An administrator is considering outsourcing the BioMed function to reduce cost.

AHA CHFM Question Answer

An administrator is considering outsourcing the BioMed function to reduce cost. The low-bid base price for outside annual inspection and testing service is $180,000 with an $80/hr repair labor rate and a $120/hr call-in labor rate. The BioMed department currently has an annual labor budget of $240,000. Assuming an estimate of 600 hours of repair labor and 100 hours of call-in labor, how much will the administrator save annually with the outsourcing option?

$12,000

$48,000

$80,000

Step-by-Step Calculation:

Current in-house cost: $240,000.

Outsourcing cost:

Base price: $180,000

Repair: 600 hrs × $80/hr = $48,000

Call-in: 100 hrs × $120/hr = $12,000

Total outsourcing = $180,000 + $48,000 + $12,000 = $240,000

Difference: $240,000 – $240,000 = $0