Important Cost Drivers Research Articles

Comparison of Machine Learning methods applied to the estimation of manufacturing cost of jet engine components

This paper compares the performance of five statistical models on the estimation of manufacturing cost of jet engine components, during the early design phase and using real industrial data. The analysis shows that recent techniques such as Gradient Boosted Trees and Support Vector Regression are up to two times more efficient than the ones typically encountered in the literature (Multiple Linear Regression and Artificial Neural Networks). If goodness-of-fit and predictive accuracy remain crucial to assess the performance of a model, other criteria such as computational cost, easiness to train or interpretability should be considered when selecting a statistical method for estimating the manufacturing cost of mechanical parts. Ideally, cost estimators should rely on several statistical models concurrently, as their distinct characteristics yield complementary views on the drivers of manufacturing cost. Finally, some engineering insights revealed by the statistical analysis are presented. They include the ranking and quantification of the most important cost drivers, the approximation of the economic production function of component cost according to accumulated production volume and a different view on the traditional breakdown of manufacturing cost of some jet engine components. As a conclusion, Machine Learning appears to be an effective, affordable, accurate and scalable technique to cost mechanical parts in the early stage of the design process.

Variable cost of ICU care, a micro-costing analysis

Intensive care unit (ICU) costs account for a great part of a hospital's expenses. The objective of the present study was to measure the patient-specific cost of ICU treatment, to identify the most important cost drivers in ICU and to examine the role of various contributing factors in cost configuration. A retrospective cost analysis of all ICU patients who were admitted during 2011 in a Greek General, seven-bed ICU and stayed for at least 24hours was performed, by applying bottom-up analysis. Data collected included demographics and the exact cost of every single material used for patients' care. Prices were yielded from the hospital's purchasing costs and from the national price list of the imaging and laboratory tests, which was provided by the Ministry of Health. A total of 138 patients were included. Variable cost per ICU day was €573.18. A substantial cost variation was found in the total costs obtained for individual patients (median: €3443, range: €243.70-€116,355). Medicines were responsible for more than half of the cost and antibiotics accounted for the largest part of it, followed by blood products and cardiovascular drugs. Medical cause of admission, severe illness and increased length of stay, mechanical ventilation and dialysis were the factors associated with cost escalation. ICU variable cost is patient-specific, varies according to each patient's needs and is influenced by several factors. The exact estimation of variable cost is a pre-requisite in order to control ICU expenses.

Diabetic retinopathy screening with pharmacy-based teleophthalmology in a semiurban setting: a cost-effectiveness analysis.

Diabetic eye complications are the leading cause of visual loss among working-aged people. Pharmacy-based teleophthalmology has emerged as a possible alternative to in-person examination that may facilitate compliance with evidence-based recommendations and reduce barriers to specialized eye care. The objective of this study was to estimate the cost-effectiveness of mobile teleophthalmology screening compared with in-person examination (primary care) for the diabetic population residing in semiurban areas of southwestern Ontario. A decision tree was constructed to compare in-person examination (comparator program) versus pharmacy-based teleophthalmology (intervention program). The economic model was designed to identify patients with more than minimal diabetic retinopathy, manifested by at least 1 microaneurysm at examination (modified Airlie House classification grade of ≥ 20). Cost-effectiveness was assessed as cost per case detected (true-positive result) and cost per case correctly diagnosed (including true-positive and true-negative results). The cost per case detected was $510 with in-person examination and $478 with teleophthalmology, and the cost per case correctly diagnosed was $107 and $102 respectively. The incremental cost-effectiveness ratio was $314 per additional case detected and $73 per additional case correctly diagnosed. Use of pharmacologic dilation and health care specialists' fees were the most important cost drivers. The study showed that a compound teleophthalmology program in a semiurban community would be more effective but more costly than in-person examination. The findings raise the question of whether the benefits of pharmacy-based teleophthalmology in semiurban areas, where in-person examination is still available, are equivalent to those observed in remote communities. Further study is needed to investigate the impact of this program on the prevention of severe vision loss and quality of life in a semiurban setting.

