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PubMed1988

Market power, monopsony, and health insurance markets.

This paper details the potential adverse welfare consequences of monopsony power in health insurance markets. It is shown that the exercise of monopsony power in the medical services market can augment the monopoly rents of an insurer with market power in the insurance market, while at the same time inefficiently reducing supplier welfare. Cost-sharing by not-for-profit firms and its welfare consequences are also analyzed.

Blue Cross Blue Shield Insurance Plans↗
PubMed1992

DRGs: the road to hospital efficiency.

In this paper, the effects of using diagnosis-related groups (DRGs) as the basis of a hospital funding mechanism and within a global budgeting mechanism are reviewed. Most forthcoming is the indeterminate effect of DRGs as a funding mechanism. By controlling only the price of hospital care, such systems remain vulnerable to compensatory increases in patient throughout, cost shifting and patient-shifting. Whether the use of DRGs has substantially reduced hospital cost per case is also not clear cut. Effects on patient outcome have not been adequately assessed. At this stage, use of DRGs within a system of global budgeting will simply focus attention on the current average costs of treating cases without consideration of whether such average costs represent efficient clinical practice. Efficient clinical practice is better established through use of less sophisticated techniques, such as clinical budgeting and cost-effectiveness analysis. The failure of more global budgeting in the past has been that patient outcome has not been monitored. Data on outcome are crucial to determining efficiency. Once efficient clinical practice is established through budgeting, DRGs could be calculated according to efficiency criteria rather than current average cost.

Australia↗
PubMed1992

The crisis in health care cost in the United States: some implications for radiation oncology.

This communication reviews the increasing cost of medical care in the USA (13% of GNP in 1995) and the associated lack of access to care for 35 million citizens. Factors affecting cost and access are presented, including where the increases are seen. The resulting effects on the Federal government, private industry, the patient, and the physician are noted. The failure of a current mechanism of control of cost is illustrated as are the views of patients and physicians. The portion of radiation oncology devoted to palliative care is discussed for its potential to reduce costs by $150-$250 million through the elimination of excessive treatments and thereby contribute to the solution of excessive cost of care.

Attitude to Health↗
PubMed1988

Cost and procedure implications of thrombolytic therapy for acute myocardial infarction.

A computer model was developed to analyze the costs to Medicare and the potential procedure volume associated with alternative strategies for treatment of acute myocardial infarction. The expected cost per case to Medicare for initial hospitalization was approximately $7,200 for conventional treatment, $7,900 for treatment with intravenous streptokinase and $8,400 for treatment with recombinant tissue-type plasminogen activator (rt-PA). The expected cost per case for use of streptokinase or rt-PA in combination with cardiac catheterization performed either emergently or at 48 h was in excess of $11,000. These cost estimates do not reflect the cost of thrombolytic drugs themselves because Medicare has not adjusted its hospital payment rates to take account of such costs. Although both streptokinase and rt-PA will increase costs to Medicare for hospitalizations for acute myocardial infarction, both agents will do so at a reasonably low cost per additional life saved--between $50,000 and $60,000. Emergency and 48 h catheterization strategies are considerably less cost-effective. Regarding procedures, this model suggests that for every 1,000 patients treatment with streptokinase will result in an additional 76 coronary angioplasty procedures and 26 coronary artery bypass operations, whereas treatment with rt-PA will result in an additional 122 angioplasty procedures and 43 bypass operations compared with conventional treatment. Thrombolytic treatment is thus likely to increase substantially the volume of cardiac catheterization, coronary angioplasty and coronary artery bypass surgery performed in the United States.

Computers↗
PubMed2005

Reducing the costs of phase III cardiovascular clinical trials.

