We use a cost-benefit model to evaluate the benefit/cost ratio (B/C) for installing AR paintings in US hospitals in two states (case studies).
Our data include US hospital statistics and staffed bed data for 2018. We use a nominal interest rate of 4% (2% real rate+2% the Fed inflation target of 2%) for the discount rate. After considering the Bureau of Labor Statistics (BLS) inflation rate of 5.67% for hospital days we decided to use a more plausible alternative. A conservative 1% reduction in total days of hospitalization was assumed in determining the potential savings (benefit). Based on the number of beds, we calculated costs.
Our research question is: does the use of AR paintings in hospitals generate a positive B/C ratio for them. We avoid common pitfalls in enumeration of the benefits, such as double counting or ignoring the effect of inflation.
Our results show a B/C of 379 for the US hospitals in aggregate. The benefits are huge. We also evaluate the B/C for Texas (with the maximum value of hospital days in the data) and for the North Marine Islands (NMI, with the minimum value of hospital days in the data). We find a B/C of 39 for Texas and B/C of 45 for NMI.
This evidence-based hospital arts project suggests reduced costs for hospitals in the US.