Integrated Maritime Bunker Management with Stochastic Fuel Prices and New Emission Regulations

Maritime bunker management (MBM) controls the procurement and consumption of the fuels used on board and therefore manages one of the most important cost drivers in the shipping industry. At the operational level, a shipping company needs to manage its fuel consumption by making optimal routing and speed decisions for each voyage. But since fuel prices are highly volatile, a shipping company sometimes also needs to do tactical fuel hedging in the forward market to control risk and cost volatility. From an operations research perspective, it is customary to think of tactical and operational decisions as tightly linked. However, the existing literature on MBM normally focuses on only one of these two levels, rather than taking an integrated point of view. This is in line with how shipping companies operate; tactical and operational bunker management decisions are made in isolation. We develop a stochastic programming model involving both tactical and operational decisions in MBM in order to minimize the total expected fuel costs, controlled for financial risk, within a planning period. This paper points out that after the latest regulation of the Sulphur Emission Control Areas (SECA) came into force in 2015, an integration of the tactical and operational levels in MBM has become important for shipping companies whose business deals with SECA. The results of the computational study shows isolated decision making on either tactical or operational level in MBM will lead to various problem. Nevertheless, the most server consequence occurs when tactical decisions are made in isolation.

Virtual Reality Based Time and Motion Study with Support for Real Walking

Manual operations in mass production are important cost drivers. Thus, tools like the MTM (Methods-time Measurement) – a time and motion study method – were introduced, which are nowadays established in industry for evaluation and improvement of production facilities. In this method, cardboard engineering is used to build simplified physical mock-ups of machines or production lines, in which the manual working process can be simulated. However, new strategies like e.g. decentralized production require the worker to walk, which is not well incorporated in the MTM and times are only estimated from the walking distance.Since many workplaces, machines or production lines already exist as digital models, it is obvious to perform the MTM completely virtually. However, this comes at the cost of a complex handling and strongly reduced realism because a desktop-based MTM application does not allow natural navigation – like walking – within the full-sized models like the cardboard setups do.This paper introduces a virtual reality-based MTM that also allows for real walking in virtual factories without using a treadmill or other walking devices. With a subtle redirection of the user during walking, these virtual factories can even be larger than the available physical space. Hence, a realistic measuring of walking times and distances can be done instead of an estimation. Since the MTM can be completely performed within a virtual environment, it gives a new realism to the method compared to the cardboard procedure. The paper closes with an outlook on future work and extensions of this novel virtual MTM.

Comparison of hospital length of stay between hospitalized non-valvular atrial fibrillation patients treated with either apixaban or warfarin

Background. Hospital length of stay (LOS) is an important cost driver for hospitals and payers alike. Hospitalized non-valvular atrial fibrillation (NVAF) patients treated with apixaban may have shorter LOS than those treated with warfarin because of the absence of need for INR monitoring in apixaban. Thus, this study compared hospital LOS between hospitalized NVAF patients treated with either apixaban or warfarin. Methods. This was a retrospective, observational cohort study based on a large US database including diagnosis, procedure, and drug administration information from >600 acute-care hospitals. Patients selected for study were aged ≥18 years and had a hospitalization record with an ICD-9-CM diagnosis code for atrial fibrillation (AF) in any position from 1 January 2013 to 28 February 2014 (index hospitalization). Patients with diagnoses indicative of rheumatic mitral valvular heart disease or a valve replacement procedure during index hospitalization were excluded. Patients were required to have been treated with either apixaban or warfarin, and not treated with rivaroxaban or dabigatran, during index hospitalization. Apixaban patients were propensity score (PS) matched to warfarin patients at a 1:1 ratio, using patient demographic/clinical and hospital characteristics. The study outcome was hospital LOS, calculated as discharge date minus admission date; a sensitivity analysis calculated hospital LOS as discharge date minus first anticoagulant administration date. Sub-analyses were conducted among patients with a primary diagnosis of AF. Results. The study included 832 apixaban patients matched to 832 warfarin patients. Mean [standard deviation (SD)] and median hospital LOS were significantly (p < 0.001) shorter in apixaban patients (4.5 [4.2] and 3 days) than in warfarin patients (5.4 [5.0] and 4). Results were consistent in the sensitivity and sub-analyses. Conclusions. Among NVAF patients, apixaban treatment was associated with shorter hospital LOS when compared with warfarin treatment. These findings may have important clinical and economic implications for hospitals, payers, and patients.

Overt hepatic encephalopathy in Italy: clinical outcomes and healthcare costs.

