Variation In Average Costs Research Articles

A Quantitative Observational Study of Physician Influence on Hospital Costs.

Physicians serve as the nexus of treatment decision-making in hospitalized patients; however, little empirical evidence describes the influence of individual physicians on hospital costs. In this study, we examine the extent to which hospital costs vary across physicians and physician characteristics. We used all-payer data from 2 states representing 15 237 physicians and 2.5 million hospital visits. Regression analysis and propensity score matching were used to understand the role of observable provider characteristics on hospital costs controlling for patient demographics, socioeconomic characteristics, clinical risk, and hospital characteristics. We used hierarchical models to estimate the amount of variation attributable to physicians. We found that the average cost of hospital inpatient stays registered to female physicians was consistently lower across all empirical specifications when compared with male physicians. We also found a negative association between physicians’ years of experience and the average costs. The average cost of hospital inpatient stays registered to foreign-trained physicians was lower than US-trained physicians. We observed sizable variation in average costs of hospital inpatient stays across medical specialties. In addition, we used hierarchical methods and estimated the amount of remaining variation attributable to physicians and found that it was nonnegligible (intraclass correlation coefficient [ICC]: 0.33 in the full sample). Historically, most physicians have been reimbursed separately from hospitals, and our study shows that physicians play a role in influencing hospital costs. Future policies and practices should acknowledge these important dependencies. This study lends further support for alignment of physician and hospital incentives to control costs and improve outcomes.

Large-scale delivery of seasonal malaria chemoprevention to children under 10 in Senegal: an economic analysis.

Seasonal Malaria Chemoprevention (SMC) is recommended for children under 5 in the Sahel and sub-Sahel. The burden in older children may justify extending the age range, as has been done effectively in Senegal. We examine costs of door-to-door SMC delivery to children up to 10 years by community health workers (CHWs). We analysed incremental financial and economic costs at district level and below from a health service perspective. We examined project accounts and prospectively collected data from 405 CHWs, 46 health posts, and 4 district headquarters by introducing questionnaires in advance and completing them after each monthly implementation round. Affordability was explored by comparing financial costs of SMC to relevant existing health expenditure levels. Costs were disaggregated by administration month and by health service level. We used linear regression models to identify factors associated with cost variation between health posts. The financial cost to administer SMC to 180 000 children over one malaria season, reaching ∼93% of children with all three intended courses of SMC was $234 549 (constant 2010 USD) or $0.50 per monthly course administered. Excluding research–participation incentives, the financial cost was $0.32 per resident (all ages) in the catchment area, which is 1.2% of Senegal’s general government expenditure on health per capita. Economic costs were 18.7% higher than financial costs at $278 922 or $0.59 per course administered and varied widely between health posts, from $0.38 to $2.74 per course administered. Substantial economies of scale across health posts were found, with the smallest health posts incurring highest average costs per monthly course administered. SMC for children up to 10 is likely to be affordable, particularly where it averts substantial curative care costs. Estimates of likely costs and cost-effectiveness of SMC in other contexts must account for variation in average costs across delivery months and health posts.

Differences in the cost of admitted patient care for Indigenous people and people from remote locations

The introduction of activity-based funding (ABF) means that Australian Refined Diagnosis Related Groups and their relative costs will become the basis for reimbursing public hospitals for admitted patient services. This study sought to investigate the variation in admitted patient costs for Indigenous people and people from remote areas that cannot be explained by variation in the clinical mix of cases, and to interpret this variation within an ABF framework. The study used a dataset of discharges from public hospitals of Northern Territory residents between July 2007 and June 2009. Multivariate regression analysis was used to estimate the variation in average costs, using the logarithm of patient cost as the dependent variable and Major Diagnostic Categories (MDCs), hospitals and population subgroups (Indigenous v. non-Indigenous; urban v. remote) as independent variables. Although much of the additional cost of Indigenous and remote patients was found to be due to differences in severity and complexity between MDCs, there were extra costs for remote Indigenous patients that were not captured by the classification system. Hospitals servicing larger than average proportions of these patients could be systematically underfunded within an ABF framework unless a price adjustment is applied.