BACKGROUND: The pharmaceutical industry spends approximately 26.4 billion dollars annually for research and development (4.1 billion dollars in cardiovascular products). We compared pharmaceutical companies' planned resource use and costs in Phase III cardiovascular trials and identified cost-saving strategies. METHODS AND RESULTS: We developed 2 case scenarios (a 17,000-patient, open-label acute coronary syndromes [ACS] trial and a 14,500-patient, double-blind congestive heart failure [CHF]) trial and surveyed 6 pharmaceutical experts about expected resources (e.g., number of sites, case report form [CRF] pages, and monitoring visits) needed for the trials. Using a validated model, we estimated costs under each expert's assumptions. ACS trial costs averaged 83 million dollars (median, 67 million dollars; range, 57 dollars to 158 million dollars) and 142 million dollars (median, 135 million dollars; range, 102 dollars to 207 million dollars) for the CHF trial. Site-related expenses (site management and payments) were >65% of total costs for both trials. In sensitivity analyses, total costs were reduced >40% by simultaneously reducing CRF pages, monitoring visits, and site-payment amounts but maintaining the numbers of patients and sites. CONCLUSIONS: With a set number of sites and patients, the most efficient way to reduce trial costs and still meet the trial's scientific objectives is to reduce management complexity. Modest changes in management parameters release significant monies to answer more research questions.

Clinical Trials, Phase III as Topic↗
PubMed2004

Applying a new conceptual framework to evaluate tuberculosis surveillance and action performance and measure the costs, Hillsborough County, Florida, 2002.

PURPOSE: Tuberculosis (TB) elimination is an important US public health goal and improving the performance of TB surveillance and action and reducing the costs will help achieve it. But, there exists the need to better evaluate the performance and measure the costs. METHODS: We pilot tested an evaluation strategy in Hillsborough County, Florida using a conceptual framework of TB surveillance and action with eight core and four support activities. To evaluate performance, we developed indicators and validated their accuracy, usefulness, and measurability. To measure the costs, we obtained financial information. RESULTS: In 2001, Hillsborough County reported 78 (7%) of the 1145 Florida TB cases. Nineteen (24%) were previously arrested. While 13 (68%) of the 19 were incarcerated during the 2 years prior to being reported, only 1 (5%) of 19 was reported from the jail. From 111 TB suspects, 219 (25%) of 894 sputum specimens were inadequately collected. Of the $1.08 million annual budget, 22% went for surveillance, 29% for support, and 49% for action. CONCLUSIONS: This conceptual framework allowed measurement of TB surveillance and action performance and cost. The evaluation performed using it revealed missed opportunities for detection of TB cases and wasted resources. This conceptual framework could serve as a model for evaluation of TB surveillance and action.

Cost Allocation↗
PubMed2003

Why did employee health insurance contributions rise?

We explore the causes of the dramatic rise in employee contributions to health insurance over the past two decades. In 1982, 44% of those who were covered by their employer-provided health insurance had their costs fully financed by their employer, but by 1998 this had fallen to 28%. We discuss the theory of why employers might shift premiums to their employees, and empirically model the role of four factors suggested by the theory. We find that there was a large impact of falling tax rates, rising eligibility for insurance through the Medicaid system, rising medical costs, and increased managed care penetration. Overall, this set of factors can explain more than one-half of the rise in employee premiums over the 1982-1996 period.

Cost Allocation↗
PubMedDate not supplied

Hospitalization costs of total knee arthroplasty with a continuous femoral nerve block provided only in the hospital versus on an ambulatory basis: a retrospective, case-control, cost-minimization analysis.

BACKGROUND AND OBJECTIVES: After total knee arthroplasty (TKA), hospitalization may be shortened by allowing patients to return home with a continuous femoral nerve block (CFNB). This study quantified the hospitalization costs for 10 TKA patients receiving ambulatory CFNB versus a matched cohort of 10 patients who received CFNB only during hospitalization. METHODS: We examined the medical records (n = 125) of patients who underwent a unilateral, primary, tricompartment TKA with a postoperative CFNB by 1 surgeon at one institution in an 18-month period beginning January 2004. Each of the 10 patients discharged home with an ambulatory CFNB (cases) was matched with a patient with a hospital-only CFNB (controls) for age, gender, body mass index, and health status. Financial data were extracted from the hospital microcosting database. RESULTS: Nine patients with ambulatory CFNB (cases) were discharged home on postoperative day (POD) 1 and 1 on POD 4. Of the controls, 3 were discharged home on POD 3, 6 on POD 4, and 1 on POD 5. The median (range) costs of hospitalization (excluding implant and professional fees) was US dollars 5,292 (US dollars 4,326-US dollars 7,929) for ambulatory cases compared with US dollars 7,974 (US dollars 6,931-US dollars 9,979) for inpatient controls (difference = US dollars 2,682, 34% decrease, P < .001). The total charges for hospitalization, the implant, and professional fees was US dollars 33,646 (US dollars 31,816-US dollars 38,468) for cases compared with US dollars 39,100 (US dollars 36,096-US dollars 44,098) for controls (difference = US dollars 5,454, 14% decrease, P < .001). CONCLUSIONS: This study provides evidence that ambulatory CFNB for selected patients undergoing TKA has the potential to reduce hospital length of stay and associated costs and charges. However, the current study has significant inherent limitations based on the study design. Additional research is required to replicate these results in a prospective, randomized, controlled trial and to determine whether any savings exceed additional CFNB costs such as from complications, having caregivers provide care at home, and additional hospital/health care provider visits.

