Case-mix Approach Research Articles

A qualitative approach to understanding the drivers of unequal receipt of definitive therapy for Black men with prostate cancer in Massachusetts.

Despite mandated insurance coverage since 2006 and robust health infrastructure in urban settings with high concentrations of minority patients, race-based disparities in prostate cancer (PCa) treatment persist in Massachusetts. In this qualitative study, the authors sought to identify factors driving inequities in PCa treatment in Massachusetts. Four hospitals offering PCa treatment in Massachusetts were selected using a case-mix approach. Purposive sampling was used to conduct semistructured interviews with hospital stakeholders. Additional interviews were conducted with representatives from grassroots organizations providing PCa education. Two study staff coded the interviews to identify major themes and recurrent patterns. Of the 35 informants invited, 25 participated in the study. Although national disparities in PCa outcomes were readily discussed, one half of the informants were unaware that PCa disparities existed in Massachusetts. Informants and grassroots organization representatives acknowledged that patients with PCa are willing to face transportation barriers to receive treatment from trusted and accommodating institutions. Except for chief equity officers, most health care providers lacked knowledge on accessing or using metrics regarding racial disparities in cancer outcomes. Although community outreach was recognized as a potential strategy to reduce treatment disparities and engender trust, informants were often unable to provide a clear implementation plan. This statewide qualitative study builds on existing quantitative data on the nature and extent of disparities. It highlights knowledge gaps in recognizing and addressing racial disparities in PCa treatment in Massachusetts. Improved provider awareness, the use of disparity metrics, and strategic community engagement may ensure equitable access to PCa treatment. Despite mandated insurance and urban health care access, racial disparities in prostate cancer treatment persist in Massachusetts. This qualitative study revealed that, although national disparities were acknowledged, awareness about local disparities are lacking. Stakeholders highlighted the importance of ancillary services, including translators, rideshares, and navigators, in the delivery of care. In addition, whereas hospital stakeholders were aware of collected equity outcomes, they were unsure whether and who is monitoring equity metrics. Furthermore, stakeholders agreed that community outreach showed promise in ensuring equitable access to prostate cancer treatment. Nevertheless, most interviewed stakeholders lacked clear implementation plans.

A Decision Tree Model-based Study on the Grouping of Hospitalization Expenses of Type 2 Diabetes Patients in a Traditional Chinese Medicine Hospital

Objective To discover the case-mix approach for TCM treatment of dominant disease type 2 diabetes patients and to analyze the hospitalization expense standards for different combinations of patients to provide theoretical references for better participation of TCM hospitals in the DRG payment method as well as reasonable regulation of hospitalization expenses for TCM type 2 diabetes patients in the future. Methods Case data were collected from 1,171 patients discharged with a principal diagnosis of type 2 diabetes from September 2021 to April 2023 from a tertiary care Chinese medicine hospital in Tianjin. Univariate and multivariate stepwise regression analyses determined categorical node variables. The decision tree model was used to perform case combinations and to analyze the expense standards and weights of different groups of disease types. Results The number of days of hospitalization, conditions in admission, and whether complicated cardiovascular and cerebrovascular diseases are the main factors affecting the hospitalization expense of type 2 diabetes patients in Chinese medicine hospitals, and the decision tree model was used to group the patients to form nine groups of patient case combinations. The standard of hospitalization expense for each combination was set reasonably. Conclusion The grouping results are more satisfactory, and the grouping scheme and hospitalization expense standards can provide a scientific basis for DRG grouping, adopting differentiated expense management, and improving the medical resource efficiency in TCM hospitals.

Opioid prescriptions and patients' health services utilization and cost before and during the COVID-19 pandemic: an exploratory population-based administrative data analysis.

