The Costs of Caring for Patients in a Tertiary Referral Australian Intensive Care Unit

We determined the direct cost of an Intensive Care Unit (ICU) bed in a tertiary referral Australian ICU and the cost drivers thereof, by retrospectively analysing a number of prospectively designed Hospital- and Unit-specific electronic databases. The study period was a financial year, from 1 July 2002 to 30 June 2003. There were 1615 patients occupying 5692 fractional occupied bed days at a total cost of A$15,915,964, with an average length of stay of 3.69 days (range 0.5–77, median 1.06, interquartile range 2.33). The main cost driver not incorporated into this analysis was blood products (paid for centrally). The average costs of an ICU day and total stay per patient were A$2670 and A$9852 respectively. Staff-related charges were 68.76%, with consumables related expenditure making up 19.65%, clinical support services 9.55% and capital equipment 2.04%. Overtime charges and nursing agency staff were 19.4% of staff-related charges (2.9% for agency staff), 3.9% lower than expenditure associated with full-time employment charges, such as pension and leave. The emergency nature of ICU means it is difficult to accurately set a nursing establishment to cater for all admissions and therefore it is hard to decide what is an acceptable percentage difference between agency/overtime costs compared with the costs associated with full-time staff appointments. Consumable expenditure is likely to increase the most with new innovation and therapies. Using protocol driven practices may tighten and control costs incurred in ICU.

A practical approach for calculating reliable cost estimates from observational data: application to cost analyses in maternal and child health

BACKGROUND

Comparative effectiveness research (CER) and cost-effectiveness analysis are valuable tools for informing health policy and clinical care decisions. Despite the increased availability of rich observational databases with economic measures, few researchers have the skills needed to conduct valid and reliable cost analyses for CER.

OBJECTIVE

The objectives of this paper are to (i) describe a practical approach for calculating cost estimates from hospital charges in discharge data using publicly available hospital cost reports, and (ii) assess the impact of using different methods for cost estimation in maternal and child health (MCH) studies by conducting economic analyses on gestational diabetes (GDM) and pre-pregnancy overweight/obesity.

METHODS

In Florida, we have constructed a clinically enhanced, longitudinal, encounter-level MCH database covering over 2.3 million infants (and their mothers) born alive from 1998 to 2009. Using this as a template, we describe a detailed methodology to use publicly available data to calculate hospital-wide and department-specific cost-to-charge ratios (CCRs), link them to the master database, and convert reported hospital charges to refined cost estimates. We then conduct an economic analysis as a case study on women by GDM and pre-pregnancy body mass index (BMI) status to compare the impact of using different methods on cost estimation.

RESULTS

Over 60 % of inpatient charges for birth hospitalizations came from the nursery/labor/delivery units, which have very different cost-to-charge markups (CCR = 0.70) than the commonly substituted hospital average (CCR = 0.29). Using estimated mean, per-person maternal hospitalization costs for women with GDM as an example, unadjusted charges ($US14,696) grossly overestimated actual cost, compared with hospital-wide ($US3,498) and department-level ($US4,986) CCR adjustments. However, the refined cost estimation method, although more accurate, did not alter our conclusions that infant/maternal hospitalization costs were significantly higher for women with GDM than without, and for overweight/obese women than for those in a normal BMI range.

CONCLUSIONS

Cost estimates, particularly among MCH-related services, vary considerably depending on the adjustment method. Our refined approach will be valuable to researchers interested in incorporating more valid estimates of cost into databases with linked hospital discharge files.

What can we learn from international comparisons of costs by DRG?

OBJECTIVES

The objective of this study was to compare costs data by diagnosis related group (DRG) between Belgium and Switzerland. Our hypotheses were that differences between countries can probably be explained by methodological differences in cost calculations, by differences in medical practices and by differences in cost structures within the two countries.

METHODS

Classifications of DRG used in the two countries differ (AP-DRGs version 1.7 in Switzerland and APR-DRGs version 15.0 in Belgium). The first step of this study was to transform Belgian summaries into Swiss AP-DRGs. Belgian and Swiss data were calculated with a clinical costing methodology (full costing). Belgian and Swiss costs were converted into US$ PPP (purchasing power parity) in order to neutralize differences in purchasing power between countries.

RESULTS

The results of this study showed higher costs in Switzerland despite standardization of cost data according to PPP. The difference is not explained by the case-mix index because this was similar for inliers between the two countries. The length of stay (LOS) was also quite similar for inliers between the two countries. The case-mix index was, however, higher for high outliers in Belgium, as reflected in a higher LOS for these patients. Higher costs in Switzerland are thus probably explained mainly by the higher number of agency staff by service in this country or because of differences in medical practices.

CONCLUSIONS

It is possible to make international comparisons but only if there is standardization of the case-mix between countries and only if comparable accountancy methodologies are used. Harmonization of DRGs groups, nomenclature and accountancy is thus required.

Breaking down hospital costs for selected medical conditions in Canada

Understanding the components of hospital costs is an important policy tool for analyzing total hospital spending or for budget planning. The objective of this study is to estimate the average cost per stay and number of stays for male and female acute care inpatients for the 15 most expensive medical conditions, and to determine whether there is a gender difference in the share of cost due to co-morbidities. Regression analysis is used to account for gender and complexity, a proxy for co-morbidities. Our findings suggest on average male inpatient costs 9.7% more to treat than a female inpatient.

