| Course | EDN 816 Financial Management in Healthcare Environments |
|---|---|
| Module | Module 6 |
| Paper type | Costing and pricing analysis |
| Length | About 1,083 words, 6 pages |
| Format | APA 7 student paper |
| School | Aspen University |
| Program | Doctor of Education |
| Updated | September 2026 |
Free sample paper for EDN 816 Module 6
What a Screening Colonoscopy Really Costs: Time-Driven Activity-Based Costing and a Fair Cash Price
Student Name
Doctor of Education Program, Aspen University
EDN 816: Financial Management in Healthcare Environments
Instructor Name
Month Day, Year
What a Screening Colonoscopy Really Costs: Time-Driven Activity-Based Costing and a Fair Cash Price
A self-pay patient called Linden Ferry Medical Center to ask the price of a screening colonoscopy and was quoted $2,568, the hospital's $4,280 charge less a 40% discount. She scheduled at an ambulatory surgery center across town instead. The call prompted the chief financial officer to ask two questions the hospital could not answer: what does a colonoscopy actually cost Linden Ferry to provide, and what would a fair cash price be? This paper answers both, using time-driven activity-based costing for the first and the cost, the market and the hospital's mission for the second.
Why Traditional Costing Falls Short
Linden Ferry currently costs a procedure by applying a department-wide ratio of costs to charges. Because charges are set inconsistently, the resulting costs are distorted, sometimes badly. Time-driven activity-based costing takes a different route: it follows a patient through every step of care, records which staff members and spaces are used and for how long, and multiplies each minute by the cost of that resource per minute of practical capacity (Kaplan et al., 2014). A systematic review found the method applicable across health care settings and useful for costing processes efficiently (Keel et al., 2017).
Mapping the Process
A team of endoscopy nurses, a gastroenterologist, a scheduler and a finance analyst walked through the colonoscopy process from the preparation call to scope reprocessing and timed each step over two weeks of cases. The map has 13 resource steps: the scheduling nurse's preparation call, registration, pre-procedure assessment and bay time, sedation by a nurse anesthetist, the procedure itself with the gastroenterologist, nurse, technician and room, recovery and discharge teaching, and reprocessing of the scope. Steps that occur only for some patients, such as pathology for removed polyps, were costed separately.
Capacity Cost Rates
For each resource, the analyst divided the annual cost by the minutes it is practically available for patient work. A registered nurse costing $132,000 a year with benefits, available about 120,000 minutes after breaks, meetings and training, costs about $1.10 a minute. The gastroenterologist's rate is $6.50, the nurse anesthetist's $2.40, the endoscopy technician's $0.60 and the registration clerk's $0.45. Spaces carry rates too: $3.20 a minute for the procedure room, reflecting its equipment and construction cost, and $0.35 for a pre-procedure or recovery bay. Using practical rather than theoretical capacity keeps the cost of unused time from being loaded onto patients.
The Cost of One Colonoscopy
The table multiplies each step's minutes by the resource's rate.
| Step | Resource | Minutes | Rate per minute | Cost |
|---|---|---|---|---|
| Preparation call | Scheduling nurse | 12 | $1.10 | $13.20 |
| Check-in | Registration clerk | 8 | $0.45 | $3.60 |
| Pre-procedure assessment | Nurse | 20 | $1.10 | $22.00 |
| Pre-procedure wait | Bay | 30 | $0.35 | $10.50 |
| Sedation | Nurse anesthetist | 40 | $2.40 | $96.00 |
| Procedure | Gastroenterologist | 25 | $6.50 | $162.50 |
| Procedure | Procedure nurse | 30 | $1.10 | $33.00 |
| Procedure | Technician | 30 | $0.60 | $18.00 |
| Procedure and turnover | Procedure room | 35 | $3.20 | $112.00 |
| Recovery | Recovery nurse | 25 | $1.10 | $27.50 |
| Recovery | Bay | 40 | $0.35 | $14.00 |
| Discharge teaching | Recovery nurse | 10 | $1.10 | $11.00 |
| Scope reprocessing | Technician | 30 | $0.60 | $18.00 |
| Supplies and reprocessing equipment | $133.00 | |||
| Total cost per screening colonoscopy | $674.30 |
Cost, Charge and Payment
The hospital's cost of about $674 contrasts sharply with its charge of $4,280. Payments fall between the two: Linden Ferry's combined facility and professional payment averages about $1,010 from Medicare and about $1,940 from commercial insurers, so the service earns a margin from both. The self-pay quote of $2,568 was nearly four times the cost and higher than most insurers pay. Charges, which few patients actually pay, had been setting the price for the patients least protected by negotiated rates. Markups of charges over cost differ widely among hospitals and track with profitability (Bai & Anderson, 2016), so a chargemaster is a poor guide to what any service should cost a patient.
