Teaching hospital costs: implications for academic missions in a competitive market

CONTEXT: As the managed care environment demands lower prices and a greater focus on primary care, the high cost of teaching hospitals may adversely affect their ability to carry out academic missions. OBJECTIVE: To develop a national estimate of total inpatient hospital costs related to graduate medical education (GME). DESIGN: Using Medicare cost report data for fiscal year 1993, we developed a series of regression models to analyze the relationship between inpatient hospital costs per case and explanatory variables, such as case mix, wage levels, local market characteristics, and teaching intensity (the ratio of interns and residents to beds). SETTING AND PARTICIPANTS: A total of 4764 nonfederal, general acute care hospitals, including 1014 teaching hospitals. MAJOR OUTCOME MEASURES: Actual direct GME hospital costs and estimated indirect GME-related hospital costs based on the statistical relationship between teaching intensity and inpatient costs per case. RESULTS: In 1993, academic medical center (AMC) costs per case were 82.9% higher than those for urban nonteaching hospitals (actual cost per case, $9901 vs $5412, respectively). Non-AMC teaching hospital costs per case were 22.5% higher than those for nonteaching hospitals (actual cost per differences in case, $6630 vs $5412, respectively). After adjustment for case mix, wage levels, and direct GME costs, AMCs were 44% more expensive and other teaching hospitals were 14% more costly than nonteaching hospitals. The majority of this difference is explained by teaching intensity. Total estimated US direct and indirect GME-related costs were between $18.1 billion and $22.8 billion in 1997. These estimates include some indirect costs, not directly educational in nature, related to clinical research activities and specialized service capacity. CONCLUSIONS: The cost of teaching hospitals relative to their nonteaching counterparts justifies concern about the potential financial impact of competitive markets on academic missions. The 1997 GME-related cost estimates provide a starting point as public funding mechanisms for academic missions are debated. The efficiency of residency programs, their consistency with national health workforce needs, financial benefits provided to teaching hospitals, and ability of AMCs to maintain higher payment rates are also important considerations in determining future levels of public financial support.     

The growth of corporate private hospitals in Malaysia: policy contradictions in health system pluralism

The rapid growth of corporate investment in the Malaysian private hospital sector has had a considerable impact on the health care system. Sustained economic growth, the development of new urban areas, an enlarged middle class, and the inclusion of hospital insurance in salary packages have all contributed to a financially lucrative investment environment for hospital entrepreneurs. Many of Malaysia's most technologically advanced hospitals employing leading specialists are owned and operated as corporate business ventures. Corporate hospital investment has been actively encouraged by the government, which regards an expanded private sector as a vital complement to the public hospital system. Yet this rapid growth of corporately owned private hospitals has posed serious contradictions for health care policy in terms of issues such as equity, cost and quality, the effect on the wider health system, and the very role of the state in health care provision. This article describes the growth of corporate investment in Malaysia's private hospital sector and explores some of the attendant policy contradictions.     

Psychiatric care and health insurance reform

Concerns about cost, access, and quality of health care in the United States have led to a variety of legislative proposals that would reform our health care system and its financing. Health insurance benefits for mental illness, including substance abuse, are treated differently from medical/surgical benefits, with stricter limits on outpatient visits and hospital days. Medicare, Medicaid, and most private health insurance plans contain this historic disparity of coverage for mental illness compared to general medical illness. Psychiatric services are also distinguishable because of the large public sector reimbursement for mental illness treatment and support. Principles for a more equitable design of mental health benefits include a non-discriminatory approach; payment on the basis of service rather than diagnosis; application of cost containment for care of mental illness on the same basis as care of general medical illness; retention of the public sector as a backup system for high-cost, long-term care; encouragement of lower-cost alternatives to the hospital through the development of a continuum of care; and a recognition of the distinction between psychotherapy and medical management. All current approaches to universal health care fall short of these principles. A research agenda is needed now more than ever in order to articulate the case for complete coverage of mental illness and substance abuse.     