Specialty and full-service hospitals: a comparative cost analysis

OBJECTIVE

To compare the costs of physician-owned cardiac, orthopedic, and surgical single specialty hospitals with those of full-service hospital competitors.

DATA SOURCES

The primary data sources are the Medicare Cost Reports for 1998-2004 and hospital inpatient discharge data for three of the states where single specialty hospitals are most prevalent, Texas, California, and Arizona. The latter were obtained from the Texas Department of State Health Services, the California Office of Statewide Health Planning and Development, and the Agency for Healthcare Research and Quality Healthcare Cost and Utilization Project. Additional data comes from the American Hospital Association Annual Survey Database.

STUDY DESIGN

We identified all physician-owned cardiac, orthopedic, and surgical specialty hospitals in these three states as well as all full-service acute care hospitals serving the same market areas, defined using Dartmouth Hospital Referral Regions. We estimated a hospital cost function using stochastic frontier regression analysis, and generated hospital specific inefficiency measures. Application of t-tests of significance compared the inefficiency measures of specialty hospitals with those of full-service hospitals to make general comparisons between these classes of hospitals.

PRINCIPAL FINDINGS

Results do not provide evidence that specialty hospitals are more efficient than the full-service hospitals with whom they compete. In particular, orthopedic and surgical specialty hospitals appear to have significantly higher levels of cost inefficiency. Cardiac hospitals, however, do not appear to be different from competitors in this respect.

CONCLUSIONS

Policymakers should not embrace the assumption that physician-owned specialty hospitals produce patient care more efficiently than their full-service hospital competitors.

Risk adjustment policy options for casemix funding: international lessons in financing reform

This paper explores modified hospital casemix payment formulae that would refine the diagnosis-related group (DRG) system in Victoria, Australia, which already makes adjustments for teaching, severity and demographics. We estimate alternative casemix funding methods using multiple regressions for individual hospital episodes from 2001 to 2003 on 70 high-deficit DRGs, focussing on teaching hospitals where the largest deficits have occurred. Our casemix variables are diagnosis- and procedure-based severity markers, counts of diagnoses and procedures, disease types, complexity, day outliers, emergency admission and "transfers in." The results are presented for four policy options that vary according to whether all of the dollars or only some are reallocated, whether all or some hospitals are used and whether the alternatives augment or replace existing payments. While our approach identifies variables that help explain patient cost variations, hospital-level simulations suggest that the approaches explored would only reduce teaching hospital underpayment by about 10%. The implications of various policy options are discussed.

Is your organization's wage index accurate?

Hospitals should take these steps to ensure their wage reporting follows Medicare directives and that all information is reported accurately: Check the reasonability of your hospital's wage data; Ensure your hospital's compliance with reporting directives; Consider your hospital demographics; Take corrective action, if needed.

Combining DRGs and per diem payments in the private sector: the Equitable Payment Model

The many types of payment models used in the Australian private sector are reviewed. Their features are compared and contrasted to those desirable in an optimal private sector payment model. The EPM(TM) (Equitable Payment Model) is discussed and its consistency with the desirable features of an optimal private sector payment model outlined. These include being based on a robust classification system, nationally benchmarked length of stay (LOS) results, nationally benchmarked relative cost and encouraging continual improvement in efficiency to the benefit of both health funds and private hospitals. The advantages in the context of the private sector of EPM(TM) being a per diem model, albeit very different to current per diem models, are discussed. The advantages of EPM(TM) for hospitals and health funds are outlined.

The cost of hospital care in Canada: a comparison of two alternatives

This article compares resource intensity weight costs with case costs for selected patient groups at St. Paul's Hospital, British Columbia. Analysis found that average case costs for surgical patients were 23.9% higher than their resource intensity weight costs, whereas case costs for non-surgical patients were 14.8% lower. Average case costs for patients receiving surgical implants were 32.8% higher than resource intensity weight costs. For patients receiving internal defibrillators average case costs were three times higher.

A comparison of inpatient severity, average length of stay, and cost for traditional fee-for-service medicare and medicare HMOs in Florida

This research compares the mean severity level, length of stay, and cost of Medicare health maintenance organization (HMO) and Medicare fee-for-service (FFS) inpatients. The results suggest Medicare HMOs have healthier inpatients and shorter lengths of stay, but more costly per-day utilization. These findings are contrary to the assumption that HMOs reduce daily utilization.