PurposeHepatic encephalopathy (HE) is a recurrent severe complication of progressive hepatic cirrhosis. The aim of this study is to evaluate the average annual direct healthcare costs for the treatment of patients with overt HE in Italy.Patients and methodsThis retrospective, observational study analyzed information from the database of ARNO Observatory. Patients with at least one hospitalization due to overt HE in the period from January 1, 2011 to December 31, 2011, were selected and observed during the year following the hospitalization. Costs for drugs, diagnostic and therapeutic procedures, and hospitalizations were estimated from the Italian National Health Service perspective.ResultsOut of a population of 2,678,462 subjects, 381 patients were identified, of whom, 21.5% died during the first hospitalization and 5.8% during the follow-up; the survival rate was 72.7% at the end of the observation period. The direct healthcare costs per patient amounted to €13,393/year (15,295 USD) (88% for hospitalizations, 8% for drugs, and 4% for diagnostic procedures). During the follow-up, 42.5% of patients had at least one rehospitalization due to HE. Patients readmitted for HE had an average annual cost of €21,272 (24,293 USD), almost doubled if compared to patients without readmissions (€12,098 [13,816 USD]).ConclusionThis analysis showed that patients with HE had relevant direct healthcare costs, in which hospitalizations were the most important cost drivers.

Cost analysis of a commercial pyroprocess facility on the basis of a conceptual design in Korea

This study postulated a commercial pyroprocess facility (KAPF+: Korea Advanced Pyroprocess Facility Plus) with a processing capacity of 400tons/year as a cost object, and utilized an engineering cost estimation method based on a conceptual design to present the results of the total cost and unit cost estimation. According to the calculation results, the total cost and unit cost were calculated with k$779,386 and $781/kgHM, respectively. Moreover, the key cost driver was manifested as the operating and maintenance costs. In particular, equipment replacement cost was identified as an important cost driver. In addition, for an increasingly accurate cost estimation, the calculation results and allocation method of the indirect cost were reanalyzed. Finally the pyroprocess unit cost increased $5 when calculated the indirect cost using the labor time as the allocation standard. Meanwhile, the pyroprocess unit cost increased $22 as a result of allocating the indirect cost using the uniform labor cost as the cost allocation standard. Accordingly, an indirect cost allocation standard was manifested as the factor that exerts a significant effect on the pyroprocess unit cost.

The excess health care costs of KardioPro, an integrated care program for coronary heart disease prevention

Coronary heart disease (CHD) is a major cause of death and important driver of health care costs. Recent German health care reforms have promoted integrated care contracts allowing statutory health insurance providers more room to organize health care provision. One provider offers KardioPro, an integrated primary care-based CHD prevention program. As insurance providers should be aware of the financial consequences when developing optional programs, this study aims to analyze the costs associated with KardioPro participation. 13,264 KardioPro participants were compared with a propensity score-matched control group. Post-enrollment health care costs were calculated based on routine data over a follow-up period of up to 4 years. For those people who incurred costs, KardioPro participation was significantly associated with increased physician costs (by 33%), reduced hospital costs (by 19%), and reduced pharmaceutical costs (by 16%). Overall costs were increased by 4%, but this was not significant. Total excess costs per observation year were €131 per person (95% confidence interval: [€−36.5; €296]). Overall, KardioPro likely affected treatment as the program increased costs of physician services and reduced costs of hospital services. Further effects of substituting potential inpatient care with increased outpatient care might become fully apparent only over a longer time horizon.

Tax Compliance Costs: A Review of Cost Burdens and Cost Structures

Our paper provides a comprehensive report of empirical research on tax compliance costs. Compared to previous reviews, our focus is on average costs for sub-groups (individual taxpayers, small businesses, large businesses) and the composition of the cost burden with regards to different cost components (in-house time effort, external adviser costs, other monetary expenses), different taxes (e.g. income tax, value added tax) and different activities like tax accounting and tax planning. In addition, we give a short review of the most important compliance cost drivers and discuss the underlying causes of tax complexity and compliance costs.