The objective was to explore percentages of the population treated with prescribed opioids and costs of opioid-related hospitalizations and emergency department (ED) visits among individuals treated with prescription opioids and costs of all opioid-related hospitalizations and ED visits in the province (i.e., provincial costs) before and during the coronavirus disease 2019 (COVID-19) pandemic in Alberta, Canada. In administrative data, we identified individuals treated with prescription opioids and opioid-related hospitalizations and ED visits among those individuals and among all individuals in the province between 2015/16 and 2021/22 fiscal years. Services used were counted on an item-by-item basis and costed using case-mix approaches. Annually, from 9.98% (2020/21-2021/22) to 14.52% (2017/18) of the provincial population was treated with prescription opioids. Between 2015/16 and 2021/22, annual costs of opioid-related hospitalizations and ED visits among individuals treated with prescription opioids were ∼$5 and ∼$2 million, respectively. In 2020/21-2021/22, the provincial costs of opioid-related hospitalizations (∼$14 million) and ED visits (∼$7.0 million) were almost twice the costs observed in 2015/16 and immediately before the pandemic (2019/20). Our findings suggest that increases in the opioid-related utilization of inpatient and ED services between 2015/16 and 2021/22, including the drastic increases observed during the COVID-19 pandemic, were likely driven by unregulated substances.

A Case-Mix System for Adults with Developmental Disabilities.

Effective management of publicly funded services matches the provision of needed services with cost-efficient payment methods. Payment systems that recognize differences in care needs (eg, case-mix systems) allow for greater proportions of available funds to be directed to providers supporting individuals with more needs. We describe a new way to allocate funds spent on adults with intellectual disabilities (ID) as part of a system-wide Medicaid payment reform initiative in Arkansas. Analyses were based on population-level data for persons living at home, collected using the interRAI ID assessment system, which were linked to paid service claims. We used automatic interactions detection to sort individuals into unique groups and provide a standardized relative measure of the cost of the services provided to each group. The final case-mix system has 33 distinct final groups and explains 26% of the variance in costs, which is similar to other systems in health and social services sectors. The results indicate that this system could be the foundation for a future case-mix approach to reimbursement and stand the test of “fairness” when examined by stakeholders, including parents, advocates, providers, and political entities.

Use of a case-mix approach to study the trends in the incidence of second primary cancers

PurposeTo analyze trends in second primary cancer (SPC) incidence by using a case-mix approach to standardize on first cancer site distribution. MethodsCases registered by 13 French cancer registries between 1989 and 2010 and followed-up until June 2013 were included. The person-year approach was used to compute standardized incidence ratios (SIRs) of metachronous SPC. Usual SIRs and cancer site–specific weighted SIRs called “case-mix SIRs” (cmSIRs) were estimated by sex and calendar period of first cancer diagnosis. Calendar trends in SIRs and cmSIRs were compared. ResultsMore than 2.9 million person-years at risk were included. Among males, SIRs dropped from 1.49 to 1.23 between 1989–1994 and 2005–2010, while cmSIRs decreased from 1.40 to 1.27. This difference seems mainly related to a stronger representation of prostate cancers (at lower risk of SPC) and a weaker contribution of bladder and head and neck cancers (at higher risk of SPC) in recent periods of diagnosis. Among females, both SIRs and cmSIRs have remained stable at around 1.22 and 1.21, respectively. ConclusionsThe cmSIR is an indicator that is not influenced by changes in first cancer site distribution. Its use should be encouraged to assess second cancer incidence control.

PMS8 - Hospital Admissions and Inpatient Costs of Non-Union, Delayed Union and Mal-Union Following Long Bone Fracture

Previous research into healing complications following long bone fractures has reported a wide range of cost estimates associated with their treatment. This research aims to describe hospital admissions and inpatient costs of hospital readmissions for healing complications following long bone fracture. All femoral, tibial and humeral fractures registered over a 5-year period by the Victorian Orthopaedic Trauma Outcomes Registry were linked with hospital datasets to identify 2-year readmissions for non-union, delayed union or mal-union. Outcomes reported included hospital admissions, length of stay and inpatient costs, derived using a case-mix approach based on Australian National Diagnosis Related Groups (AN-DRG). Out of 3908 patients with long bone fractures, 9% (n=337) were readmitted for healing complications within 2 years of their fracture. The most common type of complication resulting in readmission was non-union (7%). The majority of patients experiencing fracture healing complications were admitted once within two years of their index fracture. However, 12% had 2 admissions for healing complications during this period, 2% had three admissions and 1% (n=2) had four. The total inpatient costs for all admissions for fracture healing complications in this cohort was $5.4MAUD. The median inpatient hospital cost per patient for all complication admissions was $15,000AUD over and above the baseline fracture treatment costs and ranged from $9,500 to $25,000. The median hospital length of stay for all complication admissions was 3 days. Patients who develop fracture healing complications often have multiple admissions for treatment and incur high hospital inpatient costs. There is a need to prioritise future research aimed at preventing fracture healing complications and improving their management in order to reduce the additional burden placed on healthcare systems.