The role for regional autopsy centers in the evaluation of covered deaths. Survey of opinions of US and Canadian chairs of pathology and major health insurers in the United States

OBJECTIVE: To evaluate the advantages and disadvantages of, as well as the attitudes of health care professionals and insurers toward, the development of regional autopsy services. DESIGN: Survey of 150 medical school departments of pathology in the United States and Canada and 12 representative major health insurers in the United States. RESULTS: Of the 25 respondents from the pathology departments, most were in favor of regionalization of autopsy services, if properly underwritten. Of the five respondents from the health insurers, most were disinterested in the autopsy as a measure of outcome and unwilling to provide support. CONCLUSIONS: Health care is being regionalized around networks of insurers rather than hospitals. The networks are defined by a mixture of hospitals, physician groups, and other health care professionals. Within networks, the goal is to subscribe groups of patients, covered lives, for all medical needs from primary to complex care. As the economic risk of caring for patients is shifted to physicians, the incentive to provide service at the lowest possible cost grows, as does the need to assure that medical mismanagement does not occur. To provide quality care at affordable costs, it is necessary that outcomes, including deaths, be professionally evaluated. The present system of death investigation involves hospital colleagues and is potentially biased. Regional autopsy centers that provide timely expert information should be part of the health care system. Medical schools are potential sites for regional autopsy programs because they have the personnel needed to conduct appropriate death-related studies. Most schools are affiliated programmatically and economically with surrounding hospitals and physicians in a manner in which outcomes, costs, and quality of clinical service are of common interest.     

Histologic distribution of hepatitis A, B, C, D, E, and G with concomitant cytokine response in liver tissue

BACKGROUND: Studies focusing on the economic impact of cancer on families have emphasized that costs of chronic disease are substantial for patients and their families. However, little effort has been devoted to measuring the costs of care for families of patients hospitalized with stroke. METHODS: A total of 215 stroke patients and their families from four teaching hospitals in the Taipei metropolitan area were monitored from the date of the patient's admission to hospital until the date of discharge. The value of labor contributed by families was estimated by assigning the current monetary market rate of providing health aide to the time families spent caring for patients in hospital. Lost earnings of patients and families, expenditure for medical care, and expenses for food, clothes, adult diapers, transportation and other miscellaneous items were determined and summed to arrive at the total family cost of providing care. RESULTS: The average cost of care for one family per inpatient day was NT$4,358.20. A total of 98.6% of the families incurred labor costs, which accounted for about half of family costs for providing care. Hospital bills accounted for almost 19% of total family costs. The income loss for families and patients accounted for about 25% of total family costs. Expenses for food, clothes, transportation, diapers and other illness-related miscellaneous items accounted for about 12% of total family costs. Multiple regression analyses demonstrated that the number of family members involved in giving care and the length of stay are important predictors for the total cost of care. Average total family costs per day increased by 24.3% when an additional family member was involved in providing care. Total family costs increased 2.5% for each hospital day. CONCLUSIONS: If direct and indirect nonmedical costs are not included in the total cost calculation for providing hospital care to stroke patients, the economic impact of care on families is likely to be underestimated.     

Safety and cost-effectiveness of solvent-detergent-treated plasma. In search of a zero-risk blood supply

OBJECTIVE: To determine the public health and economic implications of solvent-detergent-treated frozen plasma (SD FP). While this processing technique nearly eliminates the risk of transmitting lipid-enveloped viruses (hepatitis B and C and human immunodeficiency virus), it has associated costs and, because it requires pooling many plasma units, may increase risks of nonenveloped virus transmission. DESIGN: A previously published Markov decision analysis model was modified to assess transfusion-related outcomes in hypothetical cohorts of plasma recipients. In-hospital mortality and other characteristics were determined in 61 patients receiving plasma transfusions at a medium-sized tertiary care center to provide data for the model. Other parameters were obtained from the medical literature. MAIN OUTCOME MEASURES: Expected SD FP costs, benefits, and cost-effectiveness, assessed as cost per quality-adjusted life-year saved. RESULTS: Compared with untreated plasma, a unit of SD FP produces a net benefit of 35 minutes in quality-adjusted life expectancy at a cost of about $19. Extrapolated to the 2.2 million plasma units transfused annually in the United States, SD FP would save 147 quality-adjusted life-years at a cost of $42.5 million. The marginal cost-effectiveness, $289,300 per quality-adjusted life-year saved in the baseline analysis, was most sensitive to estimates of SD treatment cost and the clinical setting of plasma use. In sensitivity analysis, the net benefit of SD FP was negated by the existence of even a minute risk of nonenveloped virus infection. CONCLUSIONS: From a public health perspective, the relatively high costs and small benefits of reducing enveloped virus infection risks with SD FP (and the additional risks of noneveloped virus transmission) do not appear to justify widespread implementation of this new technology.     

