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PubMedDate not supplied

Resource allocation. The cost of care: two troublesome cases in health care ethics.

With the cost of health care rising rapidly, both physicians and administrators regularly face resource allocation decisions. Under these conditions of relative scarcity, the equitable and appropriate distribution of limited resources becomes an ethical as well as a financial issue. Through ethical analysis, physician executives can assist their physician colleagues and fellow administrators to find rationally defensible answers to questions regarding the distribution of limited resources. Six criteria are frequently "weighted in the balance" by ethicists when analyzing whether justice is served in the distribution of a limited resource: need, equality, contribution, ability to pay, effort, and merit. The authors argue that, from an ethical standpoint, the best single criterion upon which one can base an allocation decision is that of merit, defined as the potential to benefit from the investment of additional resources.

Decision Making↗
PubMed1998

Strategic cost accounting helps create a competitive edge.

The way healthcare cost allocation is conducted has changed radically over the past three decades. Although government regulations have required the step-down allocation method be used for determining Medicare payments, this method is limited in its ability to generate relevant cost data needed for management decision making and effective managed care contract rate negotiation. Deriving such data depends on using appropriate cost drivers and allocation methods. Of the four method, that may be used to allocate the costs of health are organization service departments to revenue departments--the direct method, the step-down method, the double-apportionment method, and the reciprocal method--the reciprocal method is the most sophisticated and may provide the most accurate representation of costs.

Accounting↗
PubMed1994

Costs of elective total hip arthroplasty during the first year. Cemented versus noncemented.

The cost-effectiveness of the Mallory Head (Biomet, Warsaw, IN) cemented versus noncemented total hip arthroplasty was determined as part of a randomized trial. Costs were assessed during the first postoperative year. In-hospital resource use was determined using a chart review of 60 randomly selected patients. Costs were determined using a fully allocated costing model. Outpatient resource use was determined using patient diaries, and appropriate costs were allocated for outpatient visits, admissions to hospital, and patient-borne costs. There was no difference in costs between the cemented and noncemented prostheses. The average cost of the initial hospitalization was $9,990 (1988 Canadian dollars), and outpatient costs during the first year were $1,137 (total cost during the first year was $11,127). The cost per quality adjusted life year was $27,139 during the first year and $8,031 during the first 3 years.

Ambulatory Care↗
PubMed1990

How to improve allocation of support service costs.

Better accounting for support service costs at outpatient facilities involves distinguishing between fixed and variable expenses, then creating separate budgets for them. To simplify this step, financial managers can create a surrogate, such as the number of patient visits, to represent service activity. Once this is completed, separated costs are allocated by using criteria that recognize short-term and long-term service use.

Budgets↗
PubMed2006

The interplay between shifts in biomass allocation and costs of reproduction in four grassland perennials under simulated successional change.

When perennial herbs face the risk of being outcompeted in the course of succession, they are hypothesized to either increase their biomass allocation to flowers and seeds or to invest more in vegetative growth. We tested these hypotheses in a 3-year garden experiment with four perennials (Hypochaeris radicata, Cirsium dissectum, Succisa pratensis and Centaurea jacea) by growing them in the midst of a tall tussock-forming grass (Molinia caerulea) that may successionally replace them in their natural habitat. In all species except for the short-lived H. radicata, costs of sexual reproduction were significant over the 3 years, since continuous bud removal enhanced total biomass or rosette number. To mimic succession we added nutrients, which resulted in a tripled grass biomass and higher death rates in the shorter-lived species. The simulated succession resulted also in a number of coupled growth responses in the survivors: enhanced plant size as well as elevated seed production. The latter was partly due to larger plant sizes, but mostly due to higher reproductive allocation, which in turn could be partly explained by lower relative somatic costs and by lower root-shoot ratios in the high-nutrient plots. Our results suggest that perennial plants can increase both their persistence and their colonization ability by simultaneously increasing their vegetative size and reproductive allocation in response to enhanced competition and nutrient influxes. These responses can be very important for the survival of a species in a metapopulation context.

Asteraceae↗
PubMedDate not supplied

Cost-effective allocation of government funds to prevent HIV infection.