[Evaluation of costs incurred for patients with multiple trauma particularly from the perspective of the hospital]

The aim of this study was to evaluate the costs involved in treating severely injured patients at the clinic differentiated by several characteristics (injury, age), sectors (emergency room, surgery, intensive and normal care), and kinds of costs (fixed costs, variable costs) and to determine influencing factors regarding costs based on the register of the DGU (Deutsche Gesellschaft für Unfallchirurgie). All patients were taken into account who had an injury severity score (ISS) of at least 16. On this basis costs of 3702 patients were analyzed. They were compared by using analysis of variance for different groups of patients classified according to kind of injury, severity of injury, and age. Moreover, multiple regression was performed to control the common influence of demographic factors and the type of injury on costs. The average ISS of the analyzed patients was 30.6 (+/-11.6) points. The average costs of the clinic were 32,166 (+/-25,404) EUR per patient. More than half of the costs was incurred by intensive care and about one-fourth by surgery. On average 30.6% were variable costs and 69.4% were fixed costs. The analysis of variance revealed that costs increased with advancing age and severity of injury (ISS). Multiple regression confirmed these interrelations indicating that extremities are very cost intensive. Due to the high portion of fixed costs, the overall costs strongly depend on the capacity utilization and less on hospital stay. That is why it may be necessary in the future to create centers for trauma care to maintain economic efficiency for treatment of these patients. Besides large differences of costs within closely defined groups of patients, hospitals carry a high economic risk so that a more complex reimbursement system should be discussed than implemented by the German DRGs.

A Simulation Model of Hospital Management Based on Cost Accounting Analysis According to Disease

Since a little before 2000, hospital cost accounting has been increasingly performed at Japanese national university hospitals. At Kumamoto University Hospital, for instance, departmental costs have been analyzed since 2000. And, since 2003, the cost balance has been obtained according to certain diseases for the preparation of Diagnosis-Related Groups and Prospective Payment System. On the basis of these experiences, we have constructed a simulation model of hospital management. This program has worked correctly at repeated trials and with satisfactory speed. Although there has been room for improvement of detailed accounts and cost accounting engine, the basic model has proved satisfactory. We have constructed a hospital management model based on the financial data of an existing hospital. We will later improve this program from the viewpoint of construction and using more various data of hospital management. A prospective outlook may be obtained for the practical application of this hospital management model.

The cost of a hospital ward in Europe: is there a methodology available to accurately measure the costs?

Costing health care services has become a major requirement due to an increase in demand for health care and technological advances. Several studies have been published describing the computation of the costs of hospital wards. The objective of this article is to examine the methodologies utilised to try to describe the basic components of a standardised method, which could be applied throughout Europe. Cost measurement however is a complex matter and a lack of clarity exists in the terminology and the cost concepts utilised. The methods discussed in this review make it evident that there is a lack of standardized methodologies for the determination of accurate costs of hospital wards. A standardized costing methodology would facilitate comparisons, encourage economic evaluation within the ward and hence assist in the decision-making process with regard to the efficient allocation of resources.

Homogenit�t der G-DRGs in der Augenheilkunde

BACKGROUND

Since the year 2004 hospitals in Germany are obliged to participate in a payment system based on diagnosis-related groups (DRG), which bases hospital reimbursement on the diagnosis and treatment of patients. The aim of this study was to analyze the data of the first German national hospital cost data calculation for their homogeneity.

METHODS

The cases at the LMU hospital in Munich were calculated analogous to the national hospital cost data calculation for a period of 7 months. These exemplary data were then analyzed in detail for homogeneity.

RESULTS

For many DRGs, the numbers of cases in the analysis were within a range similar to those in the official nationwide calculation. The costs and lengths of stay were similar to those of the official national calculation.

CONCLUSIONS

Many ophthalmologic DRGs are quite inhomogeneous necessitating regrouping to avoid false incentives. For cases with high complexity the current system may lead to cost deficits especially for hospitals providing maximum care.

The Shocking Cost of Turnover in Health Care

Review of turnover costs at a major medical center helps health care managers gain insights about the magnitude and determinants of this managerial challenge and assess the implications for organizational effectiveness. Here, turnover includes hiring, training, and productivity loss costs. Minimum cost of turnover represented a loss of >5 percent of the total annual operating budget.

Do budget-holding physicians respond to price? the case of fundholding in the UK

In an effort to improve the efficiency of the healthcare sector, some countries have experimented with various forms of 'internal market' in public healthcare provision. In some models, policymakers have assumed that actors will behave, as in a retail market, by responding to price in the course of seeking the best 'value for money' from healthcare providers. In the study reported here we examined the responsiveness of general practitioners to price during the British experiment in general practice (GP) fundholding. The study analysed routine data on 29 423 referrals for elective care made by 129 practices in one city to two competing providers of secondary care. Indices of price responsiveness were calculated for each practice from their manifest referral behaviour. These were then used to compare fundholding and non-fundholding practices. The results showed no difference between these groups in their propensity to respond to published procedure prices, even when potential savings were very large. Our findings are consistent with the reported views of fundholding GPs that price was a secondary consideration in their referral behaviour, and provides further evidence that healthcare markets cannot be understood in simplistic terms.

[Costs, costs and more costs: which one should we use?]

A cost is not an intrinsic feature of a product in the same way as temperature is for water and air. It is a calculation based on theory and convention. Costs may be characterised by their object (an hospital admission, a hospitalization day, a diagnostic related group, a treatment phase), their contents (costs directly attributable to the patient, controllable costs, including not only departmental operating costs but also costs resulting from the department's activity, full costs including administrative and infrastructure overhead costs), the point of reference from where the costs are considered (from the point of view of the family, the health professionals suppliers, the buyers, the health care system, or society) and the time when the costs were calculated. The cost framework which must be considered in any economic evaluation must relate to the budgetary concerns of the party whose involvement is sought in a health care project. There is no all encompassing study in this field; an evaluation performed for one type of contributor must only consider this party's point of view.

