Case Interview Questions #00017: Suppose that President Barack Obama has just fired First Lady Michelle Obama as Chief of Health Care Reforms and has appointed you to fill the position. While in his office, you discover that kidney dialysis (a process for removing waste and excess water from the blood, and is primarily used to provide an artificial replacement for lost kidney function in people with renal failure) is a major portion of public health care expenditures.
Question: What analytical techniques would you use to determine if kidney dialysis cost can be reduced?
You can start this cost cutting case by looking at the cost half of profitability analysis (Costs = Fixed Costs + Variable Costs). Since this is a procedure, rather than a whole industry, it is mostly a variable costs, the sum of which is measured by cost per unit times the number of units. Thus, one could look at this problem by analyzing:
(1) how much it costs per kidney dialysis, and
(2) how many kidney dialysis occur in the U.S. every year.
Also, Don’t forget the external factors, such as corruption or government regulation, that may play a role in public health care expenditures.
Analyze the proportion of public versus private health care expenditures that are applied to kidney treatment to determine if