Relative to the magnitude of the epidemic, government funds available for HIV prevention are scarce. To optimize use of funds, we applied a mathematical model of the cost of HIV prevention interventions using national data on HIV risk-group size and HIV prevalence. This procedure suggested an allocation of funds across nine interventions to potentially prevent an estimated 20,000 infections annually, compared with the estimated 7,300 infections potentially prevented through four interventions now recommended by the Centers for Disease Control and Prevention (CDC). The optimal allocation will involve a combination of intensive interventions for high-prevalence populations and inexpensive large-scale interventions for lower-prevalence populations.

Communicable Disease Control↗
PubMed1984

[Community short-term therapy of addicts as influenced by the identity of the insurer--the East Bremen example].

Following the agreement on the splitting of the burden of cost to be borne by the Federal German national health and pension insurance schemes, the cost of treatment of addicts has been divided between the relevant bodies. This division of cost has developed into an obstacle especially to the development of curative treatment in community areas close to patients' domiciles. The article analyses the example of the Addicts Department of the Bremen-Ost Central Hospital to demonstrate the partly absurd and illogical sequelae of various cost allocation regulations for the motivation and treatment of addicts.

Alcoholism↗
PubMed2003

Out of the quagmire of plant defense hypotheses.

Several hypotheses, mainly Optimal Defense (OD), Carbon: Nutrient Balance (CNB), Growth Rate (GR), and Growth-Differentiation Balance (GDB), have individually served as frameworks for investigating the patterns of plant defense against herbivores, in particular the pattern of constitutive defense. The predictions and tests of these hypotheses have been problematic for a variety of reasons and have led to considerable confusion about the state of the "theory of plant defense." The primary contribution of the OD hypothesis is that it has served as the main framework for investigation of genotypic expression of plant defense, with the emphasis on allocation cost of defense. The primary contribution of the CNB hypothesis is that it has served as the main framework for investigation of how resources affect phenotypic expression of plant defense, often with studies concerned about allocation cost of defense. The primary contribution of the GR hypothesis is that it explains how intrinsic growth rate of plants shaped evolutionarily by resource availability affects defensive patterns. The primary contribution of the expanded GDB hypothesis is that it recognizes the constant physiological tradeoff between growth and differentiation at the cellular and tissue levels relative to the selective pressures of resource availability, including explicitly taking into account plant tolerance of damage by enemies. A clearer understanding of these hypotheses and what we have learned from investigations that use them can facilitate development of well-designed experiments that address the gaps in our knowledge of plant defense.

Adaptation, Physiological↗
PubMed1995

Analysis of the cost of training residents in a community health center.

BACKGROUND: Currently one federal program funds community health centers (CHCs) to provide services in underserved communities, and a second supports development of primary care teaching programs. Teaching CHCs respond to both program's goals, but their development is hindered by restrictive regulations of the two programs and lack of information regarding cost. METHOD: Spreadsheet software was used to develop a model that allocates cost components of a CHC-based residency. Productivity and staffing data from a teaching CHC program were used to estimate the cost of training and its sensitivity to selected variables. Data from 1992 through 1994 were collected from the family practice residency sponsored by the Brown University School of Medicine, the Memorial Hospital of Rhode Island, and the Blackstone Valley Community Health Center. RESULTS: An educational supplement of $13.21 per visit would be required for the program to be cost-neutral relative to staff. The cost of outpatient training for a resident averaged $13,935 per year. Residents would "break even" if they saw patients at 19% above the average rate recommended by the residency review committee. If staff physicians instead of residents had provided the patient care, the CHC would have saved $6,171 per resident. Additional savings from improved physician recruiting and decreased turnover would increase the value of the program to the CHC. Cost was most sensitive to resident productivity, precepting arrangements, nursing staff support, and staff turnover. CONCLUSION: Developing graduate medical education programs in CHCs can be a cost-effective way of increasing the pool of appropriately trained primary care physicians and increasing health care access for underserved populations. If teaching CHCs are to expand, provisions will need to be made for adequate reimbursement of their costs.

Community Health Centers↗
PubMed2000

Physician impact on the total cost of care.