GME: at what cost?

Current computing methods impede determining the real cost of graduate medical education. However, a more accurate estimate could be obtained if policy makers would allow for the application of basic cost-accounting principles, including consideration of department-level costs, unbundling of joint costs, and other factors.

Accounting For Teaching Hospitals’ Higher Costs And What To Do About Them

Academic health centers (AHCs) have higher costs per case and also lower margins than either other teaching hospitals or community hospitals. The differences in margins stem mostly from differences in the intensity with which similar patients are treated, as well as hospitals' ability to generate revenue to cover the costs of that greater intensity, rather than graduate medical education per se. How much patient care capacity should be supported in AHCs and who should be treated with the greater intensity they offer are open questions. If there is to be a public trust fund to subsidize AHCs, it should be financed from general revenues.

The cost of inefficiency in US hospitals, 1985-1997

We conducted a descriptive analysis of data from the Hospital Cost Report Information System from 1985 through 1997 on nonfederal, short-stay hospitals in the United States with 12-month reporting periods and valid data for the primary outcomes. The main outcome measures were change in number of beds, inpatient days, overhead cost per bed, and overhead cost per inpatient day. Actual outcomes were compared to predicted outcomes from: (1) a scenario holding the ratio of overhead cost per volume constant throughout the study period; and (2) a scenario holding overhead expenditures for 1985 constant as volume changed. The sample contained a mean of 3,605 hospitals per year. Volume declined annually by 2.2 beds (95 percent confidence interval [CI], 2.1 to 2.2; P < .001) and 997 inpatient days (95 percent CI, 992 to 1,003; P < .001). Overhead cost per bed increased by 3,388 dollars annually (95 percent CI, 3,049 to 3,737; P < .001) and overhead cost per inpatient day increased by 40 dollars annually (95 percent CI, 36 to 44; P < .001). In the constant ratio scenario, mean overhead cost per bed increased by 42,523 dollars (32 percent), and mean overhead cost per inpatient day increased by 435 dollars (59 percent). In the constant overhead cost scenario, overhead cost per bed increased 15 percent and overhead cost per inpatient day increased 19 percent. Hospital overhead costs are increasing faster than would be expected if efficiency were the primary goal of hospital management.

Cost analysis of pneumonia treatment in the Philippines

The objectives of this study were to describe the cost distribution of pneumonia treatment in tertiary hospitals in the National Capital Region (NCR) and to identify variations in costs in order to provide basic information to the Philippine Health Insurance Corporation (PHIC) for quality assurance and policy development. This study focuses on 3861 reimbursement claims, which come from 22 government and 38 private tertiary hospitals. Wide variations of cost existed among the hospitals and among the inpatients. Medicine was the leading expenditure in total costs (38%), second was examinations (27%), third was beds (22%) and the last was doctors fees (13%). The same ranking ocurred for reimbursement by PHIC. The private hospitals were more expensive than the government hospitals, but also more efficient in the length of hospitalization. The member patients spent more and were reimbursed more for clinical practice than the dependent patients. However, there was no difference in the length of hospitalization between member and dependent patients. There was no difference in the length of hospitalization and expenditure between Government Service Insurance System (GSIS) in 1997 and Social Security System (SSS) patients. Clinical guidelines should be effectively implemented and PHIC should contribute more to reduce existing variations, improve cost-effectiveness and the quality of clinical practices.

Comparing the financial risk of bed-day and DRG based pricing types using parametric and simulation methods

The extent of random financial risk involved in the Finnish bed-day and Diagnosis Related Groups (DRG) based hospital pricing systems were estimated and compared using parametric and simulation methods. DRG based payment schemes were found to provide significantly better protection against financial risk for municipalities, but municipality's size was the main determinant of financial risk. Small municipalities should use longer contracts between hospitals or form bigger purchaser-organisations for risk pooling. In addition, the current risk management system proved to be ineffective in decreasing the random variation in total costs.

Comparing apples to apples: the relative financial performance of Manitoba's acute care hospitals

This paper presents comparative financial ratios that can be adopted by health system administrators and policy analysts to begin to evaluate the performance of acute care hospitals. We combined financial, statistical and clinical information for 73 acute care hospitals in Manitoba for fiscal 1997/98 to calculate 15 indicators of financial performance. Our findings suggest that there is variability between hospital types in their average costs per weighted case, cost structure and financial performance.

Toward an international case mix index for comparisons in OCED countries. Organization for Economic Cooperation and Development

During the last 20 years, a number of studies have examined the effect of Diagnosis Related Group (DRG)-based health care prospective payment systems on the cost and quality of services. To examine these issues, it is necessary to control for variations in patient mix and the related resources needed by incorporating some form of a case mix index. As part of our ongoing research on comparative DRG-based health care payment systems, we develop a preliminary, international case mix index using the Organization for Economic Cooperation and Development (OECD) health care database. We illustrate the application of our case mix index and use it to devise a standardized cost per case and a standardized cost per day for several countries. We also provide some preliminary analysis of the data demonstrating the observable and predictable effects of DRG-based payments on case m ix index, length of stay,cost per day, and cost per case.

