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PubMed1992

Incorporating practice costs into the Resource-Based Relative Value Scale.

Practice costs (not including liability insurance costs) account for approximately 41% of the payment for medical and surgical services in the Medicare Fee Schedule. Unlike the portion of the fee schedule that compensates physicians for their work, the practice cost portion of the Medicare Fee Schedule is not resource-based; it is based instead on historical charges. As a result, physicians can recover their practice costs in less time and with less effort (measured in work relative value units) by performing invasive procedures and tests than by providing evaluation and management services. The Physician Payment Review Commission has proposed, in some detail, a method for incorporating practice costs into the Medicare Fee Schedule. The method involves allocating indirect costs on the basis of physician work plus direct costs. We find, using their own analytical framework, that indirect costs should rather be allocated on the basis of time. But to better serve the goal of incentive neutrality, and to make practice cost payments more equitable, the payment a physician receives for practice costs should be based not on service mix and volume, but on characteristics of the physician's practice more closely related to practice costs: for example, whether the physician has an office, or whether the physician practices alone or in a group.

Cost Allocation↗
PubMedDate not supplied

Forum: allocation, misallocation and reallocation of health care resources. Interview by Merit Kimball.

Calling cost containment efforts to date mostly "appearance ... that is not what the game is about...," a Harvard medical economist sets forth his views about how America has spent--and should be spending--its health care dollars. He suggests directions the country might take toward establishment of a national health insurance policy administered by the states.

Cost Allocation↗
PubMed2004

Cost of primary health care in universal insurance at Health Center 16, Bangkok Metropolitan Administration.

The purpose of the present study was to illustrate the cost of services in health promotion and prevention, out patient (OPD) and dental care in Health Center (No. 16) Bangkok Metropolitan Administration. The analysis of the cost components could be used as key data for future planning, budgeting and resources preparing for the short and long terms. The cost centers were categorized to be executive, services and supporting unit. The simultaneous equation method was employed to allocate all costs from other associated cost centers to the service unit. The unit cost per visit was 372.76 baht, while the unit cost per capitation was 532.83 baht. The unit cost of health promotion and prevention per capitation was 288.95 baht, whereas the unit cost of OPD care per capitation was 183.47 baht and the unit cost of dental care per capitation was 55.37 baht. The labor cost accountedfor 83.67 per cent, capital cost 6.09 per cent and material cost 10.24 per cent of the total cost. Unit costs of OPD and dental care were lower than the proposed budget while the unit cost of health promotion and prevention was higher. This could be due to some patients seeking OPD care from King Chulalongkorn Hospital instead, while the health promotion and prevention offering was more than that normally offered in other Health Centers. The improvement of labor efficiency and the decrease of labor cost would be the short and long run strategies respectively.

Community Health Centers↗
PubMed1996

Cost effectiveness and the allocation of therapies in a treating population.

The purpose of this paper is to challenge the uncritical use of incremental cost-outcomes ratios as decision variables. A scenario is presented which describes conditions under which increasing costs per unit of outcome prevail. Marginal costs increase as the proportion of patients treated under a given therapy increases. If the health system's objective is to maximise health benefits then patients will be switched until the marginal benefits per dollar expended are equal between the 2 therapies. In an example where the costs of the new therapy are greater, for a given proportion of patients treated, patients are switched from the existing to the new therapy until an equilibrium is achieved in the allocation of therapies among the treating population. At this point, the overall costs of treatment are at a minimum. This outcome could only be predicted if the underlying cost-outcomes functions are known and the consequent patterns of therapy substitution and cost impacts assessed. The paper concludes by raising concerns as to the role of incremental cost-outcomes ratios as decision variables where increasing costs may be expected to prevail and there is failure to consider the implications of these increasing costs in formulary decision making. If increasing costs are present then conventional cost-outcomes and incremental cost-outcomes ratios are of limited utility as decision variables in the choice of therapy options.

Cost-Benefit Analysis↗
PubMed2005

Cost of autologous peripheral blood stem cell transplantation: the Norwegian experience from a multicenter cost study.

High-dose therapy with autologous blood progenitor cell support is now routinely used for patients with certain malignant lymphomas and multiple myeloma. We performed a prospective cost analysis of the mobilization, harvesting and cryopreservation phases and the high-dose therapy with stem cell reinfusion and hospitalization phases. In total, 40 consecutive patients were studied at four different university hospitals between 1999 and 2001. Data on direct costs were obtained on a daily basis. Data on indirect costs were allocated to the specific patient based on estimates of relevant department costs (ie the service department's costs), and by means of predefined allocation keys. All cost data were calculated at 2001 prices. The mean total costs for the two phases were US$ 32,160 (range US$ 19,092-50,550). The mean total length of hospital stay for two phases was 31 days (range 27-37). A large part of the actual cost in the harvest phase was attributed to stem cell mobilization, including growth factors, harvesting and cryopreservation. In the high-dose chemotherapy phase, the most significant part of the costs was nursing staff. Average total costs were considerably higher than actual DRG-based reimbursement from the government, indicating that the treatment of these patients was heavily subsidized by the basic hospital grants.