Aged↗
PubMed2001

Improving performance in public hospitals: a role for comparative costs?

In order to encourage performance improvements, the English government has set targets for acute hospitals to reduce their unit costs. Targets are based on analysis of costs across all acute hospitals. This policy has parallels with that of 'yardstick competition', advocated as a means to encourage efficiency in industries that lack competitive pressures. However, the prospect of cost improvements may not be realised in England. Firstly, there are insufficient incentives to respond appropriately to the provision of comparative cost information. Secondly, there is more than one index purporting to measure relative hospital costs. As comparison of unit costs is highly dependent on the measurement technique adopted, caution should be exercised when setting performance targets.

Benchmarking↗
PubMed1997

Unintended effects of a cost-containment policy: results of a natural experiment in Germany.

In this paper empirical evidence for substitution processes caused by the budget for drugs prescribed by office-based physicians is provided. Due to substitution processes in a natural experiment the number of referrals and hospital admissions increased significantly after the introduction of a drug budget in Germany. This leads to additional direct and indirect cost for the health care system.

Budgets↗
PubMed1999

Using social health insurance to meet policy goals.

Social health insurance, with contributions based on incomes and access to services on need is being considered as an option for health care finance in many countries. The argument in this paper starts from the premise that the choice of health care financing mechanisms should start with a clear focus on policy goals, with different options judged against the extent to which these are met. These are likely to include objectives of access to care for those in need, quality of care, incentives for efficient provision and cost control. Different systems will meet the objectives of mobilising resources, providing insurance against risk and redistribution resources to differing extents. It is argued that a particular problem in health care finance is shifting rights to resources over time. It is also important to be clear about the distinction between affordability of and payment mechanisms for health care. The choice of funding mechanisms may have little effect on other policy goals, such as economic development. However, they may differ in the degree to which they allow specific health policy goals to be met. Different mechanisms for collecting and managing funds, and for paying for services are discussed. The paper concludes with concerns that too much emphasis is placed on structures and not how they work, that a lack of cost control may be a serious risk in developing social health insurance and that it is important to have clear mechanisms for setting priorities if policy goals are to be met.

Cost Allocation↗
PubMed1989

Weighting case mix groups: the fatal flaw in resource intensity weights.

Resource Intensity Weights (RIWs) for Case Mix Groups (CMGs) are calculated using American Diagnosis Related Group (DRG) weights and Canadian average-length-of-stay data. However, this calculation does not actually "Canadianize" DRG weights; it only serves to randomize them. This article demonstrates the lack of the all-important relationship between RIWs and CMG costs by using simplified graphical examples. Notwithstanding the deficiencies of RIWs, the concept of weighted CMGs is fundamentally sound. Accordingly, until MIS-level reporting is widely implemented and a sufficiently large and reliable domestic database has been accumulated, it may not be entirely inappropriate for Canadian health care institutions to use unadulterated American DRGs for case mix analysis and fiscal planning.

Canada↗
PubMedDate not supplied

Principles of cost analysis.

In medicine, reimbursement changes that block cost shifting are rendering revenue-based strategies less productive. Under these conditions, cost-benefit and cost-effective analyses are being touted as more effective financial tools. The anesthesia literature reflects misunderstanding and misapplication of the terminology, and principles of cost analysis are reviewed in this essay. Current evidence suggests that anesthesia costs are a minor part of the problem of controlling health care expenditures. However, the ability to perform cost analysis is essential for anesthesia groups to secure their position in health care.

Anesthesia↗