The administrator of Hope Hospital has been asked to perform an activity analysis of the emergency room (ER). The ER activities include cost of quality and other patient care activities. The lab tests and transportation are hospital services external to the ER for determining external failure costs. The result of the activity analysis is summarized as follows:

Activities Activity Cost

Patient registration.......................................$ 6,400

Verifying patient information............................9,600

Assigning patients........................................12,800

Searching/waiting for doctor.............................8,000

Doctor exam................................................4,800

Waiting for transport....................................17,600

Transporting patients....................................16,000

Verifying lab orders......................................14,400

Searching for equipment..................................8,000

Incorrect labs.............................................12,800

Lab tests...................................................17,600

Counting supplies........................................19,200

Looking for supplies.......................................8,000

Staff training...............................................4,800

Total....................................................$160,000

Instructions

1. Prepare a Pareto chart of the ER activities.

2. Classify the activities into prevention, appraisal, internal failure, external failure, and other patient care activities. Classify the activities into value-added and non-value added activities.

3. Use the activity cost information to determine the percentages of total ER costs that are prevention, appraisal, internal failure, external failure, and other patient care activities.

4. Determine the percentages of the total ER costs that are value- and non-value-added.

5. Interpret the information.