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Prospective budgeting for home care: making titration work.

OBJECTIVE: To provide a model for prospective budgeting for home care that is plausible, coherent, flexible, and sufficiently tractable that it can serve as a template for practical decision making and to clarify what would be the data requirements and statistical framework to calibrate the model. METHODS: Methods used are standard risk-neutral expected value theory, cost benefit analysis, and the conditional logistic probability model. RESULTS: A simple but effective prospective budgeting model that provides analytic scaffolding for a practical decision support system for home care case managers, consultants, and program evaluators that can improve program equity, efficiency, and effectiveness. DISCUSSION: The author criticizes the well-known Titration Budgeting Model of Weissert, Chernew, and Hirth in terms of its logical and operational problems but then goes on to develop a framework within which the goals of the titration model can be met and home care resources can be more efficiently allocated.

Aged↗

A mixed-integer goal programming model for nursing service budgeting.

This paper presents a mixed-integer goal programming model for expense budgeting in a hospital nursing department. The model incorporates several different objectives based upon such considerations as cost containment and providing appropriate nursing hours for delivering quality nursing care. Also considered are possible trade-offs among full-time, part-time and overtime nurses on weekdays as well as weekends. The budget includes vacation, sick leave, holiday, and seniority policies of a hospital and various constraints on a hospital nursing service imposed by nursing unions. The results are based upon data from a study hospital and indicate that the model is practical for budgeting in a hospital nursing department.

Budgets↗

Markets, budgets, and health care cost control.

Health care cost control is often debated in terms of markets versus bureaucracies. Market restraints are limited in practice by the goal of providing access to care. Therefore, effective cost control requires budgeting. Experience from budgeting for other services should put health care cost control in perspective: The goal should not be rational and efficient allocations, merely better ones. The important choice is not between markets and bureaucracy, but rather which decisions should be made by physicians and which by budgeters, and how to ensure that professional judgment is applied where most important.

Budgets↗

Global budgeting in Germany: lessons for the United States.

In 1993 Germany implemented significant health reform legislation that, among other things, strengthened the global budgeting of physicians and instituted global budgeting of pharmaceutical expenditures. German physician expenditures are now capped at the growth in income of members of the sickness funds, in contrast to prior years, in which some growth above a targeted level was allowed. For the first time, dental services also are subject to the budget cap. The new reform legislation also limits growth in pharmaceutical expenditures by increasing the level of copayments and by placing physicians as a group at financial risk for growth over the limit. This paper examines the effect of these reforms during the first year and offers lessons for reform of the U.S. system.

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Effects of budgeting on health care services in Dutch hospitals.

BACKGROUND: In 1983 hospital budgeting was introduced in the Netherlands. We studied the effect of the enactment of budgeting on the efficiency and effectiveness of health care. METHODS: In four different age groups, the admission rate, length of stay, type and number of surgical inpatient procedures, and hospital mortality were measured in all short-term hospitals from 1977 through 1988. Data were standardized by age and sex. RESULTS: For the total population, the hospital admission rate and the operation rate decreased after 1982. However, for the subgroup of patients beyond the age of 65 both rates are still on the rise, but the increase in the admission rate for elderly patients has slowed significantly since 1983. The tendency toward a shorter length of stay, together with the diminished admission rates, led to a 22% decrease in standardized hospital days between 1982 and 1988. The severity of the operations increased. Most operations performed on elderly patients were aimed at improving the quality of their lives rather than lengthening their life expectancy. The hospital mortality rate decreased in all age groups. CONCLUSIONS: The findings suggest that modern medicine in the Netherlands has become more efficient and more effective. Better health care for older patients was achieved within the same budget. The tendency toward more efficiency by hospitals has been reinforced since 1983.

Adolescent↗

Drug use in relation to clinical activities as an instrument for prospective drug budgeting. The Belgian experience.

