[Improvement of cost allocation in gastroenterology by introduction of a novel service catalogue covering the complete spectrum of endoscopic procedures]. / Verbesserung der Kostenkalkulation in der Gastroenterologie durch Einführung eines neuen Leistungskatalogs für alle endoskopischen Prozeduren.

BACKGROUND: The German hospital reimbursement system (G-DRG) is incomplete for endoscopic interventions and fails to differentiate between complex and simple procedures. This is caused by outdated methods of personnel-cost allocation. METHODS: To establish an up-to-date service catalogue 50 hospitals made their anonymized expense-budget data available to the German-Society-of-Gastroenterology (DGVS). 2.499.900 patient-datasets (2011-2013) were used to classify operation-and-procedure codes (OPS) into procedure-tiers (e.g. colonoscopy with biopsy/colonoscopy with stent-insertion). An expert panel ranked these tiers according to complexity and assigned estimates of physician time. From June to November 2014 exact time tracking data for a total 38.288 individual procedures were collected in 119 hospitals to validate this service catalogue. RESULTS: In this three-step process a catalogue of 97 procedure-tiers was established that covers 99% of endoscopic interventions performed in German hospitals and assigned validated mean personnel-costs using gastroscopy as standard. Previously, diagnostic colonoscopy had a relative personnel-cost value of 1.13 (compared to gastroscopy 1.0) and rose to 2.16, whereas diagnostic ERCP increased from 1.7 to 3.62, more appropriately reflecting complexity. Complex procedures previously not catalogued were now included (e.g. gastric endoscopic submucosal dissection: 16.74). DISCUSSION: This novel service catalogue for GI-endoscopy almost completely covers all endoscopic procedures performed in German hospitals and assigns relative personnel-cost values based on actual physician time logs. It is to be included in the national coding recommendation and should replace all prior inventories for cost distribution. The catalogue will contribute to a more objective cost allocation and hospital reimbursement - at least until time tracking for endoscopy becomes mandatory.

Optimal sample size allocation for Welch's test in one-way heteroscedastic ANOVA.

The determination of an adequate sample size is a vital aspect in the planning stage of research studies. A prudent strategy should incorporate all of the critical factors and cost considerations into sample size calculations. This study concerns the allocation schemes of group sizes for Welch's test in a one-way heteroscedastic ANOVA. Optimal allocation approaches are presented for minimizing the total cost while maintaining adequate power and for maximizing power performance for a fixed cost. The commonly recommended ratio of sample sizes is proportional to the ratio of the population standard deviations or the ratio of the population standard deviations divided by the square root of the ratio of the unit sampling costs. Detailed numerical investigations have shown that these usual allocation methods generally do not give the optimal solution. The suggested procedures are illustrated using an example of the cost-efficiency evaluation in multidisciplinary pain centers.

How Cleveland Clinic used TDABC to improve value.

Cleveland Clinic partnered with Harvard Business School to conduct a pilot project to explore the differences between time-driven activity-based costing (TDABC) and relative value unit costing. The goal was to determine whether TDABC could improve the accuracy of cost information and identify value-improvement opportunities for two types of heart-value procedures. Using TDABC, leaders gained a detailed look into process steps that could be consolidated, reduced, or performed with a lower cost mix of personnel.

A new costing model in hospital management: time-driven activity-based costing system.

Traditional cost systems cause cost distortions because they cannot meet the requirements of today's businesses. Therefore, a new and more effective cost system is needed. Consequently, time-driven activity-based costing system has emerged. The unit cost of supplying capacity and the time needed to perform an activity are the only 2 factors considered by the system. Furthermore, this system determines unused capacity by considering practical capacity. The purpose of this article is to emphasize the efficiency of the time-driven activity-based costing system and to display how it can be applied in a health care institution. A case study was conducted in a private hospital in Cyprus. Interviews and direct observations were used to collect the data. The case study revealed that the cost of unused capacity is allocated to both open and laparoscopic (closed) surgeries. Thus, by using the time-driven activity-based costing system, managers should eliminate the cost of unused capacity so as to obtain better results. Based on the results of the study, hospital management is better able to understand the costs of different surgeries. In addition, managers can easily notice the cost of unused capacity and decide how many employees to be dismissed or directed to other productive areas.

