A good template improves trial budgeting process

One research hospital’s best practice

One of the keys to accurately projecting costs of a clinical trial is to have a working budget template that captures every single cost, but which avoids duplications that could lead to regulatory problems, an expert says.

"A working template helps us understand how the budget needs to be constructed," says Bill Caskey, PhD, director of research and grants administration at The Children’s Mercy Hospital in Kansas City, MO. Caskey spoke about clinical trials budgeting at the 2004 Annual Meeting of the Society of Research Administrators International, held Oct. 23-27, 2004, in Salt Lake City.

The template provides the backbone of the budgeting process. To obtain accurate cost estimates, principal investigators and research coordinators need to provide clinical information that is as accurate as possible, he says.

Since the institution has had success with its budgeting template, the research and grants office is able to determine the actual costs of conducting a clinical trial or other research study, putting a cost on every item and service provided, including pencils and pens, Caskey reports.

"We do this day in and day out, and we probably get a better budget for investigators than what the investigators themselves would," he says. "Our research cost is what our real cost is, and that’s what we charge the federal government."

The Children’s Mercy Hospital’s efficiency in research budgeting has been a factor in its tremendous research growth within the past eight years, including an increase in external funding from $1 million to $10 million this past year, Caskey says.

Research expenditures have increased from about $2 million eight years ago to about $15 million now, Caskey says.

The institution will break even on research contracts with the NIH, he adds.

You get what you pay for

When Caskey begins negotiations with a pharmaceutical company or other private sponsor, the negotiations typically are a little different. "The first offer is what I’d charge an insurance company for the same interventions," he says.

"We’re a pediatric hospital exclusively, and with the renewal of the Drug Labeling Act for pediatrics, pharmaceutical companies are seeking sites to place a pediatric study," Caskey explains. "Our case completion rate approaches 100% in accuracy. I’ve been here eight years, and I don’t remember a study where we didn’t enroll all the subjects we said we’d enroll."

So when sponsors complain about the research charges, he responds, "You get what you pay for, so if you want a study done well and fast, you’ll come here."

Caskey provides these best practice guidelines for improving accuracy and success in the budgeting process:

  • Capture the best information possible from investigators.

Investigators are asked to check boxes for each of the possible interventions and services provided for a study, which means that they either need to have experience or need to receive input from someone who does have experience with a particular type of protocol, Caskey says.

After research coordinators and investigators select the interventions that will be done for each research subject, then those interventions are matched with hospital codes, while facility charges are separated, he explains.

For instance, if the investigator has indicated that a subject will need a complete blood cell (CBC) count, then the working template already has a calculation for the charge associated with use of the examining room and what the charge is for that intervention, based on whether the intervention is a Level 1, 2, or 3. The level of intervention is dependent on the time spent and equipment needed for the exam room, Caskey explains.

"We separate facility charges from actual treatment or tests being done," he adds.

When these calculations are made, they’re shared with the research coordinator or the physician investigator who review them and approve them, Caskey says.

"Once we identify those charge codes, we can create an Excel spreadsheet that closely resembles the study schematic in the protocol," he says. "Then we can provide the total costs for all CBCs done for a study."

Also, the finished spreadsheet can be transferred to the sponsor’s budget forms, and the information is easy to decipher when budget negotiations begin, Caskey says.

"It really helps with negotiations because it’s a clear presentation of what it actually costs us to do the study," he says.

Delineate patient care, trial charges

  • Keep research enrollee charges separate from patient care admission charges.

The institution uses separate enrollment screens for clinical studies, and these are different from the ones used for admission of patients for patient care, Caskey says.

When a patient is enrolled in a study, the research coordinator involved knows how to separate standard of care and send charges to the right place, whether it’s Medicaid, a third-party payer, or a clinical study, he says.

Then each month, the bills are sent to research coordinators who review them to make corrections and make certain that research charges are not also billed to Medicare or Medicaid, Caskey reports.

