Author: Anna K. Rockich, MS, Pharm D, Director, General Surgery Research Program, University of Kentucky Medical Center
Abstract: Effective budget development and negotiation is critical for investigative sites. This article provides an overview of budget requirements for the conduct of a study, identifies common mistakes in developing budgets, and highlights how to effectively develop the budget and negotiate with the sponsor. Tools to assist in managing the budget on a daily basis are provided.
Study coordinators wear many hats, including organizing study operations, writing the institutional review board (IRB) submission, maintaining ongoing IRB communications, obtaining informed consent, administering investigational drugs and devices, monitoring study subjects, collecting data, and working with sponsors. Budget and billing are two of many responsibilities.
Protocols have become increasingly complex, and sponsors are demanding more work by investigative sites. According to the Tufts Center for the Study of Drug Development1, in 2000, the median number of unique procedures per protocol was 20.5; by 2011, this had increased to 30.4 unique procedures per protocol. The number of unique procedures per protocol in 2016, although not yet quantified, will be exponentially higher. The total number of eligibility criteria has also increased, from 31 in 2000 to 49 in 2007, the last date for which data are available. Scrutiny on inclusion and exclusion criteria has also increased. The median number of case report form pages per-protocol has increased from 55 in 2000 to 180 in 2007.
It takes about five years for a study coordinator with minimal experience to become relatively autonomous, in the author’s opinion. Budgeting and contracting are generally the last skills that study coordinators are taught. The author recently met a very experienced study coordinator who has worked as a study coordinator for 15 years. She had never, however, developed a budget. Locally, at least at the University of Kentucky, available curriculums for training on budgets and contracts are limited. On-the-job training requires time and good mentors. Study coordinator turnover is another issue. Study coordinating is a vocation not suited for all. Some people enjoy research while others do not, and they move on to other positions or disciplines. The author must continually train new study coordinators.
Selecting the Right Studies
The General Surgery Research Program (GSRP) at the University of Kentucky has developed a standardized method for budget development and management as well as a strong mentoring program for study coordinators. The GSRP also developed a system of checks and balances with budget management to ensure that the front-end work complements the back-end work.
Selecting the right studies is crucial (Table 1). It is a bad decision for both the investigative site and the sponsor when a site accepts a study and then cannot enroll enough subjects. Conducting a feasibility analysis enables the study coordinator to identify studies that are truly good matches for the institution. It is important to critically review the inclusion and exclusion criteria and not to simply ask the clinical investigator whether there are enough patients to meet the enrollment goal. A multi-disciplinary team of clinicians who will be involved with the study, such as specialty physicians, pharmacists, nurses, respiratory therapists, and nutritionists, should participate in reviewing the study and help identify possible stumbling blocks.
The study coordinator must also determine whether the budget is reasonable. The investigative site should not assume a deficit balance on a clinical trial for the sponsor. It is perfectly acceptable to tell the sponsor that the study will not work for the site.
Developing a Study Budget
The basics of budget development for a clinical trial include reviewing the protocol, the internal budget versus the external budget, cost versus charge, and the above standard of care versus standard of care analysis (Table 2). It is important to review each section of the protocol carefully. The author compares the study assessment table (a table summarizing study required procedures typically available in the protocol) to that of the actual text of the protocol. Ninety percent of the time, the assessment schedule is either inaccurate or incomplete. The author revises the assessment schedule for accuracy and uses it in preparing the budget. It is very important to carefully review the footnotes in the assessment table that further describe study assessments.
Whether the study is for a device, a drug, or both must be considered. The University of Kentucky General Surgery Research Program conducts both drug and device studies. Sometimes, however, investigative site staff may not have the necessary expertise. For example, the site is conducting a study of an investigational drug given by a syringe pump, and the nurses are not trained in the use of syringe pumps. Thus, this study involves both a drug and a device, and nurses need to be trained in using the syringe pumps. The study coordinator or the investigator must understand the investigator’s brochure, including the adverse event profile, which provides insights on adverse event monitoring that will be necessary during the study.
The author prepares two types of budgets for every protocol. These budgets include the internal and external ( or sponsor) budgets. The internal budget is a standardized worksheet for use in determining local costs. The budget that the sponsor sends the investigative site is the external budget. The study coordinator must convert the internal budget onto the external budget for the sponsor. Receiving the same sponsor budget format from all investigative sites enables the sponsor to compare budgets across sites. Every institution is different. The study coordinator must be able to effectively communicate with the sponsor to make the case for the site’s budget.