Practical options for estimating cost of hospital inpatient stays

Analysts often estimate the cost of hospital services by applying cost/charge (c/c) ratios from federal or state data sources to the charges provided on hospital discharge records. Recently, a number of sources of discharge data are not permitting the release of hospital identities. This study compares several sources of c/c data for use in the restricted environment. Accounting data from four state systems and from files of the federal Centers for Medicare and Medicaid Services (formerly HCFA) are employed. In one analysis hospitals are grouped by selected characteristics. C/c varies by state and characteristics. Some HCFA and state measures track each other closely. A wider analysis of hospital-specific data for 51 states offers a separate test and extension of the initial results. The study supports a practical policy option of releasing grouped c/c ratios attached to discharge records when identity must be masked. Key words: hospital cost, cost to charge ratios, privacy protections.

Striving towards efficiency in the Greek hospitals by reviewing case mix classifications

In order to verify the efficiency level of Greek public hospitals, this paper evaluates the most recent indicators. Relevant data were collected from the two following databases: (a) hospitals' utilisation data generally and per clinical speciality [Ministry of Health, Athens, (Data based) 1995]; (b) Patients' and hospitals' characteristics per diagnosis [National Statistical Office, Athens, (Data based) 1993]. As explanatory variables, the study examines supply and demand factors following case mix classifications. Firstly, average length of stay (ALOS) and secondly, cost per case were regressed as dependent variables. The study highlights the extent of variability across hospitals for different groups of patients with the same condition. The results specify the most important factors that affect ALOS and cost pertaining to efficiency. Per speciality analysis shows occupancy, size-type of the hospital, beds and doctors per speciality, access and use of outpatient services, and surgical operations, etc. as the most significant factors. Per disease-diagnosis analysis shows age of over 65 years, gender, residence, marital status, surgical operation and insurance as the most important factors. General cost analysis in all National Health Systems (NHS) hospitals shows that economies of scale appear in: (a) district and/or specialised hospitals of 250-400 beds; (b) regional and/or teaching hospitals of over but near to 400 beds. Consequently, the author determines the 'Greek' Diagnostic Related Groups (DRGs), based on the cost per clinical speciality in the nine basic specialities and on the cost per diagnosis of the top 15 diagnoses. Further to the scientific results, such studies will enhance much necessary discussions on the organisation of service delivery and financing, by following case mix classification.

Clinical process analysis and activity-based costing at a heart center

Cost studies, productivity, efficiency, and quality of care measures, the links between resources and patient outcomes, are fundamental issues for hospital management today. This paper describes the implementation of a model for process analysis and activity-based costing (ABC)/management at a Heart Center in Sweden as a tool for administrative cost information, strategic decision-making, quality improvement, and cost reduction. A commercial software package (QPR) containing two interrelated parts, "ProcessGuide and CostControl," was used. All processes at the Heart Center were mapped and graphically outlined. Processes and activities such as health care procedures, research, and education were identified together with their causal relationship to costs and products/services. The construction of the ABC model in CostControl was time-consuming. However, after the ABC/management system was created, it opened the way for new possibilities including process and activity analysis, simulation, and price calculations. Cost analysis showed large variations in the cost obtained for individual patients undergoing coronary artery bypass grafting (CABG) surgery. We conclude that a process-based costing system is applicable and has the potential to be useful in hospital management.

The hospital cost index: a new way to assess relative cost-efficiency

Hospital senior financial executives routinely review measures of facility costs to assess their organization's cost-efficiency. The measures they typically use for this activity are cost per adjusted discharge and cost per adjusted patient day. These measures have flaws that limit their usefulness for comparing cost-efficiency of different hospitals. A more effective measure is the hospital cost index (HCI), which adjusts for case-mix complexity in both inpatient and outpatient operations and can be computed from publicly available databases. The highly reliable HCI enables senior financial executives to make comparison among specific hospitals, including direct competitors.

Cataract surgery output and cost of hospitalization for cataract surgery in the University of Benin Teaching Hospital

Cataract is the most common cause of curable blindness in Nigeria. Nigeria has an overall population of approximately 110 million with a blindness prevalence rate of 1%. Cataract is responsible for 30 - 60% of the blindness. A great deal of blindness prevention activity should therefore centre around cataract surgery if we are to clear out cataract back log of over 1/2 a million individuals. Only 106 cataract surgeries were performed in the 24 months reviewed. There were 75 males and 31 females. This study highlights the meagre contribution of teaching hospitals to the prevention of blindness. Several factors including ignorance, poverty, socioeconomic and political tensions and teaching hospital bureaucracy are no doubt responsible for this. Hospitalization for cataract surgery is becoming very unpopular in the developed world as this tends to increase cost of surgery. The need to establish cataract surgery outreach services and adopt day case surgical procedures in our hospitals cannot be over emphasized as strategies for clearing our national cataract backlog.

A simple method for calculating the financial balance of a hospital, based on proportional dividing

It is necessary to estimate financial status to determine hospital management policy. The costs and revenues (financial balance) of each hospital division are one good index. However, it is difficult to calculate the financial balance for each division, since clinics and central services are intricately involved with each other There are no reports on a pragmatic method for calculating the financial balance. We devised a simple method based on proportional dividing. Consequently, one individual was able to complete the calculation for our hospital, which consists of 1300 beds and 23 clinics, without using the central hospital computer system.

