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PubMed1986

Including health status in Medicare's Adjusted Average Per Capita Cost capitation formula.

Actuarial factors currently comprising Medicare's HMO capitation formula, the Adjusted Average Per Capita Cost (AAPCC), are considered by many researchers to be inadequate as predictors of future period health care costs. While it is often suggested that the formula should incorporate beneficiary health status, no measure of health status suitable for this purpose has yet been identified. The authors present initial results from a study of 1,934 randomly selected Medicare beneficiaries in Michigan. Beneficiaries were surveyed to obtain data on several alternative measures of health status. Medicare claims were used to estimate beneficiary health care costs for periods before and after the survey. In regressions on future period Medicare payments, equations including the AAPCC factors plus a health status measure achieved R2 values ranging from 0.013 to 0.072, depending on the health status measure, compared with an R2 value of 0.003 for the equation with AAPCC factors alone.

Activities of Daily Living↗
PubMed1987

Short-term responses of hospitals to the DRG prospective pricing mechanism in New Jersey.

Short-term responses of hospitals to the New Jersey prospective payment system, which uses Diagnosis Related Groups (DRGs) to establish rates of compensation for all payers, were examined in this study. The sample consisted of 84 New Jersey hospitals that were subject to prospective payment and a comparison group of 76 hospitals. Hospitals comprising the comparison group located in eastern Pennsylvania, were reimbursed retrospectively. Regression equations, which included independent variables to control for market supply and demand conditions, were estimated for the cost per admission, cost per day, length of stay; and cases treated. The results indicate that increases in the cost per admission and cost per day were lower (P less than 0.05) in hospitals subject to the all payer DRG system than in those institutions that were reimbursed retrospectively. In addition, the results suggest that most of the cost savings attributed to the New Jersey DRG system are due to a reduction in the average length of stay. The paper concludes with policy implications.

Cost Allocation↗
PubMed1996

Financial pressure and competition. Changes in hospital efficiency and cost-shifting behavior.

Using data from the American Hospital Association and the Medicare program, the authors analyzed the effects of financial pressure and market competition on changes in several measures of performance of 1,435 acute care hospitals between 1987 and 1989. Over the observation period, the least profitable hospitals constrained their growth in total expenses to half that for the most profitable hospitals (13.3% versus 27.6%) by limiting the growth of their staffs and their total assets. These changes were associated with a reduction in inefficiency of 1.8% (11.2%) compared with a very slight increase in inefficiency for the highest profit group. Similarly, hospitals in highly competitive markets controlled expenses relative to those in the least competitive areas. However, they also experienced slower revenue growth than did less competitive hospitals so that, in relative terms, their profit rates fell. The authors found no evidence to suggest that financial pressures created by either low profits or market competition resulted in hospitals engaging in cost-shifting. The authors conclude that health care reforms or market forces that put financial pressures on hospitals can result in cost-containment and improved efficiency without significant cost-shifting.

Cost Allocation↗
PubMed2002

Instituting a routine varicella vaccination program in Canada: an economic evaluation.

BACKGROUND: After licensing of a varicella vaccine in Canada in 1998, Health Canada commissioned a study to evaluate options for a vaccination program. The evaluation of a program of vaccination of 12-month-old children, with and without a catch-up program for susceptible 12-year-olds, is presented here. METHODS: An economic model was developed simulating the expected experience, with and without vaccination, of cohorts of children susceptible to varicella. The cohorts were simulated for 70 years, and infection and complication rates were calculated along with the attendant costs, with an assumed vaccine cost of $60. RESULTS: With an 85% coverage rate vaccination is expected to reduce the number of chickenpox cases by approximately two-thirds and varicella-related complications by up to 75%. The overall costs of varicella are expected to drop by >$4 million (1998 Canadian dollars) per 100,000 eligible vaccinees, but costs to the health care system are expected to increase by >$2 million. From the health care system perspective, vaccination would cost approximately $42 per discounted case avoided. INTERPRETATION: Routine varicella vaccination would likely substantially reduce the overall costs of managing chickenpox but would result in an increase in health care expenditures. These findings are consistent with evaluations in other countries.

Adolescent↗
PubMed1998

Economic costs of expanded criteria donors in renal transplantation.