Abstract 16698: Comparison of Hospital Length of Stay Between Hospitalized Non-Valvular Atrial Fibrillation Patients Treated With Either Apixaban or Warfarin

Hospital length of stay (LOS) is an important cost driver for hospitals and payers alike. Hospitalized non-valvular atrial fibrillation (NVAF) patients treated with apixaban may have shorter LOS than those treated with warfarin because of the absence of need for INR monitoring in apixaban. Thus, this study compared LOS between hospitalized NVAF patients treated with either apixaban or warfarin. This was a retrospective, observational cohort study based on a large U.S. database including diagnosis, procedure, and drug administration information from over 600 acute-care hospitals. Patients selected for study were aged ≥18 years and had a hospitalization record with an ICD-9-CM diagnosis code for atrial fibrillation (AF) in any position from Jan-1-2013 to Feb-28-2014 (index hospitalization). Patients with diagnoses indicative of rheumatic mitral valvular heart disease or a valve replacement procedure during index hospitalization were excluded. Patients were required to have been treated with either apixaban or warfarin, and not treated with rivaroxaban or dabigatran, during index hospitalization. Apixaban patients were propensity score (PS) matched to warfarin patients at a 1:1 ratio, using patient demographic/clinical and hospital characteristics. Study outcome was LOS, calculated as discharge date minus admission date; a sensitivity analysis calculated LOS as discharge date minus first anticoagulant administration date. Subanalyses were conducted among patients with a primary diagnosis of AF. The study included 832 apixaban patients matched to 832 warfarin patients. Patients had a mean age of 74 years and 46% were female. Mean [standard deviation (SD)] and median LOS was significantly (P&lt;0.001) shorter in apixaban patients (4.5 [4.2] and 3 days) than in warfarin patients (5.4 [5.0] and 4); results were consistent in sensitivity analyses of LOS after first anticoagulant administration date (2.8 [3.5] and 2 days for apixaban vs. 3.9 [3.9] and 3 for warfarin, P&lt;0.001). Subanalyses yielded very similar results. Among NVAF patients, apixaban treatment was associated with shorter hospital LOS when compared with warfarin treatment. These findings may have important clinical and economic implications for hospitals, payers, and patients.

Analysis of the additional costs of clinical complications in patients undergoing transcatheter aortic valve replacement in the German Health Care System

BackgroundThis study aims at analyzing complication-induced additional costs of patients undergoing transcatheter aortic valve replacement (TAVR). MethodsIn a prospective observational study, a total of 163 consecutive patients received either transfemoral (TF-, n=97) or transapical (TA-) TAVR (n=66) between February 2009 and December 2012. Clinical endpoints were categorized according to VARC-2 definitions and in-hospital costs were determined from the hospital perspective. Finally, the additional costs of complications were estimated using multiple linear regression models. ResultsTF-TAVR patients experienced significantly more minor access site bleeding, major non-access site bleeding, minor vascular complications, stage 2 acute kidney injury (AKI) and permanent pacemaker implantation. Total in-hospital costs did not differ between groups and were on average €40,348 (SD 15,851) per patient. The average incremental cost component of a single complication was €3438 (p<0.01) and the estimated cost of a TF-TAVR without complications was €34,351. The complications associated with the highest additional costs were life-threatening non-access site bleeding (€47,494; p<0.05), stage 3 AKI (€20,468; p<0.01), implantation of a second valve (€16,767; p<0.01) and other severe cardiac dysrhythmia (€10,611 p<0.05). Overall, the presence of complication-related in-hospital mortality increased costs. ConclusionsBleeding complications, severe kidney failure, and implantation of a second valve were the most important cost drivers in our TAVR patients. Strategies and advances in device design aimed at reducing these complications have the potential to generate significant in-hospital cost reductions for the German Health Care System.

Un modello per la determinazione del costo standard nei servizi di trasporto pubblico locale su autobus in Italia°

We estimate the standard costs in the Italian local bus transport system by means of a top down approach. Commercial speed results the most important cost driver, while economies of scale are low and only present in the case of small transport operators. Medium sized and large operators exhibit diseconomies of scale. We find a positive correlation between investments in bus fleet and service cost. The model aims at introducing policy criteria for the allocation of public funds earmarked to the local public transit sector among Italian regions.

