Tips for a more useful, accurate CR budget

Make chargemaster, calculate complexity

The bottom line to better financial management of any clinical research (CR) site is the budget. Better budgets lead to better negotiating, staffing, and contracts. So it's a great place to start a quality improvement project.

"A budget to me is taking your time, effort, and procedures and translating them into dollar amounts," says Steven Ziemba, MS, MBA, PhD-candidate, director of clinical research at Phoebe Putney Memorial Hospital in Albany, GA.

Ziemba outlines the process for determining the most accurate clinical research budget with these best practice tips:

• Calculate your true productivity/labor costs.

"Of all of the clinical research expenses, the biggest one is labor," Ziemba says. "The reason is that most of what you are doing on a study is collecting data, interacting with patients and physicians, and this involves labor and time."

The key is to know the best methods for calculating labor and other CR costs, and the best way rarely is the easiest way, Ziemba notes.

"It's not as easy as it sounds," he explains. "You don't just take the annual salary of a research nurse and divide it by 2000 or the number of working hours."

The calculations need to include productivity, which is the total compensation broken down into units of time that encompass actual working time, as well as vacation time, sick time, and benefits, including health insurance, disability insurance, retirement funding, and other items, he says.

"What I mean by productivity is you might have 2000 hours in a work year, but how many of those would be available for working?" Ziemba says. "You have to take into consideration vacation hours, deducting that from the 2000 hours, and other things."

Plus each employee's salary has 30% added onto it in benefits. So for an example, the total for salary and compensation might be $65,000 per year. Then this is divided by maybe 1400 actual productive work hours to come up with the formula that is used to calculate the per hour labor costs, he explains.

• Determine how much time is spent on each study task.

The next step is to calculate how many hours it takes to do each task that is performed during a clinical trial.

"You could do a time study as is done in other departments in a hospital," Ziemba says. "But for clinical research it's not that simple; for instance, with informed consent you have different amounts of time it takes to do it depending on the study and its level of complexity."

Plus each patient will vary in how long it takes to understand the study and complete the informed consent process, he adds.

It's possible to arrive at base numbers that can be adjusted from study-to-study, but it's not always possible to create a standard number for research tasks, he says.

"I've seen estimates of two to three hours minimum for informed consent and up to four times as much as that," Ziemba says.

Another variable in conducting informed consent is the research nurse or coordinator who is conducting it. Some will take longer to reach the point of deciding the potential participant fully understands the study and what will be required of him or her, he adds.

• Estimate study complexity and include that in budget preparation formulas.

"Some articles in the literature can be used to estimate the complexity of a study," Ziemba says. "But I would urge in the use of these articles that you are careful of what you are reading because it's possible you might miss something that would impact the complexity, or there might be an issue that is unique to your site."

For instance, a particular research site might have limited staffing or other resource issues that impact complexity.

• Create a chargemaster that uses budget cost and unit calculations.

The chargemaster should include start-up cost information, including everything that needs to be done to get a study going, Ziemba says.

Each research site should know what it costs to keep a study running without any enrolled patients, and then they should factor that into their negotiations. Even though sponsors might consider certain administrative costs as the cost of doing business, they still should be calculated, he says.

"We will request a submission of safety reports, requesting money for that because it will take time to put them together," Ziemba says. "Also, you have to keep in mind to charge for IRB fees, if you're using an IRB."

As a CR director works on the chargemaster, it's a good strategy to meet with the billing department to see if they can help determine the cost of the study's procedures, such as a CT scan.

"That's a good place to start with your chargemaster, and it's a good place to go to on a regular basis when you want to update your chargemaster," Ziemba says.

The chargemaster essentially is an Excel spreadsheet that is broken into different sections and pages. One is for administrative costs, including IRB fees, start-up fees, and other departmental tasks, Ziemba explains.

"Other tabs cover radiology or hospital-based fees or cancer center fees," he adds. "Then you have your per visit items."

These are items that can be stored to be used across studies. They should be updated at least twice a year, although Ziemba makes changes each time he does a new budget.

The most time-consuming part of creating a chargemaster involves adding items particular to the protocol, Ziemba says.

"Go to the schedule of events and compare that to the budget," he suggests.

This can take anywhere from a day to a week, depending on the study's complexity, he adds.

• Use your budget/chargemaster when negotiating contracts.

Make time for negotiating and be sure the chargemaster is on the desk when negotiations take place, Ziemba advises.

"Try to make the time to actually do the negotiating," he says.

"You don't want to be in a situation where you're working on one thing and when the sponsor calls up to discuss the budget your mind is somewhere else and you don't have the chargemaster in front of you," he says. "I recommend that you say, 'Can we reschedule this for a better time?'"

The key is to not let sponsors speed up the negotiation process.

Both sides are trying to reach a satisfactory agreement, and the CR site needs to know its budget in order to negotiate a fair price for the study, Ziemba says.