BACKGROUND AND OBJECTIVES: Physicians' efforts at cost containment focus on decreased resource utilization and reduced length of stay. Although these efforts appear to be appropriate, little data exist to gauge their success. As such, the goal of this study is to determine trauma service cost allocations and how this information can help physicians to contain costs. MATERIALS AND METHODS: The authors analyzed the costs for 696 trauma admissions at a level I trauma center for fiscal year 1997. Data were obtained from the hospital costing system. Costs analyzed were variable direct, fixed direct, and Indirect costs. Together, the fixed and indirect costs are referred to as "hospital overhead." Total Cost equals variable direct plus fixed direct plus indirect costs. RESULTS: The mean variable, fixed, and indirect costs per patient were $7,998, $3,534, and $11,086, respectively. Mean total cost per patient was $22,618. CONCLUSION: The 35% variable direct cost represents the percentage of total cost that is typically under the immediate influence of physicians, in contrast to the 65% of total cost over which physicians have little control. Physicians must gain a better understanding of cost drivers and must participate in the operations and allocations of institutional fixed direct and indirect costs if the overall cost of care is to be reduced.

Adult↗
PubMed1991

A new approach to optimal selection of services in health care organizations.

A new reimbursement policy adopted by Medicare in 1983 caused financial difficulties for many hospitals and health care organizations. Several organizations responded to these difficulties by developing systems to carefully measure their costs of providing services. The purpose of such systems was to provide relevant information about the profitability of hospital services. This paper presents a new method of making hospital service selection decisions: it is based on an optimization model that avoids arbitrary cost allocations as a basis for computing the costs of offering a given service. The new method provides more reliable information about which services are profitable or unprofitable, and it provides an accurate measure of the degree to which a service is profitable or unprofitable. The new method also provides useful information about the sensitivity of the optimal decision to changes in costs and revenues. Specialized algorithms for the optimization model lead to very efficient implementation of the method, even for the largest health care organizations.

Accounting↗
PubMed2006

Step up to the step-down method.

CFOs can use the Medicare cost report step-down method to allocate costs by service line and then develop an income matrix. With an income matrix and tiered expenses by service areas, CFOs can direct corrective action to improve financial performance. The cost data derived from the step-down method can also be used to set prices and to negotiate third-party contracts.

Accounting↗
PubMed1999

Perceptions on the influence of cost issues on quality improvement initiatives: a survey of Saudi health care managers.

OBJECTIVE: To determine (i) the cost issues which Saudi health care managers perceive to influence overall quality improvement initiatives, and (ii) the relationship between health care managers' satisfaction with such initiatives and their perceptions regarding the influence of different cost issues on the overall quality improvement initiatives. DESIGN: Data were collected through a self-administered questionnaire in August and September 1996 in the Western Region of the Kingdom of Saudi Arabia. The participants were 236 health care managers of private hospitals. Data was analysed using the chi2 test. RESULTS: Less than one-half of the health care managers surveyed were satisfied with their hospitals' overall quality improvement initiatives. The issue that was rated to have the most influence on such initiatives was the 'cost of malpractice lawsuits' followed by the budget for the quality assurance programme'. The issue that was perceived to have the least influence on overall quality improvement initiatives was 'data on cost allocation'. Of the 17 cost issues included in the study, eight had statistically significant influence on the health care managers' satisfaction with their hospitals' overall quality improvement initiatives. The most statistically significant was the 'measurement of the costs of quality-related actions'.

Attitude of Health Personnel↗
PubMed1999

Use of a cost accounting system to evaluate costs of a VA special program.

BACKGROUND: The Department of Veterans Affairs (VA) established six mobile clinics to provide care for rural veterans. Each was operated by a parent VA Medical Center (VAMC). OBJECTIVE: To describe the use of a cost-accounting system which does not provide costs at the service or patient level to determine the costs of the mobile clinics. RESEARCH DESIGN: Costs per visit were compared among the mobile clinics with the parent VAMCs and with simulated fixed-location clinics. Cost data came from VA's Centralized Accounting for Local Management (CALM) data. Utilization data came from VA's outpatient file. RESULTS: Information was obtained from the VAMCs' fiscal services to reallocate costs among the CALM subaccounts to generate cost data that was comparable among the mobile clinics. Costs per visit for the mobile clinics were twice as high as those of the parent VAMCs. Costs per visit would be lower at fixed-location clinics unless the volume were substantially less than that provided by the mobile clinics. CONCLUSION: Differences between cost allocations for accounting purposes and research are likely to necessitate adjusting cost accounting data for research purposes. Fortunately, information from the accountants or primary data can lead to a cost database which is appropriate for research evaluations. In the mobile clinics study, the analysis of cost accounting data led to the conclusion that mobile clinics were not a cost-effective way in which to provide care to rural veterans.

Accounting↗