Understanding the variation in costs among HIV primary care providers

Abstract

The paper uses a hybrid cost model to identify the determinants of cost variation among programs that offer early intervention services to people living with HIV and AIDS in the US. The model combines the effects of input price and output volume measures from traditional economic cost functions with institutional factors based on program and patient characteristics on the cost of providing primary medical care and support services to people living with HIV and AIDS. The impact of economic factors conforms to conventional theory and reveals the potential for cost savings through greater economies of scale and substitutability of low cost for high cost labor inputs. Similarly, programs that use staff more efficiently and share an affiliation with other organizations exhibit lower costs than more labor intensive and non-affiliated providers. However, patient characteristics are equally important determinants of program spending. Minority patients use services less frequently and generate fewer costs, while patients facing fewer barriers to care, such as those with Medicaid coverage, access services more frequently and incur higher costs. Uninsured patients also generate higher costs, but the higher costs associated with this subgroup more likely stem from a lack of continuity in care and, thus, poorer health status and greater healthcare needs when treatment is sought. Injection drug users require less expensive services, but access services more frequently than other risk groups, while patients with an AIDS diagnosis and those who are co-infected with hepatitis C require more program resources. By separately estimating the economic and institutional determinants of program costs, the study highlights the relative importance of factors that are amendable to internal cost control efforts versus those that reflect the resource needs of local communities.