Decision support in healthcare: determining provider influence on treatment outcomes with robust risk adjustment

Recent advances in decision support offer a powerful toolkit to monitor, benchmark and improve healthcare quality. Since the underlying demography and prior illness of patients vary across hospitals, performance should be risk-adjusted to allow for fair comparison of providers. While previous research has proposed risk-standardisation models, their estimation still remains a non-trivial task. As a remedy, this paper utilises the least absolute shrinkage operator, LASSO for short, as a Bayesian method as part of a framework to propose a robust technique for estimating the risk-adjusted performance of hospitals. We compare our robust estimation to existing approaches (namely, the case mix approach and hierarchical generalised linear models) and demonstrate its advantages with real data. Our findings show that our method, which is robust and fully automated, can yield useful findings even with small data sets.

56 Comparison of morbidity, mortality and cost impact of stage B and stage C heart failure underline the clinical and economic need for national heart failure prevention strategy

Introduction Heart failure (HF) has hit the epidemic proportion and is incurring significant cost to the health care system. Given the major morbidity, mortality and economic burden of this condition, a prevention strategy needs careful assessment to determine its role in the future health care policy. The STOP-HF project has underlined the clinical and cost effectiveness of a biomarker driven risk stratification and intervention strategy in those at risk for HF. Supportive data to establish the widespread application of this strategy would come from a comparative analysis of patients at risk for HF and those of a new community diagnosis of HF followed in a disease management programme. To assess the importance of HF prevention, we report the morbidity, mortality and economic costs of an at-risk cohort compared to established community HF. Method 1566 patients attending the HF prevention unit and rapid access clinic for possible new onset HF from 2002 up to end of 2012 were selected for this analysis. Using Doppler echocardiography, patients were categorised to stage A (risk factors for HF with no structural or functional impairment of the heart), stage B (asymptomatic LV systolic dysfunction [B-LVSD], or isolated LV diastolic dysfunction [B-LVDD]), and stage C (symptomatic HF with reduce LVEF [C-REF] or preserved LVEF [C-PEF]). Follow-up time for events was until the end of 2014. Hospitalisations were collected, confirmed by HIPE records and categorised as HF event, other cardiovascular (other-CV) event, non-cardiovascular (non-CV) event and death. In the pre-specified cost analysis, direct costs associated with emergency hospitalisations were analysed using a case-mix approach from the perspective of the healthcare provider. Result 1097 patients were in stage A, 173 stage B (112 B-LVDD and 61 B-LVSD), and 296 stage C (181 C-PEF and 115 C-REF). BNP increased through the stages at 19.1 pg/mL, 62.8 pg/mL, 67 pg/mL, 185 pg/mL and 384.5 pg/mL. Figure 1 showed that the HF events and death rate increased across the spectrum. The other-CV events are higher in B-LVDD group compare to the B-LVSD group. C-REF has more other-CV events compared to C-PEF, but the non-CV events are similar. In the costing sub-study of 1,025 patients for whom detailed costing data were available, emergency CV hospitalisation costs per patient per annum were €313 ± 1222, €350 ± 1095 and €899 ± 1228 for stages A to C respectively. The data also show that emergency non-CV hospitalisation costs per patient per annum were €422 ± 1078, €560 ± 1316 and €2739 ± 4769 for stages A to C respectively, underlining a dramatic 4-fold increase emergency hospitalisation costs between stage B and C. Conclusion The clinical and costs impact of HF care escalate significantly with the development of the symptomatic phase of HF syndrome. These data along with the positive clinical and cost effectiveness analysis of the STOP-HF data underline the need for national activation of the STOP-HF strategy.

Acute hospital, community, and indirect costs of stroke associated with atrial fibrillation: population-based study.