In an effort to control escalating health expenditures, especially in hospitals, many countries are planning or experimenting with prospective budgeting systems. Belgium is no exception and has recently introduced, with some success, limited fixed charges per hospital admission and/or per hospitalisation day for laboratory tests and radiographic investigations. More recently, the focus has shifted to hospital drug expenditures, which have shown high growth rates over the past few years. Until now, such expenditures have been reimbursed on a fee-for-service system, often with limited out-of-pocket charges for hospitalised patients. In order to curb the growth of drug expenditures, it is appropriate to investigate whether the financing of hospital drugs through a prospective budgeting system could be a feasible solution. Therefore, we constructed a database of over 270 000 admissions from a sample of 23 Belgian general and teaching (university) hospitals for the year 1991. Data were obtained from the official Minimum Basic Data Set or Résumé Clinique Minimum, which contains summarised clinical and administrative information, plus detailed expenditures (including medications) for each hospital stay. This information allowed us to categorize each stay into an appropriate diagnosis-related group (DRG). Our first descriptive analysis identified a number of major variables that influenced patients' drug expenditures: all-patient DRG (APDRG), age, disease severity, length of stay in an intensive care unit, emergency admission, death during hospitalisation, and hospital type (teaching or general). A covariance analysis was then performed on all hospital stays combined, and separately on surgical and medical stays. The results indicated that these variables taken together account for between 56.5 and 76.3% of drug expenditures in medical and surgical stays, respectively, with the major variance explained by differences in APDRG category. However, when the data were disaggregated according to major diagnosis category, a large degree of heterogeneity in the explained variance was observed. In patients with drug use- and alcohol-related disorders, 5.2% of drug billings/expenditures were attributable to the APDRG, and the corresponding figure in patients undergoing circulatory system surgery was 84%. This means that, if DRGs are used to define a global prospective drug budget for a hospital, using the hospital's historical case mix as a weighting factor, we should pay particular attention to the hospital profile because the predictive power of such a system could be relatively low in some hospitals. Consequently, we need to construct larger confidence intervals for hospitals in which historical drug expenditures have low predictive power, or search for additional explanatory variables for expenditures in these hospitals.

Belgium↗

Targeting Medicare in the Federal budget: an annual event?

When it came time to reduce the 1991 federal budget, it was not surprising that the budget cutters set their sights on Medicare to reduce the deficit. But why does Medicare appear to be such a major target at budget time, and when are "cuts" really cuts?

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Advancing mission in the marketplace. Integrated strategic planning and budgeting helps a system remain accountable.

In the late 1980s Holy Cross Health System (HCHS), South Bend, IN, began to implement a revised strategic planning and budgeting process to effectively link the system's mission with its day-to-day operations. Leaders wanted a process that would help system employees internalize and act on the four major elements articulated in the HCHS mission statement: fidelity, excellence, empowerment, and stewardship. Representatives from mission, strategic planning, and finance from the corporate office and subsidiaries examined planning and budgeting methods. From the beginning, HCHS leaders decided that the process should be implemented gradually, with each step focusing on refining methodology and improving mission integration. As the process evolved. HCHS developed a sequence in which planning preceded budgeting. The system also developed a variety of educational and collaborative initiatives to help system employees adapt to the organization's change of direction. One critical aspect of HCHS's ongoing education is an ethical reflection process that helps participants balance ethical considerations by viewing an issue from three perspectives: social vision, multiple responsibility, and self-interest.

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The challenge of operating within staffing budgets on the maternity unit at New England Memorial Hospital despite a fluctuating census.

PROJECT: Improve staffing policies and procedures on the Maternity unit to reduce the chronic practice of exceeding the budget for nursing hours per patient day (NHPPD). Principals: Maternity Service nursing staff and unit secretary. Process Improvement Method: Plan-Do-Check-Act. Timeline: Begun: March 1991. RESULTS reported here: FY 1992 (October 1, 1991-September 30, 1992). KEY FINDINGS: Patient census fluctuated dramatically from shift to shift. To staff the unit during peak times, nurses from other units were floated in, but many lacked sufficient obstetrics training. Conversely, at slack times, OB nurses were floated to other units. All the above factors resulted in nursing dissatisfaction as well as the Maternity unit exceeding its nurse staffing budget by 25 percent. Improvements: Unit-based staffing, which eliminated floating and increased ownership on the unit, was implemented, along with other changes in operations, policies, and procedures. A charge nurse position was created and implemented to coordinate activities between shifts. Staffing policies and procedures were clarified and updated. RESULTS: Nursing hours per patient day are now on budget, and nursing morale is also improved.