The economic cost of obesity: the French situation

OBJECTIVE: To estimate the economic burden of obesity in France. DESIGN: A prevalence-based approach identifying the costs incurred during a given year (1992) by obese subjects. MEASUREMENTS: Direct costs (personal health care, hospital care, physician services, drugs) and indirect costs (lost output as a result of cessation or reduction of productivity caused by morbidity and mortality); economic benefits due to the reduced incidence of hip fractures. RESULTS: The direct costs of obesity (BMI > or = 27) were 11.89 billion French Francs (FF), which corresponded to about 2% of the expenses of the French care system. Hypertension represented 33% of the total amount and cancer 2.5% of the direct cost of obesity. Indirect costs represented FF 0.6 billion. These are conservative estimates as far as all obesity-related diseases and all health care and indirect costs were not included due to missing information. CONCLUSION: These results were remarkably similar to previous reports on the economic costs of obesity in other western countries (USA, Sweden, Netherlands, Australia) which concluded that the cost of obesity amounted to around 2% to 5% of the total cost of health care in industrialized societies.     

Use of administrative personnel in hospitals: a three nation comparison

Differences in the costs of health care systems among industrialized countries has been the focus of several studies. Labor costs, specifically the amount of resources used for administration, are considered to contribute to differences in overall health care costs. To determine differences in the use of labor resources, especially administrative and managerial, among American, Austrian and German hospitals, we use a convenience sample of one Austrian, one German and two United States (US) tertiary care centers. In our analysis we used payroll data of the four hospitals. First, we categorized job titles and created job categories. Subsequently, we calculated full time equivalents (FTEs) per job category and compared them across countries. Adjustments were made for differences in health systems. The main outcome measures were FTEs per patient day and per discharge in each job category. In the US hospitals > 19% of FTEs were in administrative categories as compared with < 8% in the European hospitals. For administrative managers, US hospitals used > 11 times the labor per patient day of the European institutions. Among administrative areas, the largest absolute FTE difference was in financial operations. US hospitals used > 5 FTEs of personnel per 10,000 patient days versus < 1.0 FTE in the European hospitals. Given the kinds of administrative work done in US hospitals compared to Austria and Germany, differences in the organization and financing of these countries' health care systems may account for an important part of the higher number of US personnel.     

Economic sequelae of failed treatments of psychosomatic and somato-psychic illnesses

The search for biotechnical causes of diseases although very successful in many areas fail to account for wide variations of morbidity and mortality. Such search in the most common symptoms, for which our health care system is utilized, falls short of meeting the health needs of a vast number of patients, since only in 16% such causes can be found. This continuing misunderstanding contributes to the tremendous rise in healthcare expenditures without improving the delivered health care. Relatively short lasting psychosocial interventions are shown to have a significant effect in reducing health care seeking behaviour. This is particular demonstrated in somatization disorder. In the last section examples for cost offset effects in outpatient care and in psychosomatic inpatient treatment will be given with remarkable cost savings. Finally recommendations are listed to meet the health needs of the public more sufficiently. Psychosocial factors are shared determinants of health outcomes across diseases, therefore labeled as "Super highways for Disease", must be taken into account to reduce the number of unnecessary diagnostic examinations and unsuccessful treatments, to reduce the length of hospital stay, to increase the survival rate in cancer by increasing the self-management and self-competence, which will finally lead to a tremendous reduction in costs for our health care system.     

Cost-effectiveness of tissue plasminogen activator for acute ischemic stroke. NINDS rt-PA Stroke Study Group

Tissue plasminogen activator (tPA) has been shown to improve 3-month outcome in stroke patients treated within 3 hours of symptom onset. The costs associated with this new treatment will be a factor in determining the extent of its utilization. Data from the NINDS rt-PA Stroke Trial and the medical literature were used to estimate the health and economic outcomes associated with using tPA in acute stroke patients. A Markov model was developed to estimate the costs per 1,000 patients eligible for treatment with tPA compared with the costs per 1,000 untreated patients. One-way and multiway sensitivity analyses (using Monte Carlo simulation) were performed to estimate the overall uncertainty of the model results. In the NINDS rt-PA Stroke Trial, the average length of stay was significantly shorter in tPA-treated patients than in placebo-treated patients (10.9 versus 12.4 days; p = 0.02) and more tPA patients were discharged to home than to inpatient rehabilitation or a nursing home (48% versus 36%; p = 0.002). The Markov model estimated an increase in hospitalization costs of $1.7 million and a decrease in rehabilitation costs of $1.4 million and nursing home cost of $4.8 million per 1,000 eligible treated patients for a health care system that includes acute through long-term care facilities. Multiway sensitivity analysis revealed a greater than 90% probability of cost savings. The estimated impact on long-term health outcomes was 564 (3 to 850) quality-adjusted life-years saved over 30 years of the model per 1,000 patients. Treating acute ischemic stroke patients with tPA within 3 hours of symptom onset improves functional outcome at 3 months and is likely to result in a net cost savings to the health care system.     

