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PubMed2001

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.

Cost Allocation↗
PubMed1991

Assessment issues and the cost of schizophrenia.

A variety of factors must be considered in developing assessment procedures to evaluate the cost of schizophrenia. One is the definitional problem: definitions of schizophrenia have varied over time and space, with a tendency in recent years to narrow the concept substantially. These changes in definition, which reflect the increasing scientific rigor in psychiatry, make the task of establishing base rates, assessing morbidity and mortality, and ultimately determining the cost of schizophrenia more difficult. Efforts to assess the cost of schizophrenia must also take into account the fact that its cost is not simply monetary, nor can it be conceptualized using only the cost of treatment. The overall cost of schizophrenia also includes social and psychological costs experienced by patients and family members. The concept of "the overall cost" is discussed--the sum of costs to the patient (including suffering, loss of productivity, and mortality), the cost to the family (including suffering and loss of productivity), and cost of treatment (including medications, rehabilitation services, day hospitals, inpatient facilities, etc.). At present, standardized techniques are available only for assessing some aspects of patient costs, while assessments of family and treatment costs are relatively underdeveloped. Over the long run, reduction of the overall cost of schizophrenia is most likely to come from investment in research. The most effective way to reduce the overall cost is to develop improved treatments, to identify the pathophysiology and etiology of schizophrenia, and ultimately to identify ways to prevent it from occurring.

Comprehensive Health Care↗
PubMed1998

Trauma service cost: the real story.

OBJECTIVE: The objective was to define and characterize the costs associated with trauma care at a level I trauma center. Once the costs were identified, attending physician-led teams were designed to reduce costs within each cost center. SUMMARY BACKGROUND DATA: The location and magnitude of the costs on a trauma service remain largely unknown. Focused cost-containment strategies remain difficult to implement because the expected return on these interventions is unknown. METHODS: Cost center data were reviewed for the 40 major DRGs admitted for the first 6 months of the fiscal years 1996 and 1997. Data were obtained from the hospital finance department using the Transition Systems Inc. accounting system. We focused on variable direct costs, those that vary with patient volume (e.g., staff nursing expense and medical/surgical supplies). To address issues of inflation, pay raises, and changing costs, a proxy value was created for 1996 and costs were held constant for the 1997 calculation. The major services that constitute cost centers identified in the system were nursing, surgical, pharmacy, laboratory, radiology, and emergency services. Attendings were assigned to develop and oversee customized cost-reduction modalities specific to each cost center. The cost-reduction modalities used to achieve significant savings were as follows: nursing, case management approach focusing on early discharge; surgical, meeting with operating room (OR) purchasing to modify expensive behavior patterns; pharmacy, integrating clinical pharmacist with direct attending support; laboratory, enforcing protocol for lab draws; radiology, increasing the use of emergency room ultrasound and accepting outside x-rays; and emergency services, 24-hour in-house attending staff to reduce emergency room time. The surgical and emergency services cost centers predominately generate costs by the length of time care is delivered in that area. RESULTS: For each period, data from 363 patients were compared. Mean length of stay decreased between the study periods from 8.72 to 7.06 days, while the average injury severity score was unchanged. Together, these cost centers constituted 87.4% of the total cost of care delivered. Significant cost reduction was achieved in all six variable cost centers: nursing (24%), surgical (5%), pharmacy (57%), laboratory (27), radiology (7%), and emergency (36). The mean cost per case was reduced by 25%. CONCLUSIONS: Identification of the true cost centers and directed attending surgeon involvement are essential to the development and implementation of a successful cost-reduction process.

Cost Allocation↗
PubMed1978

Education as a hidden cost in ambulatory care.