Applying the ABCs in provider organizations.

Activity-based costing (ABC) is an accounting technique designed to guard against potentially serious financial problems that can arise when an organization's accounting costs deviate significantly from its actual costs. In general, an ABC analysis considers two factors: a cost element (a directly measurable unit of cost, such as the cost of an item) and a cost driver (a directly measurable feature of the service, such as how often the item is used). ABC is best applied to specific service areas, orservice packages, for which consumption of resources is largely predictable and atomic units of services can be accurately identified.

Bilateral associated game: Gain and loss in revaluation.

Hamiache introduces associated game to revalue each coalition's worth, in which every coalition redefines his worth based on his own ability and the possible surpluses cooperating with other players. However, as every coin has two sides, revaluation may also bring some possible losses. In this paper, bilateral associated game will be presented by taking into account the possible surpluses and losses when revaluing the worth of a coalition. Based on different bilateral associated games, associated consistency is applied to characterize the equal allocation of non-separable costs value (EANS value) and the center-of-gravity of imputation-set value (CIS value). The Jordan normal form approach is the pivotal technique to accomplish the most important proof.

Hospital cost shifting revisited: new evidence from the balanced budget act of 1997.

This paper analyzes hospital cost shifting using a natural experiment generated by the Balanced Budget Act (BBA) of 1997. I find evidence that urban hospitals were able to shift part of the burden of Medicare payment reduction onto private payers. However, the overall estimated degree of cost shifting is small and varies according to a hospital's share of private patients. At hospitals where Medicare is a small payer relative to private insurers, up to 37% of BBA cuts was transferred to private payers through higher payments. In contrast, hospitals with greater reliance on Medicare were more financially distressed, as these hospitals saw large BBA cuts but were limited in their abilities to cost shift.

The use of source apportionment for air quality management and health assessments.

Receptor modeling is the application of data analysis methods to elicit information on the sources of air pollutants. Typically, it employs methods of solving the mixture resolution problem using chemical composition data for airborne particulate matter (PM) samples. In such cases, the outcome is the identification of the pollution source types and estimates of the contribution of each source type to the observed concentrations. Receptor modeling also involves efforts to identify the locations of the sources through the use of local meteorology or ensembles of air parcel back trajectories. Compositional data were collected in a number of monitoring programs. The U.S. Environmental Protection Agency deployed a network of urban airborne PM samplers to provide PM(2.5) composition data for urban centers across the United States. In addition, advanced monitoring methods were deployed at "supersites." These data show the differences in composition in different part of the country and were also used to identify and apportion the particle sources. These results were used to (1)develop effective and efficient air quality management plans and (2) refine emission inventories for input into deterministic models to predict changes in air quality as the result of the implementation of various management plans. The apportionments also serve as exposure estimates for health effects models to identify those components of the PM that are most closely related to observed adverse health effects. Although current regulations target total airborne mass concentrations, such health effects results might result in targeting those sources that are most likely linked to adverse health effects and thus produce the maximum health benefit.

Cost allocation methodology applicable to the temporary assistance for needy families program. Final rule.

This final rule applies to the Temporary Assistance for Needy Families (TANF) program and requires States, the District of Columbia and the Territories (hereinafter referred to as the "States") to use the "benefiting program" cost allocation methodology in U.S. Office of Management and Budget (OMB) Circular A-87 (2 CFR part 225). It is the judgment and determination of HHS/ACF that the "benefiting program" cost allocation methodology is the appropriate methodology for the proper use of Federal TANF funds. The Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996 gave federally-recognized Tribes the opportunity to operate their own Tribal TANF programs. Federally-recognized Indian tribes operating approved Tribal TANF programs have always followed the "benefiting program" cost allocation methodology in accordance with OMB Circular A-87 (2 CFR part 225) and the applicable regulatory provisions at 45 CFR 286.45(c) and (d). This final rule contains no substantive changes to the proposed rule published on September 27, 2006.

Cost drivers and resource allocation in military health care systems.