Impact of global bundled payments on hospital costs of coronary artery bypass grafting

The Health Care Financing Administration began the Medicare Participating Heart Bypass Center Demonstration in 1991, in which hospitals and physicians are paid a single negotiated global price for all inpatient care for heart bypass patients. This article analyzed the changes in total and departmental direct variable costs during the 1991-1993 period using micro-cost data. The results indicate that all participating hospitals had significant reductions in total direct variable costs, after controlling for preoperative risk factors and postoperative outcomes. However, the patterns in cost reductions across major departments were different across hospitals. The cost reductions primarily came from nursing intensive care unit, routine nursing, pharmacy, and catheter lab.

Improving performance in public hospitals: a role for comparative costs?

In order to encourage performance improvements, the English government has set targets for acute hospitals to reduce their unit costs. Targets are based on analysis of costs across all acute hospitals. This policy has parallels with that of 'yardstick competition', advocated as a means to encourage efficiency in industries that lack competitive pressures. However, the prospect of cost improvements may not be realised in England. Firstly, there are insufficient incentives to respond appropriately to the provision of comparative cost information. Secondly, there is more than one index purporting to measure relative hospital costs. As comparison of unit costs is highly dependent on the measurement technique adopted, caution should be exercised when setting performance targets.

A decision analytical cost analysis of offering ECV in a UK district general hospital

OBJECTIVE

To determine the care pathways and implications of offering mothers the choice of external cephalic version (ECV) at term for singleton babies who present with an uncomplicated breech pregnancy versus assisted breech delivery or elective caesarean.

DESIGN

A prospective observational audit to construct a decision analysis of uncomplicated full term breech presentations.

SETTING

The North Staffordshire NHS Trust.

SUBJECTS

All women (n = 176) who presented at full term with a breech baby without complications during July 1995 and June 1997.

MAIN OUTCOME MEASURES

The study determined to compare the outcome in terms of the costs and cost consequences for the care pathways that resulted from whether a women chose to accept the offer of ECV or not. All the associated events were then mapped for the two possible pathways. The costs were considered only within the hospital setting, from the perspective of the health care provider up to the point of delivery.

RESULTS

The additional costs for ECV, assisted breech delivery and elective caesarean over and above a normal birth were 186.70 pounds sterling, 425.36 pounds sterling and 1,955.22 pounds sterling respectively. The total expected cost of the respective care pathways for "ECV accepted" and "ECV not accepted" (including the probability of adverse events) were 1,452 pounds sterling and 1,828 pounds sterling respectively, that is the cost of delivery through the ECV care pathways is less costly than the non ECV delivery care pathway.

CONCLUSIONS

Implementing an ECV service may yield cost savings in secondary care over and above the traditional delivery methods for breech birth of assisted delivery or caesarean section. The scale of these expected cost savings are in the range of 248 pounds sterling to 376 pounds sterling per patient. This converts to a total expected cost saving of between 43,616 pounds sterling and 44,544 pounds sterling for the patient cohort considered in this study.

Descriptive patient data as an explanation for the variation in average daily costs in intensive care

Intensive care patients require therapy that can vary considerably in type, duration and cost, so making it extremely difficult to predict patient resource use. Few studies measure actual costs; usually average daily costs are calculated and these do not reflect the variation in resource use between individual patients. The aim of this study was to analyse a data set of 193 critically ill adult patients to look for associations between routinely collected descriptive data and patient-specific costs. Regression analysis was used to explore any relationships between average daily patient-specific costs and the following variables: duration of intensive care unit stay, Acute Physiology and Chronic Health Evaluation II scores in the first 24 h, gender, age, mechanical ventilation at any point during the stay, postoperative status, emergency admission and mortality. Overall, this analysis explained 33.6% of the variation in average daily costs. The additional costs of an extra day of care, mechanical ventilation, an extra point on the Acute Physiology and Chronic Health Evaluation II score, and survival were obtained.

Cost inefficiency in Washington hospitals: a stochastic frontier approach using panel data

We analyze a sample of Washington State hospitals with a stochastic frontier panel data model, specifying the cost function as a generalized Leontief function which, according to a Hausman test, performs better in this case than the translog form. A one-stage FGLS estimation procedure which directly models the inefficiency effects improves the efficiency of our estimates. We find that hospitals with higher casemix indices or more beds are less efficient while for-profit hospitals and those with higher proportion of Medicare patient days are more efficient. Relative to the most efficient hospital, the average hospital is only about 67% efficient.

[Cost of diagnostic and therapeutic hemodynamic procedures: comparison with DRG reimbursement]

BACKGROUND

The cumulative costs of diagnostic and interventional procedures in the catheterization laboratory in public hospitals are still largely unknown, notwithstanding the present stress upon the cost-effectiveness issues in medicine.

METHODS

From January through April 2000 we have evaluated procedures in the catheterization laboratory of the Ravenna USL. Costs taken into consideration were the following: the mean cost of materials for each type of examination and of medications used for each patient, personnel costs, machinery mortgages' costs, ambulance transportation's costs, and general hospital expenditures. DRGs and reimbursements have been calculated on the basis of clinical indications and modalities of procedures.