Economic public health aspects of benign prostatic hyperplasia in Austria

Benign prostatic hyperplasia (BPH) is one of the most frequent diseases in advanced aged men. The introduction of a new coding system (ICD-VESKA) in 1989 made it possible to analyze the number of hospitalized cases and to calculate the costs of inpatient care. In 1990 10,710 BPH cases were treated within Austrian hospitals. Controlling for multiple entries 9,742 individual patients (269.4 per 100,000) were treated 138,761 days. Case fatality was 0.5% (46 deaths). The number of inpatients comprises only the top 1,3% of morbidity, the total number is estimated with 770,000 patients. Based on the official nursing fees total costs in public affiliated hospitals were AS 250 millions. Including private hospitals total costs increase to AS 306 millions. The inpatient care of BPH represents only a small proportion of the total health and economic burden, which obviously mainly occurs in the outpatient system. Therefore BPH is one of the diseases of which social and economic importance is usually underestimated due to a lack of information.     

Cost offset: Past, present, and future.

The health of the U.S. health care system is precarious. Calls for reform in areas such as cost, quality, and equal access to health care are widespread and growing louder each day. Action is required on each of these issues, yet the lack of progress is cause for serious concern. A central problem is the reluctance to acknowledge the roles that the mind and behavior play in health and illness. One solution is the integration of psychological health care into the general health care system. A major vehicle for advancing the integration of health care is the "cost-offset" effect, a concept that involves paying systematic attention to psychological factors in order to reduce overuse of medical services and thereby decrease costs. Despite data demonstrating that the cost-offset hypothesis is quite robust, little has been done to implement integrated health care. This article reviews the literature on cost offset, discusses the policy implications, and considers its application to the public sector. (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Trauma center 2000. How many and which trauma centers does Europe need around the year 2000?

The treatment of severely injured patients is a challenge for preclinical and clinical treatment concepts, causing financial aspects of increasing importance for the German health care system. A total of 32,500 polytraumatized patients (PTS III and IV) are managed in trauma center levels I-IV in Germany. Trauma center levels I or II are by definition capable of supporting the full range of treatment for the severely injured. With the baseline calculation of 64,000 DM per patient and 104 polytrauma treated per year in the Berlin Virchow Clinic, 6.66 million DM primary costs must be spent for treatment. The total annual costs of this center are nearly 24 million DM for emergency cases and 7 million DM fixed costs per year, for a trauma center level I. In Europe the distribution of trauma center levels I or II is sufficient and can be specified with 1 center per 1 million inhabitants. Nevertheless, the european air medical service could support more intensive use of these central trauma institutions. This was shown by comparing the number of polytrauma patients and the number of trauma centers. Less then half of these patients are treated in levels I or II trauma centers. The financial pressure on the health system and the rising quality must lead to better utilization of trauma centers. To meet this goal a annual treatment rate of 300-400 polytrauma patients should be aimed at. The claim of the American College of Surgeons that a trauma surgeon should treat 50 severely injured patients per year would then be possible.     

Research without billing data. Econometric estimation of patient-specific costs

OBJECTIVES: This article describes a method for computing the cost of care provided to individual patients in health care systems that do not routinely generate billing data, but gather information on patient utilization and total facility costs. METHODS: Aggregate data on cost and utilization were used to estimate how costs vary with characteristics of patients and facilities of the US Department of Veterans Affairs. A set of cost functions was estimated, taking advantage of the department-level organization of the data. Casemix measures were used to determine the costs of acute hospital and long-term care. RESULTS: Hospitalization for medical conditions cost an average of $5,642 per US Health Care Financing Administration diagnosis-related group weight; surgical hospitalizations cost $11,836. Nursing home care cost $197.33 per day, intermediate care cost $280.66 per day, psychiatric care cost $307.33 per day, and domiciliary care cost $111.84 per day. Outpatient visits cost an average of $90.36. These estimates include the cost of physician services. CONCLUSIONS: The econometric method presented here accounts for variation in resource use caused by casemix that is not reflected in length of stay and for the effects of medical education, research, facility size, and wage rates. Data on non-Veteran's Affairs hospital stays suggest that the method accounts for 40% of the variation in acute hospital care costs and is superior to cost estimates based on length of stay or diagnosis-related group weight alone.     

