Voice-To-Text Transcribers in Healthcare: Financial Analysis

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Table 1. Expenses Associated with Proposed Idea
Expenses Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Grand Total
Startup Expenses
Software License $170,000
Hardware & Software Setup $ 221,000
Server $ 109,000
Training (Staff) $ 213,000
Total Startup Expenses $ 713,000
Operating Expenses
Software Support $ 50,000 $ 55,000
3rd Party Interface $ 25,000 $ 25,000 $ 25,000
Contingency $ 100,000 $ 10,000 $ 10,000
Total Operating Expenses $ 300,000
Total Expenses
Total Expenses $ 713,000 $ 125,000 $ 60,000 $ 25,000 $ 65,000 $ 25,000 $ 1 013,000
Table 2. Revenues Associated with Proposed Idea
Revenues Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Grand Total
Improved Communication $ 22,000 $ 25,000 $ 25,000 $ 25,000 $ 25,000
Exclusion of Duplication of Documents $ 33,000 $ 37,000 $ 37,000 $ 37,000 $ 37,000
Increasing Patient Flow $ 115,000 $ 202,000 $ 202,000 $ 202,000 $ 202,000
Improvement in Hospitalization $ 50,000 $ 65,000 $ 65,000 $ 65,000 $ 65,000
Total Revenue $ 220,000 $ 329,000 $ 329,000 $ 329,000 $ 329,000 $ 1 536,000
Table 3. Total Estimated Expenses, Revenues, Deficit/ Surplus, and Return on Investment (ROI)
Year 1 Year 2 Year 3 Year 4 Year 5
Total Revenue $ 220,000 $ 549,000 $ 878,000 $ 1 207,000 $ 1536,000
Total Expenses $ 838,000 $ 898,000 $ 923,000 $ 988,000 $ 1 013,000
Deficit/ Surplus $ (618,000) $ (349,000) $(45,000) $ 219,000 $ 523,000
Return on Investment -0,74 -0,39 -0,49 0,22 0,52

In healthcare, as in other areas of the economy, the budget is crucial. According to Harrington (2019), a well-defined budget is essential because it helps the healthcare organization better understand the funds that can be spent on different sections of the project and how much should be allocated to each. This project involves the application of artificial intelligence in non-patient care tasks. The project is to provide healthcare staff with access to a voice-to-text transcriber.

Every project has some start-up expenses that are incurred before the project starts and starts generating revenue. Start-up expenses, presented in table 1, include staff training, installation of servers, hardware and software, and software licenses. The most significant expenses are associated with hardware and software setup and staff training, which is more than 60% of the total start-up costs. On the other hand, the server costs are the lowest, accounting for 15% of the total start-up expenses.

In turn, operating expenses, presented in table 1, consist of software support costs, third-party interface, and contingencies. It is assumed that software support will be required not every year, but twice in 5 years, in the second and fourth years. Costs are $50,000 in the second year, and $55,000 in the fourth year, subject to a possible increase in the cost of services. A third-party interface may be needed in the first, third, and fifth years for a total of $75,000. Various items, from equipment breakdowns to staff training, can be included in contingency costs that were not previously included. It is assumed that such expenses in the first year can be maximum, so $100,000 is provided for them. In the second and fourth years, this expense category is $10,000 each. Thus, operating expenses are $300,000 over five years. The total cost is $1,013,000, with 83% of the cost being start-up and first-year costs.

In terms of revenues, presented in table 2, this category of finance includes income from improved communication, elimination of duplication of documents, increased patient flow, and improved hospitalization. It is assumed that the use of a voice-to-text converter will improve the efficiency of the healthcare facility and increase the flow of patients. In this regard, the maximum income, constituting 60% of the total income, will fall in this category. Total revenues over five years are estimated at $1,536,000.

A surplus or deficit measures whether a business has positive or negative cash flows. Lieneck (2021) asserts that it indicates whether a firm is making a profit or not. As a result of calculating costs and revenues for five years, it was found that the budget deficit is observed from the first to the third year, and from the fourth year, the medical business will have a surplus. Table 3 shows that the ROI is negative from year 1 to year 3. This means that the company is not efficient enough in terms of revenue compared to cost. In the 4th year, the return on investment is positive and equals 0.22. This means that the money invested makes a profit, so the company performs well financially. In the 5th year, the return on investment is 0.52, which indicates that after five years of project implementation, the net profit will be more than half of the invested funds. This confirms the estimates of Mintz and Brodie (2019) that the implementation of voice-to-text converters in healthcare could lead to a benefit estimated up to US$875,000 per hospital. Thus, the implementation of voice-to-text converters in a healthcare facility is feasible because it is effective.

References

Harrington, M. K. (2019). Health care finance and the mechanics of insurance and reimbursement. Jones & Bartlett Learning.

Lieneck, C. H. (2021). Healthcare financial accounting: A guide for leaders. Cognella, Incorporated.

Mintz, Y., & Brodie, R. (2019). . Minimally Invasive Therapy & Allied Technologies, 28(2), 73-81. Web.

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