Aligning Health Care Policy With Evidence-Based Medicine: The Case for Funding Direct Oral Anticoagulants in Atrial Fibrillation

Misalignment between evidence-informed clinical care guideline recommendations and reimbursement policy has created care gaps that lead to suboptimal outcomes for patients denied access to guideline-based therapies. The purpose of this article is to make the case for addressing this growing access barrier to optimal care. Stroke prevention in atrial fibrillation (AF) is discussed as an example. Stroke is an extremely costly disease, imposing a significant human, societal, and economic burden. Stroke in the setting of AF carries an 80% probability of death or disability. Although two-thirds of these strokes are preventable with appropriate anticoagulation, this has historically been underprescribed and poorly managed. National and international guidelines endorse the direct oral anticoagulants as first-line therapy for this indication. However, no Canadian province has provided these agents with an unrestricted listing. These decisions appear to be founded on silo-based cost assessment—the drug costs rather than the total system costs—and thus overlook several important cost-drivers in stroke. The discordance between best scientific evidence and public policy requires health care providers to use a potentially suboptimal therapy in contravention of guideline recommendations. It represents a significant obstacle for knowledge translation efforts that aim to increase the appropriate anticoagulation of Canadians with AF. As health care professionals, we have a responsibility to our patients to engage with policy-makers in addressing and resolving this barrier to optimal patient care.

Updated cost-of-care estimates for commercially insured patients with multiple sclerosis: retrospective observational analysis of medical and pharmacy claims data.

BackgroundFor patients with multiple sclerosis (MS), previous research identified key disease sequelae as important cost drivers and suggested that among users of disease-modifying drugs (DMDs) in 2004, DMDs represented 73% of the total cost of care. More recent studies were limited to incident disease/treatment and/or excluded DMDs from cost estimates. To support contemporary pharmacoeconomic analyses, the present study was conducted to provide updated information about MS-related costs and cost drivers including DMDs.MethodsFor each of 2 years, 2006 and 2011, commercially insured, continuously eligible patients with ≥ 1 medical claim diagnosis of MS were sampled. MS-related charges were based on medical claims with MS diagnosis plus medical/pharmacy claims for DMDs. 2006 charges were adjusted to 2011 $ using the medical care component of the consumer price index (CPI). Subgroups of patients using DMDs (interferon [IFN] beta-1a intramuscular or subcutaneous, IFN beta-1b, glatiramer, natalizumab) in 2011 were identified. By-group differences were tested with bivariate statistics.ResultsMean (standard deviation [SD]) age of 15,902 sample patients in 2011 was 47.6 (11.8) years, 76% female. Mean [SD] MS charges ($26,520 [$38,478] overall) were significantly (P < 0.001) higher for patients with common disease sequelae: malaise/fatigue (n = 2,235; $39,948 [$48,435]), paresthesia (n = 1,566; $33,648 [$45,273]), depression (n = 1,255; $42,831 [$51,693]), and abnormality of gait (n = 1,196; $48,361 [$55,472]). From 2006 to 2011, CPI-adjusted MS charges increased by 60%. Among patients treated with a single DMD in 2011, inpatient care was 6% of charges (range = 4%-8%; P = 0.155); outpatient care was 19% (range = 14%-20% except for natalizumab [29%]; P < 0.001); and DMDs were 75% (range = 67%-81%; P < 0.001).ConclusionsCommon MS sequelae remain important cost drivers. Although MS treatment costs are increasing, the proportion of MS charges due to DMDs in 2011 is similar to that reported in 2004.

The effect of age and time to death on primary care costs: The Italian experience

A large body of literature shows that time to death (TTD) is by far a better predictor of health spending than age. In this paper, we investigate if this finding holds true also in presence of primary care costs (pharmaceuticals, diagnostic tests and specialist visits) in Italy, where they represent an important share (about 30%) of the total health care expenditure (HCE). Our analysis is based on a large sample of the Italian population (about 750,000 individuals), obtained from the Health Search-SiSSI database, which contains patient-level data collected routinely by General Practitioners in Italy since 2002. We study individuals aged 19 and older, over the period 2006–2009. By means of a two-part model which accounts for the presence of zero expenditure, our findings show that age represents the most important driver of primary care costs in Italy, although TTD remains a good predictor. These results suggest that age and TTD can have a different role in shaping health care costs according to the component of health expenditure examined. Therefore, our advice to policy makers is to use disaggregated models to better disentangle these contributions and to produce more reliable health spending forecasts.

Cost drivers for voluntary medical male circumcision using primary source data from sub-Saharan Africa.

