Health care and lost productivity costs of overweight and obesity in New Zealand

Objective: To estimate the costs of health care and lost productivity attributable to overweight and obesity in New Zealand (NZ) in 2006. Methods: A prevalence‐based approach to costing was used in which costs were calculated for all cases of disease in the year 2006. Population attributable fractions (PAFs) were calculated based on the relative risks obtained from large cohort studies and the prevalence of overweight and obesity. For each disease, the PAF was multiplied by the total health care cost. The costs of lost productivity associated with premature mortality were estimated using both the Human Capital approach (HCA) and Friction Cost approach (FCA). Results: Health care costs attributable to overweight and obesity were estimated to be NZ$624m or 4.4% of New Zealand's total health care expenditure in 2006. The costs of lost productivity using the FCA were estimated to be NZ$98m and NZ$225m using the HCA. The combined costs of health care and lost productivity using the FCA were $722m and $849m using the HCA. Conclusion: The cost burden of overweight and obesity in NZ is considerable. Implications: Policies and interventions are urgently needed to reduce the prevalence of obesity thereby decreasing these substantial costs.     

Activity-based cost management in health care--another fad?

By providing improved information for strategic planning purposes activity-based cost management (ABM) systems can help hospitals and other health care providers improve the quality and efficiency of the care they provide control costs and manage their resources better. The NHS is starting to evaluate the ABM approach. Describes a research project in one specialist hospital in Sheffield UK which found that conventional approaches to costing can be inaccurate by as much as 100 per cent; conventional approaches will consistently undercost complex, specialist, infrequent episodes of care and overcost straightforward frequent episodes; and the resulting information from ABM about costs and processes significantly improves the decision-making capabilities of managers particularly in relation to ?what if? situations.     

DRGs U.K. style: a comparison of U.K. and U.S. policies for hospital cost containment and their implications for health status.

Health care cost containment in the U.K. has been characterised by the imposition of cash limits on health and personal social services. More recently performance appraisal has been introduced. The U.S. approach, on the other hand, has linked both cost containment and implicit performance appraisal by funding hospital activities on a DRG basis. Under the U.K. approach there is an internal inconsistency between the funding of hospital activities, primarily determined by the characteristics of the served population, and the appraisal of hospital performance by reference to the use of resources in relation to national norms not necessarily corresponding to the characteristics of the served population. Under the U.S. approach performance is appraised implicitly, not by the use of real resources but by the cost to the hospital of the service provision for each individual patient. Consequently the incentive is to minimise the cost of the service provision regardless of the output produced. The incentives, in both the U.K. and the U.S. approach, generate similar effects: an off-loading of responsibility for service provision at the margin onto other sectors of the health care system. They are the response to the incentive to minimise the costs incurred by the hospital in providing services to the patient. Until greater attention in paid to the monitoring of the outcomes achieved by all sectors of the health care system, and to the incentives generated to shift demands between the sectors, the respective policies will continue to be successful simply in controlling the resource cost of the hospital system.     

Primary health care funding for children under six years of age in New Zealand: why is this so hard?

The intention of this viewpoint article is to prompt discussion and debate about primary health care funding for children under the age of six. While New Zealand offers a superb natural environment for childhood, our child health outcomes continue to be poor, ranking lowest amongst 29 countries in a recent report by the Organisation for Economic Co-operation and Development. Since 1996, various funding arrangements have been introduced with the goal of achieving free primary health care for children under six years of age and nearly 80% of practices now offer care to this group without charge. Universal no cost or very low cost access for young children, however, remains elusive, particularly for after-hours care, and this is important given that at least one in five children lives in poverty. We are under no illusions about the complexity of primary care funding mechanisms and the challenges of supporting financially-sustainable systems of after-hours care. Good health care early in life, however, is a significant factor in producing a healthier and more productive adult population and improving access to primary care lessens the impact of childhood illness. We suggest that reducing cost barriers to primary care access for young children should remain an important target, and recent examples show that further reductions in cost for primary care visits for young children, including after-hours, is possible. Further funding is needed to make this widespread, in conjunction with innovative arrangements between funding authorities, primary care providers, and emergency departments. We encourage further debate on this topic with a view to resolving the question of whether the goal of free child health care for young children in New Zealand can be realised.     

Adoption of costing systems by U.S. hospitals

This article re-examines the use of costing information in hospitals. While previous research reports that hospitals are increasingly adopting costing methodologies, survey results indicate that costing systems and cost methodologies have not been widely implemented. A telephone survey of 94 hospital executives revealed only 26 percent routinely collect procedure-level costs and only 12 percent apply basic costing techniques described in prior health care management literature. It appears that despite cost accounting's benefits, immediate cost-control problems are answered with short-term, focused cost-cutting solutions. While these short-term measures allow hospitals to survive in the current environment, health care reform and other pressures to control revenue growth will make sophisticated cost management a necessity for hospitals in the near future.     