Another budget development basic is cost versus charge. The cost, which is fixed, is the total dollars needed to produce a service at the institution. A charge is the price of the service to the sponsor, which may be different. Investigative sites are in control of their charges and may be able to negotiate research discounts with different departments within the institution.
The “above standard of care” versus “standard of care” analysis is critical. The study coordinator and the investigator must have a good understanding of the standard of care for the patient population in order to understand and be able to identify issues related to items in the protocol that are above standard of care. It may be helpful to work with the investigator to identify literature that describes the standard of care nationally. The “above standard of care” items are the building block of the budget.
The General Surgery Research Program uses a worksheet that allows the investigator to identify the “above standard of care” procedures versus standard of care procedures. The investigator signs and dates the worksheet. It is necessary to have this documentation of above standard of care versus standard of care for budget negotiation. The General Surgery Research Program also gives the worksheet to the corporate compliance group for use in Medicare analysis and approval process.
Building the Budget
Key considerations in building the budget include study demographics, salaries, direct hospital costs, other direct costs, and pass-through costs. Study demographics frame the budget (Table 3). They include the phase of the study (Phase 1 to Phase 4), the number of subjects to be enrolled, the duration of enrollment, and the duration of the study to completed patients. If enrollment is anticipated to last two years and follow-up is five years, then the duration of the study to completed subjects is seven years. Over those seven years, costs will increase. Staff will receive cost of living adjustments in their raises and hospital costs will increase every year. The budget must include projected cost increases.
After subjects have completed the study, administrative work is required to close out the study. Thus, it is also important to understand the duration of study close-out. Study close-out includes reporting to the IRB, the final monitoring visits, and closing out the accounts.
Salaries are a major component of the study budget. Workload analysis is necessary to determine the salaries of the staff members who will be working on the protocol, including the investigator, the study coordinator, and perhaps a study administrator or on-call staff (Table 4).
Workload analysis includes the administrative time for each of the staff members for the entire study period, from the start of discussions with the sponsor to closing down the IRB and the last monitoring visit. Clinical time is estimated on a per-subject basis. In order to estimate the amount of time and money per key staff member, all of this information is distilled down to a percentage of the full-time equivalent.
The worksheet for administrative time includes estimated enrollment, the expected follow-up period, and the total expected study period. The General Surgery Research Program estimates the amount of time needed to complete specific administrative tasks such as budget management in half-hour increments. The estimate is done in hours per week multiplied by the number of weeks in the total expected study period.
Clinical time generally covers the investigator and the study coordinator, and for studies in the General Surgery Research Program, the on-call staff. The worksheet is used to estimate the amount of time needed, in half-hour increments, per subject, for each visit, and for each test/procedure. The totals are calculated for the total expected study period. The author works primarily on studies in General Surgery. Thus, subjects are enrolled 24/7, usually on weekends and evenings. These studies require an infrastructure where nurses are available 24/7, so on-call staff must be included in the budget.
Estimating labor time further requires understanding the true costs, which include salaries, benefits, total workplace days (total days minus vacation, sick, holiday, etc.), and non-study specific time. For example, if a staff member makes $50,000 plus benefits, totaling $16,500, the total salary is $66,500. The estimated time for administrative and clinical time is 832 project hours. If there are 1,760 work hours (estimate work hours to account for sick time, vacation, administrative non-study-related time) per year, then 40% of work effort, at $31,255, will be directed toward this particular study.
Table 5 outlines direct hospital costs, other direct costs, and pass-through costs. Direct hospital costs include laboratory charges and procedure costs. Carefully review laboratory groupings in the protocol. Every hospital has a standard battery of tests for every panel. Determine what the protocol requires in addition to those standard tests.
Procedure costs include technical and medical costs. For a CT scan, for example, there is a technical cost for performing the CT scan and the supplies used as well as a fee for the radiologist to read the scan. It is very important to sit down with representatives of other departments to discuss procedure costs and ask them to identify the exact CPT code or CDM code that is necessary. Other direct costs include subject stipends for travel, supplies, equipment, employee travel, ancillary units, clinical units, clinical space, and other departmental services such as the pharmacy, nursing, and respiratory therapy.