RESULTS

During the evaluation period 268 patients have been studied. The procedures taken into consideration included: 135 coronary angiographies, 36 right and left catheterizations plus coronary angiography, 87 coronary angiographies plus percutaneous coronary intervention (PCI), 10 PCI. The total cost of diagnostic catheterization was Itl 1,226,000 (Euro 632) whereas that of each PCI (including stent implantation in 80% of cases) associated in 87 cases with coronary angiography was Itl 5,956,000 (Euro 3044). Patients with an acute coronary syndrome or heart failure were mostly studied during their first hospital stay; those with stable disease (stable angina, previous myocardial infarction, valvular heart disease or cardiomyopathy without heart failure) were studied during ordinary hospital admission or in the context of a day-hospital. DRGs and corresponding reimbursements for the different clinical situations were the following: unstable angina DRG 124 valued at Itl 6,180,000; stable angina DRG 125 valued at Itl 3,900,000; acute or recent myocardial infarction with or without complications DRG 121 or 122 valued at ItI 8,290,000 or Itl 5,900,000; heart failure in valvular heart disease or cardiomyopathy DRG 124 valued at Itl 6,180,000; valvular heart disease or cardiomyopathy DRG 125 valued at Itl 3,900,000. The DRG for a PCI is no. 112 valued at Itl 10,235,000.

CONCLUSIONS

The costs of diagnostic and interventional hemodynamic procedures were acceptable and proportional to the DRG-related reimbursements. Appropriately indicated procedures and their quick execution during the first hospital stay lead to global economic savings for the health care system and are also clinically advantageous for the individual patient.

Using computerised patient-level costing data for setting DRG weights: the Victorian (Australia) cost weight studies

Casemix-funding systems for hospital inpatient care require a set of resource weights which will not inadvertently distort patterns of patient care. Few health systems have very good sources of cost information, and specific studies to derive empirical cost relativities are themselves costly. This paper reports a 5 year program of research into the use of data from hospital management information systems (clinical costing systems) to estimate resource relativities for inpatient hospital care used in Victoria's DRG-based payment system. The paper briefly describes international approaches to cost weight estimation. It describes the architecture of clinical costing systems, and contrasts process and job costing approaches to cost estimation. Techniques of data validation and reliability testing developed in the conduct of four of the first five of the Victorian Cost Weight Studies (1993-1998) are described. Improvement in sampling, data validity and reliability are documented over the course of the research program, the advantages of patient-level data are highlighted. The usefulness of these byproduct data for estimation of relative resource weights and other policy applications may be an important factor in hospital and health system decisions to invest in clinical costing technology.

Variations in expenditure between adult general intensive care units in the UK

This paper presents the findings from the second pilot study of the cost block method in 21 adult general intensive care units (ICUs). The aim of this study was to explore the possible reasons for the variation in cost identified in a previous pilot study of 11 ICUs. Data were collected for the six cost blocks for the financial year 1996/97. Multivariate analysis showed that 93% of the variation in expenditure on disposable equipment could be explained by the number of ICU beds, the number of admissions and the presence of a high-dependency unit (HDU). Ninety-two per cent of the variation in nursing staff expenditure was explained by the number of ICU beds and the presence of an HDU. Hospital type and the number of patient days explained 76% of the variation in expenditure on consultant staff. Sixty-four per cent of the variation in drug and fluid expenditure was explained by the number of patient days.

Casemix funding for a specialist paediatrics hospital: a hedonic regression approach

This paper inquires into the effects that Diagnosis Related Groups (DRGs) have had on the ability to explain patient-level costs in a specialist paediatrics hospital. Two hedonic models are estimated using 1996/97 New Children's Hospital (NCH) patient level cost data, one with and one without a casemix index (CMI). The results show that the inclusion of a casemix index as an explanatory variable leads to a better accounting of cost. The full hedonic model is then used to simulate a funding model for the 1997/98 NCH cost data. These costs are highly correlated with the actual costs reported for that year. In addition, univariate regression indicates that there has been inflation in costs in the order of 4.8% between the two years. In conclusion, hedonic analysis can provide valuable evidence for the design of funding models that account for casemix.

Better Medicare Cost Report data are needed to help hospitals benchmark costs and performance

To evaluate costs and achieve cost control in the face of new technology and demands for efficiency from both managed care and governmental payers, hospitals need to benchmark their costs against those of other comparable hospitals. Since they typically use Medicare Cost Report (MCR) data for this purpose, a variety of cost accounting problems with the MCR may hamper hospitals' understanding of their relative costs and performance. Managers and researchers alike need to investigate the validity, accuracy, and timeliness of the MCR's cost accounting data.