No economic data from population-based studies exist on acute or late hospital, community, and indirect costs of stroke associated with atrial fibrillation (AF-stroke). Such data are essential for policy development, service planning, and cost-effectiveness analysis of new therapeutic agents. In a population-based prospective study of incident and recurrent stroke treated in hospital and community settings, we investigated direct (healthcare related) and indirect costs for a 2-year period. Survival, disability, poststroke residence, and healthcare use were determined at 90 days, 1 year, and 2 years. Acute hospital cost was determined using a case-mix approach, and other costs using a bottom-up approach (2007 prices). In 568 patients ascertained in 1 year (2006), the total estimated 2-year cost was $33.84 million. In the overall sample, AF-stroke accounted for 31% (177) of patients, but a higher proportion of costs (40.5% of total and 45% of nursing home costs). On a per-patient basis compared with non-AF-stroke, AF-stroke was associated with higher total (P<0.001) and acute hospital costs (P<0.001), and greater nursing home (P=0.001) and general practitioner (P<0.001) costs among 90-day survivors. After stratification by stroke severity in survivors, AF was associated with 2-fold increase in costs in patients with mild-moderate (National Institutes of Health Stroke Scale, 0-15) stroke (P<0.001) but not in severe stroke (National Institutes of Health Stroke Scale ≥16; P=0.7). In our population study, AF-stroke was associated with substantially higher total, acute hospital, nursing home, and general practitioner costs per patient. Targeted programs to identify AF and prevent AF-stroke may have significant economic benefits, in addition to health benefits.

Abstract 171: A Population-based Comparison of Total Costs: The Economic Burden of Atrial Fibrillation-Associated Stroke

Introduction Accurate health economics data is essential for service planning and clinical guideline development. Stroke associated with atrial fibrillation (AF) is characteristically more severe and disabling than non-AF stroke. Few data exist on the economic impact of AF-stroke compared to non-AF-stroke in population-based samples. Methods The North Dublin Population Stroke Study is a population-based prospective study of incident stroke in Dublin, Ireland. Both direct (healthcare-related) and indirect costs were calculated over a 2-year post-stroke period for individual patients, using data for survival and disability, discharge destination, outpatient and family practitioner visits, community supports, and ongoing treatment. Acute inpatient care was costed using the casemix approach, measuring the resource use per hospitalization (index stroke plus post-stroke admissions). Length of stay was used to cost rehabilitation and nursing home admissions. Indirect costs of illness were calculated using in-hospital length of stay to determine loss of productivity. Total costs were compared for AF-stroke and non-AF stroke, calculated at 2007 prices and converted to US$ (2007 rates). Results Of 568 ischemic and hemorrhagic incident stroke patients, 31% (177) had AF-associated stroke. 2-year fatality was higher in AF-stroke patients (50.3% versus 35.1%, p=0.001). Total 2-year median cost was $34,982 for AF-stroke patients (25-75% IQR $14,213-$88,283) compared to median cost of $17,736 (25-75% IQR $10,803-45,838] in non-AF stroke patients (p&lt;0.001). Inpatient care contributed 47% of total costs: cost per AF-stroke patient (index stroke) was median $14,257 (IQR $10,286-$40,989) compared to median $10,624 per non-AF stroke patient (IQR $9,482-26,241, p=0.002). Long-term institutional care was the second highest cost contributor with greater proportions of living AF stroke patients in nursing homes (2-year mean cost $23,997(±standard deviation [SD] $68,585) versus non-AF-stroke (mean $12,988 (±SD $51,561, p=0.002 for cost comparison). Community supports (2-year mean $5,487 ±SD $13,283 versus $3,808 ±SD $11,844 (p=0.1), post-stroke specialized equipment (mean $2,729±$8,927 vs $2,122±$8,267, p=0.2), and repeat hospital admission (mean $3,580±$12,124 vs $1,951±$8,446, p=0.4) costs were non-significantly higher in patients with AF-stroke. In linear regression models, AF was an independent predictor of total costs after adjusting for age (p=0.02, β 0.1) but the association was lost on adding stroke severity (72-hour Rankin score) (p=0.1, β 0.07). Conclusion In this population study, AF-associated stroke was associated with substantially higher costs for hospitalisation and community support after discharge. With ageing populations and increasing stroke burden, AF-stroke is likely to account for an increasing proportion of overall cost to health services.