BACKGROUND: The organ shortage has increased interest in the use of "expanded criteria" donors (ECDs). Although much has been written concerning the clinical outcomes associated with the use of such donors, little has been published concerning the financial results associated with their use. METHODS: A retrospective cost identification study of recipients of kidneys from expanded criteria cadaveric donors was used. RESULTS: Of a total of 78 cadaveric renal transplants in fiscal year 1995, there were 38 kidneys (49%) transplanted from ECDs. Graft survival at 1 year was not statistically different between patients who received kidneys from ECDs and those who received non-ECD kidneys (84% vs. 85%, respectively). Length of stay (P < 0.05), serum creatinine at 1 year after transplantation (P < 0.01), and the percentage of patients requiring hemodialysis (P < 0.05) were all higher among patients who received kidneys from ECDs. Cold ischemic time was significantly longer in patients who received kidneys from ECDs (31.4+/-12 hr vs. 24.0+/-9 hr; P < 0.05). The total average and median costs were $12,190 and $10,911 higher in recipients of kidneys from ECDs as compared with non-ECD controls (P < 0.01). Stepwise linear regression demonstrated that length of stay was the major clinical determinant of total costs; only the use of antilymphocyte induction was otherwise significantly associated. When kidneys from ECDs were transplanted into "high-risk" recipients (age > 60 or retransplant patient), the average total costs were $15,311 more than when kidneys from ECDs were transplanted into non-high-risk patients (n=16 and 21, respectively; P < 0.05) and $20,680 more than when a non-ECD, non-high-risk pairing was undertaken (n=26; P < 0.05). CONCLUSIONS: Kidney transplantation with organs from ECDs is significantly more expensive than with organs from non-ECDs, even in the face of similar graft survival rates. Further study is needed to determine the cost-effectiveness of renal transplantation utilizing kidneys from ECDs vis-a-vis hemodialysis.

Adult↗
PubMedDate not supplied

The Florida Department of Health and the Florida Association of County Health Department Business Administrators: a model of successful collaboration to sustain operational excellence.

The Florida Association of County Health Department Business Administrators, Inc., is an organization of public health business professionals working collaboratively with the state's department of health administrative offices in promoting best practices throughout local county health departments. This article discusses a number of joint initiatives, past and present, that are benefiting public health services in Florida. In addition, mentoring and training, contract management, cost allocation, and financial reporting, among others, are "hot button" topics of interest to all states in promoting improved administration of their public health programs.

Florida↗
PubMed2007

Financial impact of hand surgery programs on academic medical centers.

BACKGROUND: This study analyzes the financial performance of hand surgery in the Department of Surgery at the University of Michigan. This analysis can serve as a reference for other medical centers in the financial evaluation of a hand surgery program. METHODS: Fiscal year 2004 billing records for all patients (n = 671) who underwent hand surgery procedures were examined. The financial data were separated into professional revenues and costs (relating to the hand surgery program in the Section of Plastic Surgery) and into facility revenues and costs (relating to the overall University of Michigan Health System). Professional net revenue was calculated by applying historical collection rates to procedural and clinic charges. Facility revenue was calculated by applying historical collection rates to the following charge categories: inpatient/operating room, clinic facility, neurology/electromyography, radiology facilities, and occupational therapy. Total professional costs were calculated by adding direct costs and allocated overhead costs. Facility costs were obtained from the hospital's cost accounting system. Professional and facility incomes were calculated by subtracting costs from revenues. RESULTS: The net professional revenue and total costs were 1,069,836 and 1,027,421 dollars, respectively. Professional operating income was 42,415 dollars, or 3.96 percent of net professional revenue. Net facility revenue and total costs were 5,500,606 and 4,592,534 dollars, respectively. Facility operating income was 908,071 dollars, or 16.51 percent of net facility revenues. CONCLUSIONS: While contributing to the academic mission of the institution, hand surgery is financially rewarding for the Department of Surgery. In addition, hand surgery activity contributes substantially to the financial well-being of the academic medical center.

Academic Medical Centers↗
PubMed2000

The economics of quality--a practical approach.