Protocols also have hidden costs. For example, the protocol may require the radiology technician to take more views than what is considered for a standard CT scan of the abdomen. It is very important to read the superscript descriptions of assessments and to look for bundled costs. The General Surgery Research Program is conducting a study in the ICU population that requires a Sequential Organ Failure Assessment (SOFA). This is listed on the screening baseline visit all the way up to day 30. Performing a SOFA assessment requires evaluating renal, cardiovascular, coagulation, hepatic, neurological, and respiratory function. In order to budget costs accurately, investigative site staff needs to know that doing this also requires tests such as creatinine, bilirubin, platelet count, and blood gas analysis.
The duration of the protocol, use of a drug or device in other ongoing studies, and case report forms are factors that can add other hidden costs. Estimated annual cost increases based on the duration of the protocol must be incorporated into the budget. If the drug or device is being used in other ongoing studies, the investigative site could be inundated with investigational new drug application safety reports from those studies. The time required to complete case report forms must also be considered.
Pass-through costs represent costs that are not directly related to the per-subject costs. They are listed in a different section of the budget and passed directly to the sponsor. Pass-through costs include administrative start-up costs, the IRB start-up work, and contract and budget development. The University of Kentucky has a group that manages study budgets from a billing perspective, for a fee. The General Surgery Research Program passes this fee on to the sponsor. Other pass-through costs include pharmacy start-up fees, IRB review and close-out fees, and long-term storage and archiving.
Complicated laboratory tests and unanticipated laboratory tests are pass-through costs. The General Surgery Research Program conducts many studies requiring microbiology testing, which can be complicated. If the subject has a positive blood culture result in the beginning of the study, this test may need to be repeated. The blood culture test itself is complicated, as well as expensive. The General Surgery Research Program lists microbiology tests in the budget and passes through the costs. Depending on the drug or device being studied, unanticipated laboratory tests may be necessary due to a particular unanticipated side effect. Sometimes the sponsor will list a battery of required tests in the protocol if the side effect occurs. This should be part of the unanticipated laboratory tests section of the budget.
Contract and protocol amendments are another pass-through cost. Investigative site staff must spend time on contract and protocol amendments. The General Surgery Research Program bills the sponsor for each amendment.
Screen failures, serious adverse event (SAE) reports, investigational new drug application safety reports, and advertising are all pass-through costs. In order to have staff available 24/7, the General Surgery Research Program has quarterly on-call fees for pagers that are passed on to the sponsor. Outside services such as home healthcare are also pass-through costs.
Learning from Past Mistakes
Mistakes made by the author provide learning experiences for others. Allowing a non-enrolling study to continue was one mistake. Build a mechanism to evaluate enrollment on a quarterly basis. Sometimes, the investigative site can negotiate with the sponsor to identify and fix an enrollment problem. For example, the General Surgery Research Program negotiated with a sponsor to modify the inclusion/exclusion criteria for a study. In other cases, however, the site does not have the appropriate patient population, and enrollment cannot be increased to the necessary level.
Not addressing poor cash flow from a sponsor was another mistake by the author. The General Surgery Research Program was accumulating accounts receivable in a particular account with a very small device company. The device company went out of business and left the investigative site with a deficit. Other mistakes were underestimating screening time and training time as well as failure to address changes in the cost due to protocol amendments. Investigative site staff must consider whether a protocol amendment affects the budget and if it does, to address the budget change.
Investigative site staff members should not fear re-addressing costs with sponsors. The author’s experience in doing this has been very positive. If the site has a justifiable cost, sponsors are generally willing to work with the site. Sponsors want their sites to be successful and happy. If a site is partway through the study and staff members realize that they have underestimated the costs, they should discuss this with the sponsor.
Negotiating Budgets and Payments Terms
Investigative sites give the sponsor a sponsor budget containing the site’s costs. Budgets of the General Surgery Research Program (GSRP) are generally higher than other sites because the General Surgery Research Program (GSRP) has a strong understanding of its costs, especially personnel costs. Site staff members should send a cost justification letter with the budget to explain the costs and to facilitate communication with the sponsor. The site should negotiate research discounts with various departments within the institution as a way to reduce costs for the sponsor if possible.
There are some basic rules to keep in mind about the budget in general. Timely payment is important. The General Surgery Research Program reviews budgets and bills quarterly. It is important to ensure that the investigative site receives regular payments from the sponsor. If it does not, this must be addressed. The site should charge the sponsor non-refundable start-up fees. Having a residual balance at the end of the study is the goal; however, there may be times when the study is very important to the investigator and there is no residual balance other than the needs to cover some study costs.
