A Comprehensive Break Even Analysis of MRI and CT Unit of a Tertiary Care Hospital in Sikkim

Abstract

Break Even Analysis has wide application in most of the industries but its application so far is limited
in hospital industry, this study attempts to perform break even analysis of both MRI and CT unit of a
tertiary care hospital in North Eastern state of India, Sikkim. In this study the MRI machine was found to be
underutilized with a utilization coefficient of 48%, whereas the CT machine utilization was acceptable with a
utilization coefficient of 73%. In this study the MRI unit was incurring a loss of Rs 1837.39 per scan whereas
the CT unit was making a profit of Rs 891 per scan. Moreover, the break-even point for MRI is found to be
203 scans per month, the current average scan per month was 138, similarly for CT the calculated break even
point was 308 scans and the current average CT scans done were 550 scans per month. This study also uses
the break-even selling price calculation to determine the price revision for MRI assuming that the number
of MRI scans per month will remain 138 only and after doing the calculation it was found that the average
selling price per MRI scan should be Rs 6231 i.e. an increase of Rs 1837 per scan from the existing average
selling price of Rs 4394. However, revision of price should not be seen in isolation but together with the
competitor’s prices, and anticipated reduction in cases because of price elasticity.