How much time and money should we devote to quality activities? Will the results be worth the resources which we invest? How can we calculate the return on our quality investments? These questions are raised by managers, clinicians and policy-makers, but they are rarely answered, which may explain the loss of credibility of some quality activities. This paper gives examples of the cost of poor quality, describes and illustrates a simple method for quality costing, and discusses the economics of quality. It considers why there is little research and teaching about the subject, and proposes how managers and clinicians can take a more economically-informed approach to quality in public healthcare.

Cost Allocation↗
PubMed1999

The role of the workplace in the production and containment of health costs: the case of stress-related disorders.

Workplaces vary enormously in the amount of harmful stress they produce, even within specific economic sectors. Stress of certain kinds and at certain levels tend to produce health harms and costs that are borne not only by individual employees and employers but also by families and society at large. Variations in stress levels within economic sectors can be traced to variations in management practices that govern key conditions of work involving demand, effort, control and reward. The costs of stress-related disorders produced by adverse governance practices are transferred outside the workplace in varying degrees. The actual extent of this cost transfer depends on policies and programs within the workplace. We can characterize workplaces according to a typology in which the key dimensions are commitment to abate harm through participatory management practices and the effectiveness and efficiency of harm containment through programs such as employee assistance and health promotion. The most health-promoting and cost-avoiding workplaces foster high control, high reward conditions and support employees with employee assistance and health promotion programs. The policy implications of this observation are drawn out.

Absenteeism↗
PubMed2005

Extending McNemar's test: estimation and inference when paired binary outcome data are misclassified.

McNemar's test is popular for assessing the difference between proportions when two observations are taken on each experimental unit. It is useful under a variety of epidemiological study designs that produce correlated binary outcomes. In studies involving outcome ascertainment, cost or feasibility concerns often lead researchers to employ error-prone surrogate diagnostic tests. Assuming an available gold standard diagnostic method, we address point and confidence interval estimation of the true difference in proportions and the paired-data odds ratio by incorporating external or internal validation data. We distinguish two special cases, depending on whether it is reasonable to assume that the diagnostic test properties remain the same for both assessments (e.g., at baseline and at follow-up). Likelihood-based analysis yields closed-form estimates when validation data are external and requires numeric optimization when they are internal. The latter approach offers important advantages in terms of robustness and efficient odds ratio estimation. We consider internal validation study designs geared toward optimizing efficiency given a fixed cost allocated for measurements. Two motivating examples are presented, using gold standard and surrogate bivariate binary diagnoses of bacterial vaginosis (BV) on women participating in the HIV Epidemiology Research Study (HERS).

Biometry↗
PubMed1996

Cost-effectiveness of coronary angioplasty versus medical treatment: the impact of cost-shifting.

BACKGROUND: Coronary angioplasty (PTCA) offers improved symptom control over medical treatment in patients with stable angina and single-vessel disease. However, it is uncertain if PTCA is more cost-effective. Cost-shifting could also influence the provision of PTCA. METHODS: Data from the only randomised trial comparing PTCA to medical therapy (ACME study) were used with costs from an Australian teaching hospital to estimate the costs and freedom from angina in 100 patients over three years. The incremental cost-effectiveness of PTCA, and the potential for cost-shifting were also examined. RESULTS: Although the total cost of treating 100 patients over three years with PTCA ($678,978) was higher than a medical strategy ($631,078), PTCA was more cost-effective ($10,930 versus $12,682 per patient free of angina). The incremental cost-effectiveness of PTCA ($3875 per extra patient free of angina) was also substantially less than the cost of the medical strategy. These should be considered crude estimates as they were based on limited data on resource use. The hospital could reduce costs by pursuing a medical strategy, but 54% of the savings would result from shifting the cost of treating patients to the Federal Government and patients. By performing PTCA on privately insured rather than Medicare patients, the hospital could shift $29,876 per 100 patients to the Federal government and private insurance funds. CONCLUSIONS: From society's perspective, PTCA may be more cost-effective than a medical strategy. However, the financial interests of the hospital are best served by limiting PTCA or restricting PTCA to privately insured patients. Cost-shifting may have a major impact on the provision of PTCA. The costs of providing medical services need to be weighed against the cost of not providing them.

Angioplasty, Balloon, Coronary↗
PubMedDate not supplied

Effect of outpatient treatment of febrile neutropenia on the risk threshold for the use of CSF in patients with cancer treated with chemotherapy.