This study illustrates the feasibility of incorporating technical efficiency considerations in the funding of military hospitals and identifies the primary drivers for hospital costs. Secondary data collected for 24 U.S.-based Army hospitals and medical centers for the years 2001 to 2003 are the basis for this analysis. Technical efficiency was measured by using data envelopment analysis; subsequently, efficiency estimates were included in logarithmic-linear cost models that specified cost as a function of volume, complexity, efficiency, time, and facility type. These logarithmic-linear models were compared against stochastic frontier analysis models. A parsimonious, three-variable, logarithmic-linear model composed of volume, complexity, and efficiency variables exhibited a strong linear relationship with observed costs (R(2) = 0.98). This model also proved reliable in forecasting (R(2) = 0.96). Based on our analysis, as much as $120 million might be reallocated to improve the United States-based Army hospital performance evaluated in this study.

The health care cost-shifting debate: could both sides be right?

Private payers and many industry analysts claim that hospital pricing strategy typically shifts health care costs from government payors to private payors. Economists believe, however, that hospitals would have maximized prices with previous market power, preventing any current opportunity to increase prices and shift costs. Economists have more recently claimed that a lack of competition is the reason for any cost shifting that may be occurring. Given issues such as hospital mission and governance, and the responses of hospitals to changing industry conditions, both parties may be correct in their cost-shifting assessment. Furthermore, understanding both viewpoints may be necessary to address adequately the cost-shifting issue and the future financing of health care.

A model for calculating costs of hospital-acquired infections: an Italian experience.

PURPOSE: Many approaches on the economic aspect of hospital acquired infections (HAIs) have two major limitations: first, the lack of distinction between resources attributable to the management of HAI and resources absorbed by the main clinical problem for which the patient was hospitalized, and second, the lack of an adequate method for calculating the relative costs. These assume that the resources used by HAI can be determined by measuring the extra days of length of days (LOS) of infected patients versus non-infected patients and attribute to extra-LOS a value to the mean total cost. The aim of the article is to test a cost-modelling method that could overcome these limitations by applying the appropriateness evaluation protocol to the medical charts of patients with hospital-acquired symptomatic urinary tract infection (UTI) or sepsis, and by using cost-centre accounting. DESIGN/METHODOLOGY/APPROACH: The paper explains and tests a model for calculating costs of HAIs. FINDINGS: The data analysis showed that it is not always true that infections protract LOS: five out of 25 sepsis cases have extra-LOS and eight out of 25 UTI cases have extra-LOS, while the cases of sepsis that arose in surgery ward and intensive care units and urinary tract infections in ICU are without prolongation of LOS. The data analysis also showed that, using the mean total cost, the three cases of sepsis in the general surgery and the six in the ICU did not incur costs, nor did the two cases of UTI in ICU, so that they appear to be infections at zero cost. Moreover, the weight of the cost for the bed, or for the diagnostic services, or for the pharmacological treatment, varied widely depending on the site of the HAI and the ward where the patient was hospitalized. ORIGINALITY/VALUE: The method can be applied in any hospital.

Implementing apportionment strategy to identify costs in a multidisciplinary clinic.

OBJECTIVE: To present the implementation of an apportionment strategy proportional to the productive areas of a multidisciplinary clinic, defining the minimum values to be passed monthly to health professionals who work there. METHODS: A study of the clinic structure was carried out, in which the area of occupation of each service was defined. Later the cost was prorated, allocating a value to each room, proportional to the space occupied. RESULTS: The apportionment implementation allowed the clinic managers to visualize the cost of each room, providing a value base for formation of a minimum amount necessary to be passed monthly to each professional, as a form of payment for rent of using their facilities. CONCLUSION: The risk of financial loss of the clinic was minimized due to variation of its productivity, as well as the conditions of transference at the time of hiring by professionals were clear, promoting greater confidence and safety in contract relations. OBJETIVO: Apresentar a implantação de uma estratégia de rateio proporcional às áreas produtivas de uma clínica multidisciplinar, definindo valores mínimos a serem repassados mensalmente aos profissionais de saúde que as ocupam. MÉTODOS: Estudo da estrutura da clínica, no qual foi definida, em metros quadrados, a área de ocupação de cada serviço. Em seguida, o custo foi rateado, alocando um valor a cada sala, proporcional ao espaço ocupado. RESULTADOS: A implantação do rateio possibilitou aos gestores da clínica estudada visualizar o custo de cada sala, fornecendo uma base de valor para formação de um valor mínimo necessário a ser repassado mensalmente para cada profissional, como forma de pagamento pelo aluguel de utilização de suas instalações. CONCLUSÃO: Minimizou-se o risco de prejuízo da clínica pela variação de sua produtividade, bem como ficaram claras as condições de repasse no momento de contratação do aluguel pelos profissionais, promovendo maior confiança e segurança na relação contratual.

