Food-Service-Manual-for-Health-Care-Institutions

Designing a Nutrition Services Payment System
Services that could be provided for a fee by the nutrition and food service department include
computerized nutrient analysis, computerized menu planning, inpatient and outpatient nutrition
counseling, weight reduction counseling, diet and exercise programs, and other specialized
nutrition programs. However, before these services are developed for distribution, a market
analysis must be completed to determine whether the customer or other reimbursement agencies
are willing to pay for them. Before the nutrition manager can initiate a charge directly for
nutrition services, he or she will need to determine how dietitians spend their time and the dollar
value of their services. The costs involved in providing the services and the price to be
charged for them can then be determined realistically. All costs involved in providing the service
must be included in determining the total cost per unit of service. Because a portion of all
bills will be uncollectible even though the service has been provided, a provision for bad debts
must be included in the overall cost. An example of such a cost calculation is illustrated in
Table 9.2. Other authors have used other methods (see Jackson, Laramee, and Puckett [1997],
and Hospital Food and Nutrition Focus [1996] in the bibliography).
Table 9.2. Cost Calculation for the Services of a Registered Dietitian
Variables Hours or Dollars
Total number of work hours per year, hr a 2,080
Less: vacation time (10 days) (80)
holidays (8 days) (64)
sick leave (8 days) (64)
education leave (8 days) (64)
nonproductive time b (312)
Actual number of work hours available per year, hr 1,496
Approximate number of units of service per yearc 600
Average yearly salary, $
Plus fringe benefits
40,000
d 12,800
Total yearly compensation, $ 52,800
Salary per hour ($52,800 ÷ 1,496), $ 35.30
Labor cost per unit of service (2.5 hours × $35.30), $ 88.25
Yearly indirect costs, $ e 22,000
Indirect cost per unit of service ($18,000 + 600), $ 36.67
Labor cost per unit of service, $ 88.25
Indirect cost per unit of service, $ 36.67
Profit (12 percent of labor and indirect costs), $ 15.00
Total cost per unit of service, $ 139.92
aThe number of work hours per year is based on a 40-hour workweek.
bNonproductive time accounts for about 15 percent of the total work hours and includes coffee breaks, time spent waiting,
and so forth.
cThe standard amount of time allowed per patient referral, on unit of service (as determined by work analysis; includes evaluating
the order, securing counseling materials, and performing counseling, charting, and the like), is 2.5 hours. 1,496 hours ÷
2.5 = 598, or, for the sake of computation, 600 units of service per year.
dFringe benefits are assumed to equal 32 percent of the average salary and include insurance benefits, Social Security payments
made by the employer, and so forth.
eIndirect costs include expenses for telephone service, postage, copying service, general overhead, allowances for uncollectible
payments, and administrative expenses.
Source: Based on J. C. Rose. Hospital Food and Nutrition Focus 2(3), Nov. 1985, revised in 2003 by R. P. Puckett, pp. 2–4.
Clinical Nutrition Care Management
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