OBJECTIVES: Febrile neutropenia (FN) in patients with cancer treated with chemotherapy has traditionally been managed with inpatient broad-spectrum antibiotics until the infection and neutropenia have resolved. A newer strategy is outpatient oral or intravenous antibiotics in selected patients after an initial hospitalization. We sought to determine these costs, both overall and relative to those of traditional management, and the optimal role of prophylactic colony-stimulating factor (CSF) in patients at greatest risk for FN. METHODS: Existing economic decision models were modified by incorporating a treatment strategy for FN in which patients are classified as high- and low-risk according to criteria described by Talcott. Low-risk patients were assumed to be treated as outpatients. Overall costs with the revised economic model were assessed and sensitivity analyses were performed. RESULTS: The costs of an episode of FN were estimated as 1) no CSF: dollar 13,355; 2) CSF with hospitalization for FN: dollar 8677; and 3) CSF with risk stratification and outpatient management in low-risk patients: dollar 8188. The risk threshold for the cost-effective use of CSF was only slightly lower with outpatient treatment. When all patients with FN are treated as inpatients and the cost of hospitalization is dollar 1750/day the risk threshold for FN at which prophylactic CSF becomes cost-effective is 16%. It is 15% when low-risk patients are treated as outpatients. CONCLUSIONS: Outpatient treatment slightly decreases the risk threshold for FN at which prophylactic CSF becomes cost-effective. The limited economic effect of this strategy may be because the patients who were at greatest risk of complications had significantly longer lengths of stay and accounted for most of the hospitalization costs.

Ambulatory Care↗
PubMed1990

Financing long-term care. An insurance-based approach.

A joint public-private insurance program is the best approach to resolving the problem of financing long-term care. In this report, we describe one possible approach in detail. A modest expansion of the current (ie, after repeal of the Medicare Catastrophic Coverage Law of 1988) Medicare benefit for persons needing relatively short-term nursing home and home care services would be a first step. For those with extended long-term service needs, a non-means tested, publicly funded program with joint federal-state financing and administration would provide coverage after a substantial elimination period and with an income-related copayment. Private long-term care insurance purchased through employers before retirement or in the periretirement period, through use of income or equity accumulated in life insurance, pension funds, or home ownership, would be used to fund the exclusionary period or copayments of the public program by those who wish to have greater protection for income or assets. The role of Medicaid would be limited to paying for the deductible, copayments, and initial long-stay expenses of those with low incomes and limited assets.

Cost Allocation↗
PubMed1992

Public-private partnerships: the Connecticut model for financing long-term care.

Responses to the growing crisis in long-term care financing have included efforts to negotiate partnerships between the private and public sectors for the purpose of developing innovative models for long-term care insurance. One such set of models has been encouraged by support from the Robert Wood Johnson Foundation's "Long Term Care Insurance Program" grants. The Connecticut Partnership for Long Term Care uses a cooperative approach to encourage the development of private sector long-term care insurance products that are integrated with Medicaid eligibility determinations. The Connecticut model is described, accompanied by a history of its development, and a comparison is made with other models currently under consideration by national policy analysts.

Connecticut↗
PubMed1997

Is managed care good or bad for geriatric medicine?

This article uses clinical vignettes to examine the simultaneous dangers and opportunities that managed care brings to geriatric medicine. While the complex multifactorial syndromes prevalent in older adults might at first glance seem poorly handled under capitation, we argue that the incentives provided under existing delivery systems can be equally perverse. These improper incentives have arisen from (1) the fee-for-service payment mechanism itself, which has spawned a subspecialty culture ill-equipped to deal with the primary care needs of older adults and (2) the fragmentation of funding sources for geriatric care into two major payers (Medicare and Medicaid), encouraging providers to focus on cost shifting rather than the logical integration of services. The result has been a delivery system that provides little impetus to maximize functional status, the central goal of modern geriatric medicine. Because physicians may assume financial risk under global capitation, and because the cost of caring for a frail older adult is inversely related to functional status, managed care offers the potential to align the goals of cost containment with the goals of modern geriatric medicine. Physicians should have a substantive voice in the design and implementation of these systems.

Activities of Daily Living↗