Once the budget and contract have been negotiated and the study is initiated, budget management is necessary. Budget management allows efficient management of study subject billing, and it provides protection against erroneous billing to third-party insurers and subjects, which could result in legal action. The Office of the Inspector General considers clinical research a top compliance initiative and is spending a great deal of money on fraud and abuse audits. Medicare “double-billing” has been the subject of many investigations and settlements by the Office of the Inspector General and the Department of Justice. Budget management creates a mechanism for communication between the study coordinator and the billing staff members, and it provides a process for critical analysis of the research program for financial progress.
Budget Management Tools
Budget management tools include:
- Budget management sheet
- Study status log
- IRB log
- SAE log
- Salary distribution log
The budget management sheet, placed in each subject’s record, is the most important budget management tool. The study coordinator uses the budget management sheet when ordering laboratory tests for a particular subject. The budget management sheet is used to document any procedures that are above the standard of care and to review bills for accuracy. Even more importantly, the budget management sheet enables the study coordinator to track down bills that were not received for study procedures and take the appropriate actions.
At the University of Kentucky, study coordinators and the billing group use the study status log to communicate. Everyone knows the number of subjects who have been enrolled in the study and exactly where they are in the study. This information is used in preparing accurate bills. Study coordinators use IRB and SAE logs to provide information to the billing group for use in accurate billing to the sponsor. The salary distribution log, updated monthly, assigns a percentage of staff time to each study. This is helpful in managing the budget for the current study as well as in developing budgets for similar studies in the future.
Quality assurance for the General
Surgery Research Program consists of quarterly meetings with the
administration, the department chairman, department administrators, and the
author to critically evaluate studies. They review study progress, enrollment,
salary distribution, and workload analysis. Using financial data, they justify future
needs and do strategic planning.
Selecting the Right Studies
- Conduct a feasibility analysis
- Critically review inclusion/exclusion criteria
- Involve appropriate clinicians in reviewing the study (e.g., pharmacy, nurses, and dietary) for patient enrollment estimates and possible stumbling blocks
- Determine whether the budget is reasonable
Budget Development Basics
- Protocol review:
- Each section
- Protocol text versus study assessment outline
- Footnotes for expanded description
- Device versus drug or both
- Adverse event profile
- Internal versus external budget:
- Internal budget:
- Standardized worksheet for preparing the budget (not shared with the sponsor)
- External budget:
- The sponsor’s budget
- Investigative sites convert the internal budget to the sponsor budget
- Internal budget:
- Cost versus charge:
- Cost: Total dollars needed to produce that service:
- Costs are fixed
- Charge: Price of the service to the sponsor:
- Charges might vary
- Investigative sites control charges
- Cost: Total dollars needed to produce that service:
- Above “standard of care” versus standard of care analysis:
- Determine which procedures are above standard of care versus standard of care
- Investigator signs and dates the analysis
- Provides a footprint for the budget
- Reflect above standard of care in the budget
- Phase of study
- Number of subjects
- Duration of enrollment
- Duration of study to completed patient
- Duration of study close-out
Workload Analysis to Determine Salaries
- Investigator, study coordinator, study administrator, and on-call staff
- Administrative time (representing the entire study period)
- Clinical time (estimate on a per-subject basis)
- Estimates are done in full-time equivalent percentages
Direct Costs and Pass-Through Costs
- Direct hospital costs:
- Laboratory charges:
- Carefully review laboratory groupings in the protocol
- Procedure costs:
- Technical cost
- Medical cost
- Department representatives must ensure that the necessary data points are collected under a specified CPT or CDM code
- Laboratory charges:
- Other direct costs:
- Subject stipends for travel
- Employee travel
- Ancillary units
- Clinical units
- Clinic space
- Other departmental services (e.g., nursing, respiratory therapy, and pharmacy)
- Pass-through costs:
- Administrative start up
- Pharmacy start-up
- IRB review fee
- Long-term storage/archiving
- Annual IRB renewal fee
- IRB closeout fee
- Complicated laboratory tests (microbiology)
- Unanticipated laboratory tests
- Contract/protocol amendment fee
- Screen failures
- SAE reports
- Investigational new drug application safety reports
- Quarterly on-call fee
- Outside services (home health care)
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