Cost of nosocomial infection in Turkey: an estimate based on the university hospital data

Nosocomial infections significantly affect the resource needs of hospitalized patients. They increase the mortality and morbidity of affected individuals and expose hospital staff to increased risk of infection. To estimate the additional resources needed in the hospital sector to deal with such infections, a sample of infection cases was selected from the Hacettepe University Hospital in Ankara, Turkey. Each case of nosocomial infection was matched with a noninfected case after controlling for age, sex, clinical diagnosis etc. of the patients. The empirical results indicate that hospital infection increases the average hospital stay by about four days. Total cost of an infected case, on average, was found to be $442 higher than that for a matched noninfected case. Using this incremental cost estimate, projections for Turkey implies that the hospital sector had to spend an additional $48 million in 1995 for medical management of nosocomial infections. The benefit: cost ratio for a hospital-based infection control programme is found to be about 4.6. Clearly, a programme for preventing nosocomial infections will not only pay for itself but also will generate other direct and indirect benefits to patients and society as a whole.

The value of a hospitalist service: efficient care for the aging population?

BACKGROUND

We studied patients of a hospitalist teaching service and patients receiving routine private care (control subjects). We sought to evaluate whether inpatients cared for by an academic hospitalist service had lower lengths of stay and resource utilization rates.

METHODS

Using monthly hospital census data, 477 hospitalist cases and 1,160 control cases were selected by explicit criteria from the Medicaid population of a large, university-affiliated, community medical center between July 1, 1996, and June 30, 1997. Outcomes in hospitalist faculty patients were compared to those of control patients under the care of private providers.

RESULTS

Median length of stay was 4 days for control subjects and 3 days for the hospitalist service (p < 0.0001). Median total cost per case was $4,853 for control subjects and $4,002 for hospitalist patients (p < 0.0001). Only patients > or = 65 years old showed statistically significant reductions in both length of stay (p < 0.0001) and total cost (p = 0.002). Subspecialty consultation rates were 37.6% for control subjects and 16.6% for hospitalist cases (p < 0.0001). We noted increasing consultations for patients > or = 65 years old, especially in the control group (p = 0.001). No significant differences in mortality, 30-day readmissions, or interfacility transfers were observed.

CONCLUSIONS

Patients cared for by an academic hospitalist service that includes actively participating medical residents appear to have lower lengths of stay, total costs, and consultation rates than patients receiving routine private care. The reductions are largely observed among patients > or = 65 years old.

Modelling strategies for reducing pharmaceutical costs in hospital

OBJECTIVE

To describe drug utilization and cost in a large hospital and to compare the impact of different strategies on cost associated with drug prescribing.

DESIGN

Retrospective data on drug utilization and cost, linked to patient clinical data and prescriber data from November 1998 were analyzed and modelled.

MAIN OUTCOME MEASURES

Impact of different strategies for cost control.

SETTING

A large hospital in Sydney, Australia.

RESULTS

The mean cost of drugs per episode of care was 28 Australian dollars. Of all drug costs, 79% was incurred by medical units and 14% by surgical units. Oncology accounted for 42% and inpatients for 91% of drug costs. Although section-100 (S-100) drugs incurred a high cost (640 dollars) per episode of care, there were only 41 episodes where S-100 drugs (expensive, restricted drugs) were used, and the total cost of S-100 drugs was only 3.7% of the total cost to the hospital. Antibiotics were the most commonly prescribed drug category, prescribed in 14% of all hospital episodes, and accounting for 14% of total drug costs. Anti-ulcer drugs were the next most costly group, accounting for 7% of total drug costs. A 20% reduction in use of antibiotics would save four times that (233,832 dollars pa) of a 20% reduction in use of S-100 drugs (61,392 dollars pa).

DISCUSSION

Our study suggests that reducing inappropriate use of high volume drugs such as antibiotics could be more effective in optimising health facility drug budgets than attempts concentrating solely on reducing use of high cost drugs alone. Moreover our study suggests that systematic measurement of drug utilisation patterns is a key element of drug cost control strategies.

The costs of HIV/AIDS care at government hospitals in Zimbabwe

According to official figures, HIV infection in Zimbabwe stood at 700 000-1 000 000 in 1995, representing 7-10% of the population, with even higher expected numbers in 2000. Such high numbers will have far reaching effects on the economy and the health care sector. Information on costs of treatment and care of HIV/AIDS patients in health facilities is necessary in order to have an idea of the likely costs of the increasing number of HIV/AIDS patients. Therefore, the present study estimated the costs per in-patient day as well as per in-patient stay for patients in government health facilities in Zimbabwe with special emphasis on HIV/AIDS patients. Data collection and costing was done in seven hospitals representing various levels of the referral system. The costs per in-patient day and per in-patient stay were estimated through a combination of two methods: bottom-up costing methodology (through an in-patient note review) to identify the direct treatment and diagnostic costs such as medication, laboratory tests and X-rays, and the standard step-down costing methodology to capture all the remaining resources used such as hospital administration, meals, housekeeping, laundry, etc. The findings of the study indicate that hospital care for HIV/AIDS patients was considerably higher than for non-HIV/AIDS patients. In five of the seven hospitals visited, the average costs of an in-patient stay for an HIV/AIDS patient were found to be as much as twice as high as a non-HIV/AIDS patient. This difference could be attributed to higher direct costs per in-patient day (medication, laboratory tests and X-rays) as well as longer average lengths of stay in hospital for HIV/AIDS patients compared with non-infected patients. Therefore, the impact on hospital services of increasing number of HIV/AIDS patients will be enormous.