Bed Occupancy↗

Global budgeting in the OECD countries.

Many of the Organization for Economic Cooperation and Development countries use global budgeting to control all or certain portions of their health care expenditures. Although the use of global budgets as a cost-containment tool has not been implemented in the United States in any comprehensive way, recent health care reform initiatives have increased the need for research into such tools. In general, the structure, process, and effectiveness of global budgets vary enormously from country to country, in part because the underlying social welfare system of each country is unique.

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Using global budgets in the United States.

This article discusses the range of possibilities regarding how global budgets for health care spending might be used in the U.S. and the global budget designs that provide the most and least cost control. The article is a condensation of one chapter of the author's recently published special report, Getting Ready for Global Budgets.

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Strategic plan creates a blueprint for budgeting.

Effective healthcare organizations develop budgets that reflect and support a strategic plan. Senior managers set a framework that expresses the hospital's future strategic objectives. The budget enables executives to determine which specific service lines are profitable or unprofitable. Administrators and clinicians at all levels are involved in the budgeting process.

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Using PCs for effective case-mix based budgeting.

Precise statistical budgeting remains an underused cost-control technique in healthcare organizations, despite the increasing need for such techniques resulting from national movement toward prospective pricing and managed care. As revenues are capped, the use of precise case-mix based statistical budgeting to reduce unit costs has become one of the few strategies available to financial managers to assure profitability. The use of personal computers with database and spreadsheet software can facilitate effective case-mix based budgeting.

Budgets↗

Zero-base budgeting in the federal government: a case study.

The implementation of a zero-base budgeting system in Federal government agencies, instituted by President Carter in 1977, yielded quite different results, not only among the agencies but within specific departments as well. The experience of the Public Health Service with this budgeting process is documented and analyzed in this article. Though the individual PHS agencies generally felt that ZBB is a poor budgetary tool, the author's principal claims are that the technique was misused and that its application may well be inappropriate for the entire budget of a large political system. The result, according to Professor Herzlinger, was that those individuals who should have been the prime beneficiaries of the ZBB process were most disappointed by it.

Budgets↗

Flexible budget system a practical approach to cost management.

Flexible budgeting is a relatively simple way to introduce department heads to the complex world of cost management. Managers use a flexible budget system to set financial targets for their department and track progress towards those goals. This system gives instant feedback on a department's performance in terms of staffing hours and dollars. Full cooperation is key to a flexible budgeting system's success. Department managers must be involved in every step of the process--from educating and training staff members to determining cost variables.

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Case study. Using case-mix information for budgeting.

The following case study illustrates the use of case-mix information in the budget process. Using case-mix data from a management information system such as PBCS, hospital managers can obtain the assistance of those who influence the delivery of care to develop a sound statistical budget upon which to allocate available resources. Such a budget should be based on honest goals which can be used to evaluate actual accomplishments.

Budgets↗

Comparison of drugs use according to surgical procedures as instrument for budgeting and improvement of prescription efficiency.

Making an effort to control health expenditure's escalation, especially in hospital, the Belgian government is planning and experimenting with prospective budgeting. A research financed by the Ministry of Public Health allows us to point out the structure of the pathologies treated as well as other variables included in the medical MBDS like urgency, number of diseased systems, ... and explains a high percentage of the variance (62%) in drugs expenditures of the surgical cases. These variables have to be used in order to calibrate hospital drugs budgets. The Interdisciplinary Centre in Health Economics has developed tools to compare drugs prescriptions by type of surgical procedures in order to help hospitals to evaluate their performance should such drugs budgets be progressively introduced.

Anti-Bacterial Agents↗

Running on empty: the state budget crisis worsens.

This issue brief reviews the status of state budget shortfalls and their growing impact on the Medicaid program. It describes the magnitude of the shortfalls, the forces behind them, and how states have responded with spending cuts and tax increases. It also discusses how long the budget crisis is expected to continue and what budget balancing options remain for fiscal year 2003.

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