Why do they say “it costs the hospital to use the machine” when the hospital owns the machine?

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It always confused me. A hospital has an MRI or some other machine, and you hear they try to use it as little as possible to cut costs, because it costs them this or that amount per usage. But why would that be if they own it?

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Anonymous 0 Comments

The same reason a car has fixed and variable costs.

When you use a car, you pay for things that are proportional to the kilometers you travel (gas, tires) but you also need to compensate for costs that happen every year regardless of how much you travel (maintenance, cleaning) and even for the depreciation of the car. These fixed costs get divided by the number of kilometers that you expect to drive every year.

Same for a machine at the hospital. Someone needs to be billed for the cost of the machine. So the total cost of the machine and the other fixed costs are divided by the number of hours it is used every year.

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