Private choices,public costs: Evaluating cost-shifting between private and public health sectors in New Zealand

New Zealand’s dual public-private health system allows individuals to purchase health services from the private sector rather than relying solely upon publicly-funded services. However, financial boundaries between the public and private sectors are not well defined and patients receiving privately-funded care may subsequently seek follow-up care within the public health system, in effect shifting costs to the public sector. This study evaluates this phenomenon, examining whether cost-shifting between the private and public hospital systems is a significant issue in New Zealand.We used inpatient discharge data from 2013/14 to identify private events with a subsequent admission to a public hospital within seven days of discharge. We examined the frequency of subsequent public admissions, the demographic and clinical characteristics of the patients and estimated the direct costs of inpatient care incurred by the public health system.Approximately 2% of private inpatient events had a subsequent admission to a public hospital. Overall, the costs to the public system amounted to NZ$11.5 million, with a median cost of NZ$2800. At least a third of subsequent admissions were related to complications of a medical procedure.Although only a small proportion of private events had a subsequent public admission, the public health system incurred significant costs, highlighting the need for greater understanding and discussion around the interface between the public and private health systems.     

Bundles: an opportunity to align incentives for continuing care in Canada?

Over the past three decades, diagnosis related groups (DRG) have revolutionized hospital funding by successfully focusing hospitals attention on the 'production' process. However, using DRG for funding acute hospitals does little to create incentives outside of the hospital, or coordinate health care across providers and settings. With many health care quality and efficiency issues stemming from failures at the 'seams' in the system, there is increasing interest in creating new 'bundles' of care which includes acute and post-acute care services that align economic incentives for care coordination. Analysis of Ontario (Canada) datasets demonstrates that linking existing sources of clinical, administrative and cost data to create 'bundles' is technically feasible. However, key implementation challenges need to be addressed, such as administrative and contractual arrangements across multiple provider organizations, pricing and relations with physicians. Nonetheless, this analysis of Ontario data demonstrates that bundles provide an alternative policy option to DRG's in Canada's move toward activity-based funding.     

New Zealand health care: a background

New Zealand, its people and health care services are described, followed by a discussion of (i) the role of government and non-government agencies in the funding, provision and purchasing of health care and (ii) persistent problems in the health care system. The authors argue that recent New Zealand health care reforms represent a significant deviation from past policies. However, to have any prospect of being judged as successful, the reforms must address difficulties in the funding, purchasing and provision of health care that are not new but have been features of New Zealand health care over many years.     

The costs of HIV/AIDS care at government hospitals in Zimbabwe

According to official figures, HIV infection in Zimbabwe stood at 700 000-1 000 000 in 1995, representing 7-10% of the population, with even higher expected numbers in 2000. Such high numbers will have far reaching effects on the economy and the health care sector. Information on costs of treatment and care of HIV/AIDS patients in health facilities is necessary in order to have an idea of the likely costs of the increasing number of HIV/AIDS patients. Therefore, the present study estimated the costs per in-patient day as well as per in-patient stay for patients in government health facilities in Zimbabwe with special emphasis on HIV/AIDS patients. Data collection and costing was done in seven hospitals representing various levels of the referral system. The costs per in-patient day and per in-patient stay were estimated through a combination of two methods: bottom-up costing methodology (through an in-patient note review) to identify the direct treatment and diagnostic costs such as medication, laboratory tests and X-rays, and the standard step-down costing methodology to capture all the remaining resources used such as hospital administration, meals, housekeeping, laundry, etc. The findings of the study indicate that hospital care for HIV/AIDS patients was considerably higher than for non-HIV/AIDS patients. In five of the seven hospitals visited, the average costs of an in-patient stay for an HIV/AIDS patient were found to be as much as twice as high as a non-HIV/AIDS patient. This difference could be attributed to higher direct costs per in-patient day (medication, laboratory tests and X-rays) as well as longer average lengths of stay in hospital for HIV/AIDS patients compared with non-infected patients. Therefore, the impact on hospital services of increasing number of HIV/AIDS patients will be enormous.     