Vestibular hypersensitivity to clicks is characteristic of the Tullio phenomenon

OBJECTIVES: This study evaluated the cost-effectiveness of a smoking cessation and relapse-prevention program for hospitalized adult smokers from the perspective of an implementing hospital. It is an economic analysis of a two-group, controlled clinical trial in two acute care hospitals owned by a large group-model health maintenance organization. The intervention included a 20-minute bedside counseling session with an experienced health counselor, a 12-minute video, self-help materials, and one or two follow-up calls. METHODS: Outcome measures were incremental cost (above usual care) per quit attributable to the intervention and incremental cost per discounted life-year saved attributable to the intervention. RESULTS: Cost of the research intervention was $159 per smoker, and incremental cost per incremental quit was $3,697. Incremental cost per incremental discounted life-year saved ranged between $1,691 and $7,444, much less than most other routine medical procedures. Replication scenarios suggest that, with realistic implementation assumptions, total intervention costs would decline significantly and incremental cost per incremental discounted life-year saved would be reduced by more than 90%, to approximately $380. CONCLUSIONS: Providing brief smoking cessation advice to hospitalized smokers is relatively inexpensive, cost-effective, and should become a part of the standard of inpatient care.     

Do community hospitals reduce the use of district general hospital inpatient beds?

Community hospitals have been supported by the general public and by professionals as one means of increasing choice between local, low technology, care and high technology care at the district general hospital. However, there is no information on the impact of community hospitals on district general hospital use subsequent to NHS and community care reforms. Examination of routinely gathered activity data in the Bath Health District revealed that availability of community hospital beds was associated with reduced use of central inpatient services in the city of Bath. The reduction was most apparent for medical and geriatric beds. Decrease in the use of surgical beds was small. However, total inpatient bed use (including central and community hospital beds) was higher in the population with access to community hospital beds. We conclude that community hospitals offer one option for accessible health care and, as such merit systematic evaluation of costs and benefits. This study presents some evidence that savings could be achieved through improved efficiency.     

Comprehensive 1-year cost analysis of open antireflux surgery in Nordic countries. Nordic GORD Study Group. Gastro-oesophageal reflux disease

BACKGROUND: Antireflux surgery is a highly effective treatment option in patients with severe gastro-oesophageal reflux disease. However, because of the increasing pressure of cost containment within health care, cost aspects must also be added to the decision-making process. METHODS: The aim of this analysis was to assess the total cost of open antireflux surgery during the first year after operation in 178 patients with chronic reflux, who were recruited into a controlled, prospective clinical trial. The study was carried out in 17 hospitals in the Nordic countries. RESULTS: The cost of the operation represented more than 90 per cent of the direct medical costs which amounted to approximately US $5700. For a patient in the work force the indirect cost, i.e. loss of production, represented 47 per cent of the total cost, which was about US $10800. CONCLUSION: The total cost profile of open antireflux surgery has now been established prospectively and can form a basis for future comparisons.     

Health financing, service utilization, and national policy: A conversation with Stan Jones.

Interviews Stan Jones, Vice President for Government Relations for Blue Cross/Blue Shield, about his perspective on major health care issues. Topics discussed include access to health care, the role of government in health care services, and factors affecting rising health care utilization and increasing costs. The moral and economic issues related to competition as a means of cost containment are considered. Also discussed is the importance of consumer demand in securing new health insurance benefits, such as coverage for mental health services. Marketplace and diagnostic/treatment issues that make insurance coverage for mental health services problematical are explored. (0 ref) (PsycINFO Database Record (c) 2010 APA, all rights reserved)     

Informal care and economic appraisal: a discussion of possible methodological approaches

The role played by informal carers in the care of people with chronic disabilities is well known. Given its importance, it is essential to consider the evaluation methodology applied in economic appraisals of different care options. Few studies attempt any evaluation and those that do use varied, inconsistent and controversial methodologies. This paper aims to elicit the major issues and methodological problems related to economic appraisal of informal care. The main concern over the present methods utilized is the lack of explicit exploration of the benefits, as perceived by carers. Carers, through their decision to care it is argued, will consider both costs and benefits. Although concepts encompassed by benefits tend to be less tangible they may considerably outweigh any financial burdens. Various methods have been utilized in the past. Financial outlays are fairly straightforwardly costed, personal effort on the part of carers causes more problems. Methods applied include: the cost of substitute services; state benefits; and travel time values. The most useful is probably the latter, although it is not problem-free. Assessing benefits relating to concepts of direct and indirect utility and welfare is more complex and difficult to measure. Despite considerable literature on carers' attitudes, often these concepts are not applied (especially to residential care options) or if they are, negative aspects are emphasized (with domiciliary care). A useful application of economic appraisal would elicit optimal solutions to care dilemmas. Producing economic burden information about informal care may not be particularly constructive. Brief assessment of eight scenarios of care, considering cost differences for the public sector and the preferences of patient and carer gives insight to the problem. It emphasizes the complexity of the issue and the essential role likely to be placed on care managers in helping carers to maximize the net benefit of their efforts.