Since nearly a quarter of this nation's hospitals' outpatient and emergency rooms engage in medical education, it is of critical importance for administrators to determine the extent to which medical training influences the operational costs and efficiency of patient care for those services in their facilities. A computer simulation model has been developed at a midwest adult medical clinic to study the effects of ambulatory medical training on clinic operations. The model is capable of showing changes in the facility without disrupting the work flow and thus reduces the problems associated with long-term data collection. Various staffing patterns, both with and without medical training, were compared for the operational effects, patient convenience, and costs. The article offers probability distributions based on actual clinic experience. The research identifies and evaluates the trade-offs that must be considered when medical education is incorporated in an ambulatory program. Since both the faculty and students must take time away from direct patient care for consultation, more clinic time is required, causing staff costs to increase and patient care efficiency to decrease. The model demonstrates that when teaching loads increase, the faculty become less available to residents which results in resident inefficiency and longer patient waiting time. These operational consequences demonstrate the basic management problems of the need for balance between the demand for clinical teaching time and the demand for efficient service delivery in a solid ambulatory care/teaching program.

Adult↗
PubMed1996

Performance measurement: integrating quality management and activity-based cost management.

The development of an activity-based management system provides a framework for developing performance measures integral to quality and cost management. Performance measures that cross operational boundaries and embrace core processes provide a mechanism to evaluate operational results related to strategic intention and internal and external customers. The author discusses this measurement process that allows managers to evaluate where they are and where they want to be, and to set a course of action that closes the gap between the two.

Accounting↗
PubMed1980

Real costs of dental care in private and public practices.

The Chattanooga Project was a publicly funded program providing dental care to indigent children by private practice and public fixed and mobile clinics. Previous studies of the project have shown that the cost of providing dental care in public practices was lower than in private practices, and that this difference was not attributable either to the social characteristics of the children nor to the type of care provided. This article analyzes potential economic causes of the cost differences arising from the input-output relationships in each mode. Because the number and frequency of service types and productivity rates differed among the modes, a standard service package was developed. Productivity and costs were recalculated on the basis of this standard set of services. The results were that with services and productivity held constant the differences between private and public costs increased. The implications are that resources in the private practices were earning significantly higher returns than those in the public practices, and that public practices can offer viable economic alternatives to private practices in the provision of dental care.

Adolescent↗
PubMed1982

The measurement of hospital case mix.

This paper describes the design and preliminary results of research being conducted by Blue Cross of Western Pennsylvania to measure hospital case mix. The model of patient management used in this research interrelates symptoms, diagnosis and treatment. Analyses of detailed patient data have indicated that patient classifications that are based on discharge diagnosis, singly or in combination with other variables such as secondary or multiple diagnoses, procedure and age, do not necessarily result in patient categories that require similar management or similar hospital services. Patients who are clinically similar, and even the same patient, can have a number of diverse, but appropriate, reasons for being in the hospital, and their use of hospital resources in each hospital episode will differ accordingly. The implications of including all reasons for hospitalizing these patients under the same rubric are clear: the resultant category would not be homogeneous with respect to resource use or hospital costs. Any case-mix index constructed using such categories as its basis could not only be misleading, but could also be financially damaging or extremely profitable to selected hospitals if used in hospital reimbursement. Both the model presented and preliminary analysis will be useful in designing other strategies for research and application in the area of case mix.

Abstracting and Indexing↗
PubMed1983

The design of case-based hospital payment systems.

Reimbursing hospitals on the basis of treated cases, as in the New Jersey diagnosis-related groups (DRG) experiment, is equivalent to a centrally set pricing scheme, with all of its inherent difficulties. In addition to the problems of appropriate case definition, it is not obvious how hospitals should be classified to form reference groups for cost determination. Because empirically derived cost schedules are based on observed treatment patterns and resource use, they reflect variations in clinical appropriateness and quality and in resource use efficiency that characterize the system from which the data are drawn. If case-based schemes are to incorporate desirable performance incentives, they must be much better specified and take into account the complexity of hospital behavior. This article identifies the basic components of case-based systems of hospital reimbursement and discusses the analytic and empiric problems involved in their design.

Cost Allocation↗