Relationship between physician specialty and allopurinol prescribing patterns: a study of patients with gout in managed care settings

Objective:Allopurinol is used to lower serum uric acid (sUA) levels in gout patients. The objective of this study was to investigate the influence of physician specialty on allopurinol treatment patterns and sUA control.Design and methods:This was a retrospective study using claims from a managed care database of US health plan enrollees. Gout patients at least 18 years of age who received allopurinol were identified from the database between January 1, 2002 and April 30, 2007. The index date was defined as the date of the earliest allopurinol claim, and patients were required to have health plan enrollment for at least 365 days prior to and following the index date for inclusion. Physician specialty was determined using the index allopurinol claim. Dosage of allopurinol prescription(s) and number of gout flares were determined from claims data. sUA measurements were used to assess goal attainment over a period of at least one year following the index allopurinol prescription.Results:There were 3363 patients with gout of whom 69.9% received an index allopurinol prescription from a generalist/internist, 5.7% from a rheumatologist, 2.6% from a nephrologist, and 21.8% from a physician with other specialty. Of patients receiving their index prescription from a nephrologist, 38.7% reached the sUA goal of <6 mg/dL (357 μmol/L), as compared to patients prescribed by a rheumatologist, generalist/internist, or other physician (35.4%, 31.4%, and 39.4%, respectively; P = 0.015). When controlling for patient characteristics, multivariate analysis did not reveal statistically significant different odds of sUA goal attainment based on prescribing physician specialty, though separate analyses indicated that patients prescribed by a nephrologist had fewer gout flares. Change in allopurinol dosage from initial to final dose was more frequent among patients prescribed by rheumatologists and nephrologists.Conclusion:There is significant heterogeneity in the specialists’ management of sUA levels in patients with gout, possibly reflecting differences in case mix and treatment approaches. Limitations related to the use of claims data, such as inability to observe medications filled over-the-counter, should be considered when interpreting study results.

Using Existing Case-Mix Methods to Fund Trauma Cases

Policymakers frequently face the need to increase funding in isolated and frequently heterogeneous (clinically and in terms of resource consumption) patient subpopulations. This article presents a methodologic solution for testing the appropriateness of using existing grouping and weighting methodologies for funding subsets of patients in the scenario where a case-mix approach is preferable to a flat-rate based payment system. Using as an example the subpopulation of trauma cases of Ontario lead trauma hospitals, the statistical techniques of linear and nonlinear regression models, regression trees, and spline models were applied to examine the fit of the existing case-mix groups and reference weights for the trauma cases. The analyses demonstrated that for funding Ontario trauma cases, the existing case-mix systems can form the basis for rational and equitable hospital funding, decreasing the need to develop a different grouper for this subset of patients. This study confirmed that Injury Severity Score is a poor predictor of costs for trauma patients. Although our analysis used the Canadian case-mix classification system and cost weights, the demonstrated concept of using existing case-mix systems to develop funding rates for specific subsets of patient populations may be applicable internationally.

Predictors, consequences and costs of diabetes-related lower extremity amputation complicating type 2 diabetes: The Fremantle Diabetes Study

The aims of this study were to assess the incidence, predictors, consequences, and inpatient cost of lower extremity amputation (LEA) in a community-based cohort of type 2 diabetic patients. Between 1993 and 1996, 1,294 patients with type 2 diabetes were recruited to the longitudinal, observational Fremantle Diabetes Study. LEAs and mortality from cardiac causes were monitored until 30 June 2005. Inpatient costs (in Australian dollars in year 2000), derived using a case-mix approach, were available for the period from 1 July 1993 to 30 June 2000. During follow-up 44 patients without LEA at baseline had a first-ever diabetes-related LEA, an incidence of 3.8 per 1,000 patient-years. Independent predictors of first-ever LEA included foot ulceration (hazard ratio [95% CI]: 5.56 [1.24-25.01]), an ankle brachial index < or =0.90 (2.21 [1.11-4.42]), HbA(1c) (increase of 1%: 1.30 [1.10-1.54]) and neuropathy (2.65 [1.30-5.44]). The risk of cardiac death was significantly increased in patients with LEA at baseline, although this was not an independent risk factor. The median (interquartile range) inpatient cost per LEA admission was 12,485 Australian dollars (6,037 Australian dollars-24,415 Australian dollars), with a median length of stay of 24 (10-43) days. First-ever LEAs in type 2 patients were associated with poor glycaemic control, foot ulceration and evidence of microvascular and macrovascular disease. Patients with LEA were at increased risk of cardiac death. LEAs contribute disproportionately to diabetes-related inpatient costs.