"No research charges go to a third party, and no standard of care charges go to the research account, and that policy coupled with enrollment screens helps us to minimize mistakes," he says.

Research coordinators tend to be detail-oriented, so this monthly review has worked well, Caskey notes.

"We set this up with the hospitalwide training program, and when somebody new comes on we train them on how to use the research screens," he says. "The director of clinical trials administration holds a meeting once a month with all research coordinators and they talk about issues and new policies and anything that comes up related to that."

Through working with research staff, administrators found a solution to what has been a common research charge problem for other institutions: the charge for blood draws.

Instead of making a blood draw a separate charge from the CBC, for example, it is included in the CBC charge, Caskey says.

Accounting experts amortized the cost of blood draws across different lab charges, so part of the cost is attributed to the CBC and part is attributed to other chemistry panels, he says.

"At the end of the year, based on our statistics, we break even on the cost of the blood draws," Caskey says.

Better yet, this policy has eliminated the potential problem of a single blood draw that is done for both research and medical care purposes being charged accidentally to both the federal government and to a clinical study, which could trigger a federal fraud investigation and hefty fines, he reports.

Account for time

  • Dig up all hidden costs.

Physician and research coordinator time are the most hidden of costs, Caskey notes.

"You can calculate the amount of time someone will need on a visit, but it’s the follow-up time and paper time to do reports and such that are difficult to calculate," Caskey says. "So we developed a spreadsheet that we use with coordinators and investigators."

When the spreadsheet calculations have grossly underestimated actual costs, this is documented so the mistake can be prevented the next time.

"The manager of clinical trials has developed this spreadsheet over time by working with investigators and research nurses," Caskey says. "It was developed through trial and error."

Among the hidden costs that are captured in the spread sheet are the following:

— how long it takes to review a protocol by investigators and research coordinators;
— how long it takes to set up a study;
— time and travel for pre-study meetings;
— IRB admission costs, including the time either the investigator or study coordinator spends at the IRB meeting in which the protocol is reviewed;
— cost of subinvestigator staff;
— advertising costs, shipping costs;
— time spent for closeout and archiving;
— time spent for study administration, monitoring visits, study maintenance, scheduling clinical visits, follow-ups when a patient is a no-show; follow-ups for other problems, etc.

Once all questions are answered regarding research staff time, the time is translated into dollar costs based on each research employee’s base salary plus fringe benefits, Caskey says.

  • Make payment schedule work economically.

"As we work through the spreadsheet, and once we agree to numbers and the sponsor agrees to numbers, we have an investigator and coordinator sign on the budget," Caskey says. "Generally, it will have a per-patient charge, and we carry that over and have a summary page that shows the anticipated number with the charge per subject and the upfront charges, including the IRB fee, the study coordinator time, and the investigator time."

Then there’s an additional section of study charges, and if the sponsor has an unusual requirement for document storage, for instance, that is included here, he says.

"We also need a lot of IRB amendments for pediatric studies, so we budget for two amendments of $200 each," Caskey says. "We charge $1,500 for the review and $200 for each amendment."

It’s important to ask for all upfront fees to be nonrefundable and to be paid at the time the contract is executed, he says. "Sometimes that includes the IRB fee, and sometimes the IRB fee is invoiced separately, depending on how the company handles that."

Then screen failures are estimated, and with experience this can be predicted fairly accurately, Caskey says.

Sponsors usually request that a portion of the fee is held until all the case report forms are completed, and typically that amount is 10%, he says.

Then the other payment dates are set according to study milestones, such as each time an X number of patients are enrolled, Caskey adds.

Finally, if a clinical trial is losing money, it’s important to go back to the sponsor to request additional funding, he says.

"That has happened only two or three times," Caskey notes.

When a budget has been thoroughly estimated, including even the miscellaneous supplies, such as paper, pencils, etc., there should be few occasions when the clinical trial falls greatly under or over budget, he says.