Setting a Fair Cash Price
A fair cash price should cover the full cost, contribute to the hospital's shared costs and mission, sit near prices in the local market and not charge uninsured patients more than insurers pay. Linden Ferry's finance committee set a published all-inclusive cash price of $1,250 for a screening colonoscopy without complications, covering the facility, the gastroenterologist and sedation, with pathology priced separately at a stated amount. The price is 85% above cost, below the commercial average and close to the ambulatory surgery center's advertised price. Patients who qualify under the financial assistance policy pay less or nothing.
Price Transparency
Federal price transparency rules in effect since 2021 require hospitals to post their standard charges, including negotiated rates and cash prices, and to present shoppable services in a consumer-friendly form; screening colonoscopy is a classic shoppable service. A published price based on cost and market, rather than a discount from an arbitrary charge, is easier to explain and defend when patients, employers and regulators compare it.
Where the Cost Can Fall
The process map also shows where cost concentrates. The gastroenterologist, nurse anesthetist and procedure room account for $370.50, more than half the time-based cost of $541.30. Room turnover takes 10 of the room's 35 minutes; a second turnover team during peak hours could let the unit add two procedures a day without adding rooms. Sedation time varies widely by case; a standard pre-sedation checklist could shorten it. And the preparation call, currently made by a registered nurse, could be scripted for a trained scheduler with nurse backup for complex patients. Each change would lower cost without reducing quality, which is how the method finds value, not merely cost (Kaplan et al., 2014).
Limits of the Method
The method depends on careful time measurement, which staff may find intrusive, and on judgments about practical capacity. It costs one service well but becomes expensive to apply across hundreds of services at once. Keel et al. (2017) also found no published proof yet that the method improves bundled payment or care coordination across settings. Linden Ferry will extend it gradually to the services where pricing and cost questions matter most.
Conclusion
A screening colonoscopy costs Linden Ferry about $674 to provide, far below its $4,280 charge and below what every payer pays. Time-driven activity-based costing produced that figure from the actual process, and it showed where cost can fall. A published cash price of $1,250, grounded in cost, the market and the hospital's mission, replaces a quote that was unfair to the patient who asked and uncompetitive for the hospital. The same approach can bring cost-based pricing to other services that patients pay for themselves.