The importance of comorbidity in analysing patient costs in Swedish primary care.

BACKGROUND: The objective was to explore the usefulness of the morbidity risk adjustment system Adjusted Clinical Groups (ACG), in comparison with age and gender, in explaining and estimating patient costs on an individual level in Swedish primary health care. Data were retrieved from two primary health care centres in southeastern Sweden. METHODS: A cross-sectional observational study. Data from electronic patient registers from the two centres were retrieved for 2001 and 2002, and patients were grouped into ACGs, expressing the individual combination of diagnoses and thus the comorbidity. Costs per patient were calculated for both years in both centres. Cost data from one centre were used to create ACG weights. These weights were then applied to patients at the other centre. Correlations between individual patient costs, age, gender and ACG weights were studied. Multiple linear regression analyses were performed in order to explain and estimate patient costs. RESULTS: The variation in individual patient costs was substantial within age groups as well as within ACG weight groups. About 37.7% of the individual patient costs could be explained by ACG weights, and age and gender added about 0.8%. The individual patient costs in 2001 estimated 22.0% of patient costs in 2002, whereas ACG weights estimated 14.3%. CONCLUSION: ACGs was an important factor in explaining and estimating individual patient costs in primary health care. Costs were explained to only a minor extent by age and gender. However, the usefulness of the ACG system appears to be sensitive to the accuracy of classification and coding of diagnoses by physicians.

A modified method of activity-based costing for objectively reducing cost drivers in hospitals.

OBJECTIVES: Activity-based costing (ABC) is widely used to precisely allocate indirect costs to medical services. In the ABC method, the indirect cost is divided among the medical services in proportion to the volume of "cost drivers", for example, labor hours and the number of hours of surgery. However, the workload of data collection of cost drivers can be time-consuming and a considerable burden if there are many cost drivers. The authors aim to develop a method for objectively reducing the cost drivers used in the ABC method. METHODS: In the ABC method, the cost driver is assigned for each activity. We assume that these activities and cost drivers are the best combination. Our method, that is cost driver reduction (CDR), can objectively select surrogates of the cost drivers for each activity in ABC from candidate cost drivers. Concretely, the total indirect cost of an activity is temporarily allocated to the medical services using each candidate of cost drivers. The difference between the costs calculated by each candidate and the proper cost driver used in ABC is calculated to evaluate the similarity by the evaluation function. RESULTS: We estimated the cost of laboratory tests using our method and revealed that the number of cost drivers could be reduced from seven in the ABC to four. Similarly, the results of cost estimation obtained by our method were as accurate as those calculated using the ABC. CONCLUSIONS: Our method provides two advantages compared to the ABC method: 1) it provides results that are as accurate as those of the ABC method, and 2) it is simpler to perform complicated estimation of hospital costs.

Step up to the step-down method.

CFOs can use the Medicare cost report step-down method to allocate costs by service line and then develop an income matrix. With an income matrix and tiered expenses by service areas, CFOs can direct corrective action to improve financial performance. The cost data derived from the step-down method can also be used to set prices and to negotiate third-party contracts.

Establishing Cost-Effective Allocation of Proton Therapy for Breast Irradiation.

