by using market rates for different items. Using the total (fixed plus variable) cost per hour we used computer spreadsheet modelling to calculate how many hours a centre needs to bill to cover costs.

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Results:

Set up cost was US$876,485(renovation of existing facility, equipment). Fixed costs per year totalled $361,425. Variable costs totalled $311 per course hour. The economic benefits of increasing the number of billable teaching hours per week are significant until about 21 hours (equivalent of 3 full or 6 ½ day courses) per week (averaged over 52 weeks/year) when they start to taper off. Figure 1

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Conclusions:

Due to the high fixed (overhead) cost structure of simulation centres, economic viability is directly tied with the number of billable hours taught per week. Any lull in business can significantly affect the bottom line. Understanding the cost structure should be used to guide rational growth in numbers of simulation centres. Minimising costs may necessitate co-operation and sharing of resources between centres. Our results suggest that economic viability of simulation centres may depend on subsidies from institutions or other external sources. This is in line with the experience of the Bristol Medical Simulation Centre who reported that in excess of 50% of their running costs needed to come from commercial sources. How a centre maintains financial viability may depend on a country or an institution’s philosophy about whether centres should be government or health system funded or whether charging participants is preferable or some combination. These are complicated political issues with pros and cons for each funding model. In theory, simulation offers great potential to reduce health care costs by improving patient safety and also by reducing staffing costs via decreased training time and reduced turnover of staff. Sufficient numbers of course participants to justify simulation centre costs may be achieved if the benefits of such training are fully recognised through careful validation studies.

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Conflict of Interest:

Authors indicated they have nothing to disclose.

© 2006 Society for Simulation in Healthcare