The variation of acute treatment costs of trauma in high-income countries

ABSTRACT: BACKGROUND: In order to assist health service planning, understanding factors that influence higher trauma treatment costs is essential. The majority of trauma costing research reports the cost of trauma from the perspective of the receiving hospital. There has been no comprehensive synthesis and little assessment of the drivers of cost variation, such as country, trauma, subgroups and methods. The aim of this review is to provide a synthesis of research reporting the trauma treatment costs and factors associated with higher treatment costs in high income countries METHODS: A systematic search for articles relating to the cost of acute trauma care was performed and included studies reporting injury severity scores (ISS), per patient cost/charge estimates; and costing methods. Cost and charge values were indexed to 2011 cost equivalents and converted to US dollars using purchasing power parities. RESULTS: A total of twenty-seven studies were reviewed. Eighty-one percent of these studies were conducted in high income countries including USA, Australia, Europe and UK. Studies either reported a cost (74.1%) or charge estimate (25.9%) for the acute treatment of trauma. Across studies, the median per patient cost of acute trauma treatment was $22,448 (IQR: $11,819-$33,701). However, there was variability in costing methods used with 18% of studies providing comprehensive cost methods. Sixty-three percent of studies reported cost or charge items incorporated in their cost analysis and 52% reported items excluded in their analysis. In all publications reviewed, predictors of cost included Injury Severity Score (ISS), surgical intervention, hospital and intensive care, length of stay, polytrauma and age. CONCLUSION: The acute treatment cost of trauma is higher than other disease groups. Research has been largely conducted in high income countries and variability exists in reporting costing methods as well as the actual costs. Patient populations studied and the cost methods employed are the primary drivers for the treatment costs. Targeted research into the costs of trauma care is required to facilitate informed health service planning.     

Confidence in receiving medical care when seriously ill: a seven‐country comparison of the impact of cost barriers

Objective This paper examines how negative experiences with the health‐care system create a lack of confidence in receiving medical care in seven countries: Australia, Canada, Germany, the Netherlands, New Zealand, the United Kingdom, and the United States. Methods The empirical analysis is based on data from the Commonwealth Fund International Health Policy Survey 2007, with nationally representative samples of adults aged 18 and over. For the analysis of the experience of cost barriers and confidence in receiving medical care, we conducted pairwise comparisons of group percentages as well as country‐wise multivariate logistic regression models. Results Individuals who have experienced cost barriers show a significantly lower level of confidence in receiving safe and quality medical care than those who have not. This effect is most pronounced in the United States, where people who have foregone necessary treatment because of costs are four times as likely to lack confidence as individuals without the experience of cost barriers (adjusted odds ratio 4.00). In New Zealand, Germany, and Canada, individuals with the experience of cost barriers are twice as likely to report low confidence compared with those without this experience (adjusted odds ratios of 1.95, 2.19 and 2.24, respectively). In the Netherlands and UK, cost barriers are only a marginal phenomenon. Conclusions The fact that the experience of financial barriers considerably lowers confidence indicates that financial incentives, such as private co‐payments, have a negative effect on overall public support and therefore on the legitimacy of health‐care systems.     

How much should it cost? An introduction to management use of costing information

With the introduction of the internal market the health service is changing rapidly and health libraries must change with it. Many libraries are requested to cost their services. The demand comes from external customers and from their own organizations. This paper discusses the various reasons for costing services and how costing information can influence our management decision making. The paper challenges librarians to move costing processes away from a mechanistic approach, towards a means of demonstrating the worth of a library resources unit in cost and qualitative terms. Using costing information for cost control purposes, comparison of cost with other providers, setting prices or determining future service delivery levels is discussed, as well as considering the question of external provision of library services. Use of information on fixed and variable costs and assessing break-even levels of service provision is illustrated as a helpful guide to library survival.     

Financial consequences of hospital-acquired bacteraemia in three Belgian hospitals in 2003 and 2004

The financial and human costs of hospital-acquired infections are increasingly recognised in many healthcare systems. This study seeks to quantify excess expenditures on hospital-acquired bacteraemia (HAB) in three Belgian general hospitals in 2003 and 2004. Patients with HAB were compared with patients in the same All Patient Refined Diagnosis Related Groups (APR-DRGs) without HAB. Patient level costs were estimated using a hospital costing system developed by the 'Université Libre de Bruxelles', and compared with DRG-based funding for the three hospitals. HAB incidence was consistent with the national rate for two of the three hospitals, but considerably higher for the third. Both severity of illness and mortality were higher in the HAB group. Nosocomial bacteraemia was associated with an increased length of stay of 30 days and of 6.1 days in intensive care units. When compared with uninfected patients in the same DRG, treatment of HAB patients cost an additional euro 16,709. At current funding rates, hospitals made a mean profit of euro 446 for uninfected patients, but a mean loss of euro 2,431 for patients with HAB. Our findings suggest that hospitals have a financial interest in reducing the rate of HAB, even in a system which funds such complications through severity adjustments in the APR-DRG system. Growing international interest in pay for performance and other funding schemes will only strengthen these financial incentives.     

The cost of health system change: public discontent in five nations.

Many nations have undergone changes in health care financing and services. The public notices policy changes in health care and frequently bears new and unexpected costs or barriers to care unwillingly. This paper presents data from surveys of about 1,000 adults conducted during April-June 1998 in each of five countries--Australia, Canada, New Zealand, the United Kingdom, and the United States--to measure public satisfaction with health care. In no nation is a majority content with the health care system. Different systems pose different problems: In systems with universal coverage, dissatisfaction is with the level of funding and administration, including queues. In the United States, the public is primarily concerned with financial access.     