Economics of blood screening: in search of an optimal blood screening strategy

The objectives of this retrospective study were to assess the economic impact that the practice of 'family replacement donor system' has on the operational costs of a rural blood bank and to rationalize efficient blood screening protocols with a view to minimizing blood screening costs without compromising blood safety. Prevalence of transfusion-transmissible infections such as HIV, hepatitis B and syphilis were ascertained from records of 870 potential donors screened over a period of 6 months. Costs of screening tests were approximated by summing up costs of materials used per test. Overhead and labour costs were not factored in. Average and marginal costs of a fully-screened blood unit were calculated using different blood screening protocols. The average and marginal costs of a fully-screened blood unit vary greatly depending on the order in which screening tests are conducted. Although the variation in average costs per blood unit among different protocols is narrow, US 29.44 dollars to US 33 dollars, the variation in marginal costs is significantly wider ranging from US 22.79 dollars to US 51.85 dollars. Overall, 78 (9%) of the potential donors had HIV infection while 25 (3.2%) had hepatitis B infections and nine (1.2%) donors had syphilis. Co-infection rate was very low at 1.4%. The study shows that it is possible to prioritize blood screening tests for the selection of safe blood donors simply and cost-effectively in a developing country hospital. In the face of rapid rises in health-care spending, it is very important that essential health services such as blood screening are safely delivered with as little expenditure of financial resources as possible. To make sound economic decisions, average cost is not what matters but marginal cost, the cost of one more test.

Variation in Average Costs among Federally Sponsored State-Organized Cancer Detection Programs: Economies of Scale?

Societal cost-effectiveness analysis and its variants help decision makers achieve an efficient allocation of resources across the set of all possible health interventions. Sometimes, however, decision makers are focused instead on the efficient allocation of resources within a particular intervention program that has already been implemented. This is especially true when the intervention is being delivered at several different sites. An analysis of average cost across program sites may help program officials to maximize the health benefits that can be achieved with limited resources. In this article, the authors present such an analysis, with special attention paid to the possible existence and implications of economies of scale. Focusing on federally sponsored, state-organized cancer detection programs, the authors modeled 19 state programs as productive processes and examined their average costs over a 2- to 5-year period of operation. They considered 3 alternative definitions of output: women served, screens performed, and conditions detected. Average federal costs and average total costs were estimated for each grant period. Multivariate regression analysis was used to help explain the variation in average costs. The average cost estimates were distributed in a skewed pattern with the majority of observations falling close to the median and substantially below the mean. For all measures considered, average cost decreased as output expanded. This inverse relationship between average cost and output level persisted even after controlling for the effects of other predictors, suggesting the possible existence of economies of scale. The potential existence of economies of scale calls into question the assumption of a constant average cost frequently made in economic analyses of proposed public health programs. It also implies that a) differences in output level should be taken into account when comparing operating efficiency across program sites; b) conclusions from societal cost-effectiveness analyses may depend on the level of output at which the programs are evaluated; c) cost projections could be inaccurate if they do not take into account the decrease in average cost that occurs as output expands; and d) gains might be possible if similar programs with limited output potential are integrated, perhaps through cost sharing.

Effects of wages and scale on the costs of school-based mouthrinsing programs in the USA.

Studies of school-based mouthrinsing programs show variations in costs. In earlier work per subject costs in 14 programs were shown to increase with program size. Theoretical explanations for this finding, pertinent to these programs, include 1) wage differentials and 2) scale effects--differences in labor productivity attributable to organizational differences. To test the hypotheses implicit in these explanations a log-linear model was specified with average costs (in constant dollars) expressed as a function of wages and scale. Data were pooled for two complete years, yielding 28 observations. Regression analysis showed that 68% of the variation in average costs was explained by wages and scale, and that with wages held constant, a 1.0% increase in program size correlated with a 0.33% increase in per subject costs. The result is attributable to decreasing labor productivity. The findings of diseconomies of scale in mouthrinse programs have potential implications for the planning and evaluation of community dental programs.

HOSPITAL COSTS AND INFORMATION THEORY CASE MIX INDEXES: RESULTS FOR QUEENSLAND

The use of information theory as a basis for the construction of scalar case mix indexes for hospitals is well established but to date no results arising from an application of these indexes to Australian hospitals have been published. This paper provides a simplified explanation of the information theory approach and constructs the indexes for Queensland public hospitals. The usefulness of the indexes is then demonstrated with two applications. First, they are used to explain the variation in average cost per case between the hospitals in the study and are found to account for a small but statistically significant amount of such variation. Second, they are employed to provide estimates of state mean average and marginal costs by case type in Queensland. The resulting estimates are all both positive and plausible, characteristics not commonly found in estimates obtained using other techniques.