Public hospital resource allocations in El Salvador: accounting for the case mix of patients.

National hospitals in developing countries command a disproportionate share of medical care budgets, justified on the grounds that they have a more difficult patient case mix and higher occupancy rates than decentralized district hospitals or clinics. This paper empirically tests the hypothesis by developing direct measures of the severity of patient illness, hospital case-mix and a resource intensity index for each of El Salvador's public hospitals. Based on an analysis of inpatient care staffing requirements, national hospitals are found to receive funding far in excess of what case-mix and case-load considerations would warrant. The findings suggest that significant system-wide efficiency gains can be realized by allocating hospital budgets on the bases of performance-related criteria which incorporate the case-mix approach developed here.

Association of symptoms of depression with diagnostic test charges among older adults.

Previous studies have documented greater use of health services by depressed persons and have postulated that health care costs could be reduced overall through better recognition and treatment of depression. To determine whether a greater burden of medical illness contributes to excess charges for diagnostic tests among older adults with symptoms of depression. Prospective cohort study. A primary care group practice at an academic institution. 3767 patients 60 years of age and older who completed testing on the Centers for Epidemiologic Studies Depression Scale (CES-D) during routine office visits. Charges for all inpatient and ambulatory diagnostic testing for 2 years, including clinical pathology, diagnostic imaging, and special procedures; number of visits to the ambulatory care center or emergency department; and number of hospitalizations. The Ambulatory Care Group case-mix approach, which is based on ambulatory diagnoses, was used as a measure of health status and expected resource consumption. Patients with symptoms of depression (CES-D scores > or = 16) were significantly younger (66.6 compared with 68.1 years; P < 0.001), more likely to be white (50.5% compared with 33.9%; P = 0.001), and more likely to be female (75.8% compared with 67.6%; P = 0.001) than were those without these symptoms (CES-D scores < 16). They also had more nonpsychiatric comorbid conditions, had more visits to the ambulatory care center (9.2 compared with 7.8; P < 0.001), were more likely to use the emergency department (52.3% compared with 40%; P = 0.001), were more likely to be hospitalized (22.4% compared with 17%; P = 0.002), and had greater median total diagnostic test charges for a period of 1 year ($583 compared with $387; P < 0.001). The difference in charges, most of which were clinical pathology charges (54.2%), persisted into the second year. Ambulatory Care Group assignment was independently associated with diagnostic test charges. The CES-D summary score was not independently associated with diagnostic test charges when controlling for Ambulatory Care Group assignment. Patients with symptoms of depression accrue greater average diagnostic test charges. However, these data suggest that such patients also have a greater burden of comorbid nonpsychiatric illness. Efforts to improve outcome and decrease cost for patients who have late-life depression must target interventions to improve the care of psychiatric and medical illness concurrently.

Casemix funding of hospitals: objectives and objections.

Reform of the funding of hospitals and other health services has been one of the most important health policy initiatives undertaken by governments in recent years. A number of countries have adopted the casemix approach to payment, or are currently exploring the feasibility of its introduction. Under casemix arrangements hospitals are funded on the basis of the numbers and types of patients they treat. This paper analyses, and finds inadequate, various objections to casemix funding, including those which appeal to considerations of ethics and equity.