References
Bai, G., & Anderson, G. F. (2016). A more detailed understanding of factors associated with hospital profitability. Health Affairs, 35(5), 889-897. https://doi.org/10.1377/hlthaff.2015.1193
Kaplan, R. S., Witkowski, M., Abbott, M., Guzman, A. B., Higgins, L. D., Meara, J. G., Padden, E., Shah, A. S., Waters, P., Weidemeier, M., Wertheimer, S., & Feeley, T. W. (2014). Using time-driven activity-based costing to identify value improvement opportunities in healthcare. Journal of Healthcare Management, 59(6), 399-412. https://doi.org/10.1097/00115514-201411000-00005
Keel, G., Savage, C., Rafiq, M., & Mazzocato, P. (2017). Time-driven activity-based costing in health care: A systematic review of the literature. Health Policy, 121(7), 755-763. https://doi.org/10.1016/j.healthpol.2017.04.013
Reading the EDN 816 Module 6 assignment instructions
Aspen's EDN 816 description stresses the principles of health care finance behind patient care decisions, and since the sixth module's prompt is shared only with enrolled students, this example costs and prices one service. Assignments on costing usually ask how much a service costs to provide, how that compares with what is charged and paid, and what the organization should do with the answer. Choose a costing method and explain why. If you use time-driven activity-based costing, show the process map, the cost per minute of each resource and the total in a table. Distinguish cost, charge, payment and price clearly. When you set or evaluate a price, state your criteria, such as covering cost, market comparison and fairness to uninsured patients. Finish with the operational improvements the costing reveals.
How this EDN 816 Module 6 example is built
The paper begins with the patient's phone call and the chief financial officer's two questions. It explains why a ratio of costs to charges misstates costs, then describes how a team of nurses, a gastroenterologist, a scheduler and an analyst mapped and timed the process. Capacity cost rates follow, from $1.10 a minute for a registered nurse to $6.50 for the gastroenterologist and $3.20 for the procedure room. A five-column table multiplies minutes by rates for each step and adds $133 of supplies and reprocessing equipment. The comparison section sets cost against the charge and against payments of about $1,010 and $1,940. The pricing section explains the $1,250 cash price and its criteria. Price transparency, three ways to lower cost and the limits of the method close the paper.
Reading the EDN 816 Module 6 grading rubric
Costing papers are graded on a sound method, correct calculations, clear distinctions among cost, charge and payment, and useful conclusions. The cost table here can be checked line by line, and the capacity rates are explained from annual cost and practical minutes, which shows the method correctly applied. Three APA sources support it: the Journal of Healthcare Management article that set out time-driven activity-based costing for health care, a Health Policy systematic review of its use and a Health Affairs study linking markups to profitability. The pricing section states explicit criteria rather than choosing a number, which instructors value. Using the cost map to find savings in sedation time, room turnover and preparation calls shows that the method serves improvement, not only accounting.
Common EDN 816 Module 6 mistakes, and how to avoid them
Students often call a charge or a payment the cost, which undermines the whole paper; define all three at the start and keep them separate. Another common gap is a cost estimate with no method shown. If you use time-driven activity-based costing, time real steps if you can, or build a composite from published process times and say so. Use practical capacity, not total paid time, for your rates. When you propose a price, explain the criteria and compare it with local prices. Check whether your organization posts a price for the service you chose, as federal transparency rules require for many shoppable services. If building capacity cost rates is new to you, a tutor can work through one resource with you before you do the rest.
Write yours, or have the desk draft it
This paper is an original model document written by our desk, not a submitted student paper and not an official Aspen University document. Read it for the moves, then write your own to the instructions in your classroom. If you want one built to your exact prompt and rubric, the first custom sample is free and arrives in 24 to 48 hours.
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EDN 816 Module 6 questions, answered
What does EDN 816 Module 6 usually ask for?
Aspen's EDN 816 covers the principles of health care finance for patient care decisions, so costing a service and setting or evaluating its price is a typical sixth assignment. Follow your classroom prompt.
What is time-driven activity-based costing?
A method that maps each step of care, measures the minutes each staff member and space spends, and multiplies them by each resource's cost per minute of practical capacity.
Why are hospital charges higher than costs?
Charges are list prices that few patients pay; payers pay negotiated or set rates, so charges are often several times the cost and bear little relation to it.
Where can I find a free EDN 816 Module 6 sample paper?
The full paper is posted above, costing a screening colonoscopy at about $674 with time-driven activity-based costing and setting a published cash price.
What is a capacity cost rate?
The annual cost of a staff member, space or piece of equipment divided by the minutes it is practically available for patient work, giving a cost per minute used in time-driven costing.