PURPOSE: Cardiac toxicity due to conventional breast radiation therapy (RT) has been extensively reported, and it affects both the life expectancy and quality of life of affected women. Given the favorable oncologic outcomes in most women irradiated for breast cancer, it is increasingly paramount to minimize treatment side effects and improve survivorship for these patients. Proton RT offers promise in limiting heart dose, but the modality is costly and access is limited. Using cost-effectiveness analysis, we provide a decision-making tool to help determine which breast cancer patients may benefit from proton RT referral. METHODS AND MATERIALS: A Markov cohort model was constructed to compare the cost-effectiveness of proton versus photon RT for breast cancer management. The model was analyzed for different strata of women based on age (40 years, 50 years, and 60 years) and the presence or lack of cardiac risk factors (CRFs). Model entrants could have 1 of 3 health states: healthy, alive with coronary heart disease (CHD), or dead. Base-case analysis assumed CHD was managed medically. No difference in tumor control was assumed between arms. Probabilistic sensitivity analysis was performed to test model robustness and the influence of including catheterization as a downstream possibility within the health state of CHD. RESULTS: Proton RT was not cost-effective in women without CRFs or a mean heart dose (MHD) <5 Gy. Base-case analysis noted cost-effectiveness for proton RT in women with ≥1 CRF at an approximate minimum MHD of 6 Gy with a willingness-to-pay threshold of $100,000/quality-adjusted life-year. For women with ≥1 CRF, probabilistic sensitivity analysis noted the preference of proton RT for an MHD ≥5 Gy with a similar willingness-to-pay threshold. CONCLUSIONS: Despite the cost of treatment, scenarios do exist whereby proton therapy is cost-effective. Referral for proton therapy may be cost-effective for patients with ≥1 CRF in cases for which photon plans are unable to achieve an MHD <5 Gy.

Outpatient-based bone marrow transplantation for hematologic malignancies: cost saving or cost shifting?

PURPOSE: To determine whether a shift in care from an inpatient-based to an outpatient-based bone marrow transplantation (BMT) program decreased charges to payers without increasing clinical complications or out-of-pocket costs to patients. PATIENTS AND METHODS: This nonrandomized prospective cohort study compared clinical and economic outcomes for 132 consecutive BMT patients with hematologic malignancies who received either inpatient- or outpatient-based BMT care. RESULTS: Seventeen of 132 BMT patients underwent outpatient-based BMT. Compared with the inpatient-based group, the outpatient-based group had a markedly lower mean number of inpatient hospital days (22 v 47; P <.001) and decreased mean inpatient facility charges ($61,059 less per patient; P <.0001) but had higher mean outpatient facility charges ($49,732 higher; P <. 0001). Total professional fees were similar for the groups. The mean total charge to payers was only 7% less ($12,652; P =.21) for outpatient-based BMT than for inpatient-based BMT, but total charge was 34% less for outpatient compared with inpatient BMT ($54,240; P = 0.056) in a subset of patients who had a standard rather than high risk of treatment failure. There was no significant difference between groups in out-of-pocket costs for transportation, lodging, meals, home nursing, household assistance, child care, medication expenses, or unreimbursed medical bills. There also was no significant difference between groups in reported income lost, involuntary unemployment, or months of disability. The two groups had similar rates of major complications, including death, significant acute graft-versus-host disease, and veno-occlusive disease of the liver. CONCLUSION: Increased use of outpatient-based BMT should produce substantial cost savings for payers without adverse effects on patients for those patients who do not have a high risk of treatment failure.

Reducing the costs of phase III cardiovascular clinical trials.

BACKGROUND: The pharmaceutical industry spends approximately 26.4 billion dollars annually for research and development (4.1 billion dollars in cardiovascular products). We compared pharmaceutical companies' planned resource use and costs in Phase III cardiovascular trials and identified cost-saving strategies. METHODS AND RESULTS: We developed 2 case scenarios (a 17,000-patient, open-label acute coronary syndromes [ACS] trial and a 14,500-patient, double-blind congestive heart failure [CHF]) trial and surveyed 6 pharmaceutical experts about expected resources (e.g., number of sites, case report form [CRF] pages, and monitoring visits) needed for the trials. Using a validated model, we estimated costs under each expert's assumptions. ACS trial costs averaged 83 million dollars (median, 67 million dollars; range, 57 dollars to 158 million dollars) and 142 million dollars (median, 135 million dollars; range, 102 dollars to 207 million dollars) for the CHF trial. Site-related expenses (site management and payments) were >65% of total costs for both trials. In sensitivity analyses, total costs were reduced >40% by simultaneously reducing CRF pages, monitoring visits, and site-payment amounts but maintaining the numbers of patients and sites. CONCLUSIONS: With a set number of sites and patients, the most efficient way to reduce trial costs and still meet the trial's scientific objectives is to reduce management complexity. Modest changes in management parameters release significant monies to answer more research questions.