Antineoplastic Agents↗
PubMed2006

Cost accounting and public reimbursement schemes in Spanish hospitals.

The objective of this paper is to provide a description and analysis of the main costing and pricing (reimbursement) systems employed by hospitals in the Spanish National Health System (NHS). Hospitals cost calculations are mostly based on a full costing approach as opposite to other systems like direct costing or activity based costing. Regional and hospital differences arise on the method used to allocate indirect costs to cost centres and also on the approach used to measure resource consumption. Costs are typically calculated by disaggregating expenditure and allocating it to cost centres, and then to patients and DRGs. Regarding public reimbursement systems, the impression is that unit costs are ignored, except for certain type of high technology processes and treatments.

Accounting↗
PubMedDate not supplied

Use of cost-effectiveness analysis in health-care resource allocation decision-making: how are cost-effectiveness thresholds expected to emerge?

BACKGROUND: An increasing number of health-care systems, both public and private, such as managed-care organizations, are adopting results from cost-effectiveness (CE) analysis as one of the measures to inform decisions on allocation of health-care resources. It is expected that thresholds for CE ratios may be established for the acceptance of reimbursement or formulary listing. OBJECTIVE: This paper provides an overview of the development of and debate on CE thresholds, reviews threshold figures (i.e., cost per unit of health gain) currently proposed for or applied to resource-allocation decisions, and explores how thresholds may emerge. DISCUSSION: At the time of this review, there is no evidence from the literature that any health-care system has yet implemented explicit CE ratio thresholds. The fact that some government agencies have utilized results from CE analysis in pricing/reimbursement decisions allows for retrospective analysis of the consistency of these decisions. As CE analysis becomes more widely utilized in assisting health-care decision-making, this may cause decision-makers to become increasingly consistent. CONCLUSIONS: When CE analysis is conducted, well-established methodology should be used and transparency should be ensured. CE thresholds are expected to emerge in many countries, driven by the need for transparent and consistent decision-making. Future thresholds will likely be higher in most high-income countries than currently cited rules of thumb.

Cost-Benefit Analysis↗
PubMed2006

The cost-effectiveness of a child nutrition education programme in Peru.

This article reports impact and cost results from a health facility-based nutrition education programme targeting children less than 2 years of age in Trujillo, Peru. Key elements of the programme included participative complementary feeding demonstrations, growth monitoring sessions and an accreditation process. Data were collected from six intervention and six control health facilities to measure utilization and costs associated with the intervention. To calculate the unit costs of services, these costs are allocated using activity-based costing. To measure the effects of the intervention, 338 children were followed through household surveys at regular intervals from birth until the age of 18 months. The intervention had a clear positive impact both on the use of nutrition-related services and on children's growth outcomes. Children in the intervention areas made 17.6 visits to health facilities in the first 18 months of life, compared with 14.1 visits for children in the control areas (P < 0.001). This pattern holds true for all socioeconomic groups. The intervention prevented 11.1 cases of stunting per 100 children. In multivariate logistic regression analysis, children in the intervention were 0.33 times as likely to be stunted as the controls (P = 0.002). The marginal cost of the intervention - including external costs, training, health education materials and extra travel and equipment - is 6.12 US dollars per child reached and 55.16 US dollars per case of stunting prevented. The estimated marginal cost of the intervention per death averted is 1952 US dollars.

Adult↗
PubMed1985

Hospital cost accounting: implementing the system successfully.

To successfully implement a cost accounting system, certain key steps should be undertaken. These steps include developing and installing software; developing cost center budgets and inter-cost center allocations; developing service item standard costs; generating cost center level and patient level standard cost reports and reconciling these costs to actual costs; generating product line profitability reports and reconciling these reports to the financial statements; and providing ad hoc reporting capabilities. By following these steps, potential problems in the implementation process can be anticipated and avoided.

Accounting↗
PubMed1995

[The EDP systems for internal hospital cost accounting].

Computer systems for hospital cost accounting are in widespread use in foreign hospitals. In Norway, few hospitals have adopted such systems. Two products are currently being developed in Norway: KosPa (a system for calculating DRG costs) and Nirvana (a system intended for presentation of costs, rather than for overhead allocations and cost calculations). Both of these systems will have rather limited uses. If an organization needs a more comprehensive system with a wider selection of features, there are no Norwegian alternatives. It should be possible to implement a foreign system without too much trouble.

Accounting↗
PubMed1996

Contrasting RCC, RVU, and ABC for managed care decisions. A case study compares three widely used costing methods and finds one superior.

To obtain cost data needed to improve managed care decisions and negotiate profitable capitation contracts, most healthcare provider organizations use one of three costing methods: the ratio-of-costs-to-charges method, the relative value unit method, or the activity-based costing method. Although the ratio-of-costs to charges is used by a majority of provider organizations, a case study that applied these three methods in a renal dialysis clinic found that the activity-based costing method provided the most accurate cost data. By using this costing method, healthcare financial managers can obtain the data needed to make optimal decisions regarding resource allocation and cost containment, thus assuring the longterm financial viability of their organizations.

Capitation Fee↗