BackgroundAs voluntary medical male circumcision (VMMC) programs scale up, there is a pressing need for information about the important cost drivers, and potential efficiency gains. We examine those cost drivers here, and estimate the potential efficiency gains through an econometric model.Methods and FindingsWe examined the main cost drivers (i.e., personnel and consumables) associated with providing VMMC in sub-Saharan Africa along a number of dimensions, including facility type and service provider. Primary source facility level data from Kenya, Namibia, South Africa, Tanzania, Uganda, and Zambia were utilized throughout. We estimated the efficiency gains by econometrically estimating a cost function in order to calculate the impact of scale and other relevant factors. Personnel and consumables were estimated at 36% and 28%, respectively, of total costs across countries. Economies of scale (EOS) is estimated to be eight at the median volume of VMMCs performed, and EOS falls from 23 at the 25th percentile volume of VMMCs performed to 5.1 at the 75th percentile.ConclusionsThe analysis suggests that there is significant room for efficiency improvement as indicated by declining EOS as VMMC volume increases. The scale of the fall in EOS as VMMC volume increases suggests that we are still at the ascension phase of the scale-up of VMMC, where continuing to add new sites results in additional start-up costs as well. A key aspect of improving efficiency is task sharing VMMC procedures, due to the large percentage of overall costs associated with personnel costs. In addition, efficiency improvements in consumables are likely to occur over time as prices and distribution costs decrease.

Tax Compliance Costs: A Review of Cost Burdens and Cost Structures

Our paper provides a comprehensive report of empirical research on tax compliance costs. Comparedto previous reviews, our focus is on average costs for sub-groups (individual taxpayers, small business-es, large businesses) and the composition of the cost burden with regards to different cost components(in-house time effort, external adviser costs, other monetary expenses), different taxes (e.g. income tax,value added tax) and different activities like tax accounting and tax planning. In addition, we give ashort review of the most important compliance cost drivers and discuss the underlying causes of taxcomplexity and compliance costs.

Is overweight and class I obesity associated with increased health claims costs?

Evaluate the relationship between body mass index (BMI) and health claims costs over the last decade, assess the strength and nature of the relationship between BMI and costs, and identify comorbidities that may drive any increased costs. Using 2001-2011 claims data for employees participating in annual health appraisals, annual paid claims costs were calculated. One-part negative binomial models were fit to evaluate the relationship between BMI and costs, controlling for age, gender, race/ethnicity, and calendar year period. The relationship between increasing BMI and increasing health claims costs is gradual and starts already at a BMI of 19. The nature of the relationship did not change notably over time. The most important obesity-related comorbidities, expressed as percent increase in cost per BMI unit, was cardiovascular disease (males 10.53, 95% CI [6.46, 14.77], females 4.27, 95% CI [1.25, 7.38), while cardiovascular agents (7.23, 95% CI [6.08, 8.39]) were the most important driver of pharmacy costs. In contrast to recent evidence relating to effects on mortality, we observed a gradual increase in health claims costs starting at the low end of the recommended BMI range.

Thickness of superficial basal cell carcinoma (sBCC) predicts imiquimod efficacy: a proposal for a thickness-based definition of sBCC.

Basal cell carcinoma (BCC) is the most common malignancy in the white population. It is an important driver of healthcare costs and causes significant morbidity. Topical imiquimod is a good noninvasive treatment alternative for surgical excision in superficial BCC (sBCC). However, there are currently no uniform histological definitions of sBCC. A definition based on tumour thickness might be a good alternative. To determine whether tumour thickness in sBCC is a predictor of treatment failure. We retrospectively examined 127 histological biopsy specimens of sBCC treated primarily with imiquimod five times a week for 6 weeks. Mean follow-up was 34 months (range 3-91). Recurrence was evaluated clinically with histological verification. Among nonrecurrent cases the median tumour thickness was 0·26 mm (range 0·09-0·61), while for recurrent cases the median tumour thickness was 0·57 mm (range 0·41-1·41, P < 0·0001). Among lesions ≤ 0·40 mm in thickness, none recurred, whereas for lesions > 0·40 mm the recurrence rate was 58% (P < 0·0001). We recommend the use of tumour thickness to define the superficial pattern in pathology reports for BCC as this can help to determine treatment response of sBCC to imiquimod.