Casemix groupings for psychiatry: Strengths and weaknesses of ' V ersion 2.0 Healthcare Resource Groups' HRGs

Healthcare Resource Groups HRGs are English casemix groupings, designed to provide a common language to enable clinicians and managers to analyse the mix of cases they are dealing with, by breaking down their total caseload into a number of categories which can be used for contracting, organising and auditing services. Some background to the work of defining HRGs for psychiatry was given in Anthony, Elphick & Lelliott 1993. The first phase of the work referred to there has been completed, so that when Version 2 HRGs 1994 were published, a psychiatry chapter was included for the first time. The National Casemix Office NCMO has consulted the Royal College of Psychiatrists, and a brief introduction specific to the chapter was published alongside the HRG groupings themselves, to provide some guidance as to their appropriate use. This present article, by the originators, aims to provide a wider discussion for clinicians who may find themselves involved and expected to use a casemix approach to service or busin...

Hospital payment arrangements to encourage efficiency: the case of Victoria, Australia

The casemix funding arrangements introduced in Victoria on 1 July 1993 represent a significant departure from the previous approaches to public hospital funding in Australia. They are designed to change the economic incentives on hospitals by linking payment to the number and case complexity of patients treated. The new funding arrangements include a combination of fixed and variable payments to hospitals for inpatient services. Outpatient services remain funded on a historical basis. Special payments are made for teaching and research functions. Total payments to hospitals are capped through operation of an ‘Additional Throughput Pool’ which allows price to fluctuate inversely with volume to ensure an expenditure limit. Because of operations of specific conditions on the Additional Throughput Pool, hospitals were given an incentive to reduce waiting lists. Despite the success in reducing waiting lists and budgets, there are a number of problems with the casemix approach including both technical issues (how are payment rates to be updated?; the failure to address problems of capital) and ethical issues. These are discussed in the paper.

Product definition for healthcare contracting: an overview of approaches to measuring hospital output with reference to the UK internal market.

In many industrialised countries, health care third party payers are moving towards contracted provision arrangements with suppliers of hospital care. Essential to such a process is a standard approach to quantifying the care provided. This paper aims to outline the possible approaches to hospital product definition for the UK National Health Service, and recommends appropriate further research. All published and unpublished studies on hospital output measurement in the NHS since 1980 were sought for the purposes of the review. This included both discursive and empirical work, and no exclusion criteria were applied. Most empirical reports on this topic, however, come from the United States. Consequently, the published reports since 1980 from the USA, accessed from the Medline and Healthplan CD-ROM databases, have also been included in the overview. Where data are sufficient, the true casemix approach offers advantages over other methods of output measurement. In the UK NHS, two systems--diagnosis-related groups (DRGs) and healthcare resource groups (HRGs)--are the only casemix measures that have achieved any significant degree of attention. DRGs have been extensively evaluated internationally, and explain variations in resource use in the UK slightly better than do HRGs. As a local product, HRGs can be more easily adapted to the specific needs of the NHS internal market, however, and will thus probably emerge as a better measure for the UK in the long term. In both cases, locally derived cost weights are unavailable, and their development constitutes a major requirement for use in contracting. Adaptations for long stay and outpatient hospital episodes would enhance the usefulness of hospital casemix systems in the NHS. Existing approaches, such as specialty based classifications, are neither standardised nor predictive of resource use, and would be better replaced by casemix systems. Other countries facing similar choices between casemix measurement approaches will need to consider the "trade off" between the adaptability of locally derived systems on the one hand and the low cost, rapidly accessible results, and availability of international comparative data of an imported approach on the other.

DRGs and Australian Psychiatry

The introduction of diagnosis related groups (DRGs) as a basis for funding in the United States has revealed several shortcomings in current DRG systems. Overall, DRGs have proven to be poor predictors of cost, accounting for approximately one third of the variation in cost and length of stay for surgical DRGs and falling to less than 10% for medical DRGs. Their ability to contain costs also remains uncertain, with savings associated with reductions in length of stay being offset by increased readmission rates. Given the increasing commitment of government to casemix approaches to funding it is suggested that psychiatry should participate in the process of solving the problems so far identified with DRG systems. Participation would, it is hoped, create a focussed debate about the provision of a "gold standard" of care for all patients. The evaluation and refinement of existing DRGs is urgently needed and could utilise a number of comprehensive data bases which already exist across the country. Alternatives to diagnosis such as functional status and treatment needs should also be explored.