Demograghic and socio-economic determinants of community and hospital services costs for people with HIV/AIDS in London.

We examined the influence of demographic, social and economic background of people with HIV/AIDS in London on total community and hospital services costs. This was a retrospective study of community and hospital service use, needs and costs based on structured questionnaires administered by trained interviewers and costing information obtained from the service purchasers and providers, based on two Genito-urinary Medicine clinics in London: the Jefferiss Wing at St. Mary's Hospital and Patric Clements at the Central Middlesex Hospital, London, England. The subjects were 225 HIV infected patients (105 asymptomatic, 59 symptomatic non-AIDS and 61 AIDS). We found that over and above well established determinants of health care costs for HIV infected people such as disease stage and transmission category, social and economic factors such as employment and support of a living-in partner significantly reduced community services costs. Private health insurance had a similar effect, though only a small proportion of HIV people had such cover. The cost of community services for HIV infected non-European Union nationals, mainly of African origin, was one quarter that for the European Union nationals. Community services costs were highest for heterosexually infected women and lowest for heterosexually infected men after adjusting for other factors. Hospital services costs were significantly higher for HIV infected people lacking educational qualifications and employment. We conclude that access to community care for HIV infected non-EU nationals appears to be very poor as the cost of their community services was one quarter that for the EU nationals after adjusting for the effects of transmission category, disease stage, living with a partner, employment and having a private health insurance. Additional incentives for informal care for HIV infected people could be a cost-effective way to improve their community health service provisions.     

Funding in-hospital same-day surgery in Canada

The significant advantage of replacing global (i.e., cost-based) ambulatory funding with the same dollar value of case mix (i.e., input-based) ambulatory funding is that the fundamental basis for funding has been altered. First of all, it is widely believed that case mix-based funding establishes even more compelling incentives for hospitals to control resource utilization and costs without reducing service volumes than global systems. Case mix also represents a more precise policy instrument for ministries of health because incentives (e.g., different funding rates for various types of day surgery) can easily be incorporated to direct the composition of services rather than merely limit total hospital day surgery expenditures, as is currently done. Using the hybrid global/case mix day surgery funding system described above, funding policies can be designed to control both total cost and case mix composition while at the same time introducing incentives toward increasing ambulatory services. Although historical funding inequities remain unrectified, further inequities as ambulatory surgery volumes or case mixes change can be avoided.     

Costing maternal health services in South Tanzania

The following paper presents the methodology and results of a costing exercise of maternal health services in Tanzania. The main objective of this study was to determine the actual costs of antenatal and obstetric care in different health institutions in a district in Tanzania as a basis of more efficient resource allocation. A costing tool was developed that allows the calculation of costs of service units, such as deliveries and antenatal care, and separates these costs from the costs of other services. Time consumed by each activity was used as an allocation key. For that purpose, we recorded the personnel consumption with different time-study methodologies. This approach was tested and implemented in Mtwara Urban District, South Tanzania. The results were analyzed by a spreadsheet program. The paper presents average costs for different costing units of maternal care. Among other findings, we found that the cost of a normal vaginal delivery is US $12.30 in a dispensary and US $6.30 in the hospital—a result that needs explanation, as usually one would expect that hospitals are more cost-intensive than first-line facilities. However, dispensaries are grossly underutilized so that the costs per service unit are rather high. The cost for surgical delivery (only in hospitals) was found to be US $69.26 and the average cost per antenatal care consultation (only at dispensaries) was US $2.50. We conclude that improved planning of elective services is a prerequisite for more effective and efficient use of personnel resources. In addition, the definition of medically and economically sound standards, in particular staffing standards, is critical to make cost analysis an effective management tool to guide rational resource allocation.     

The cost-effectiveness of mammography screening: evidence from a microsimulation model for New Zealand

Mammography screening currently represents the only means by which the mortality rate from breast cancer can be modified substantially. A national mammography screening programme is being considered for New Zealand, and pilot programmes were established in two regions (Otago/Southland and Waikato) in 1991 to determine the potential costs and benefits of mammography for New Zealand women. The aim of this paper is to explore the cost-effectiveness of mammography screening in New Zealand relative to no screening, and to examine the marginal change in costs and benefits of altering programme characteristics such as the age of women invited and screening frequency. Cost-effectiveness is measured by the net cost (the costs of screening minus the treatment savings averted by the early detection of cancers) per year of life gained, from the perspective of the public health care sector. A microsimulation computer model, MICROLIFE, was developed to facilitate the estimation of mortality reduction and cost-effectiveness. The results show that, while mammography screening does not 'save money' overall, the cost per year of life saved for a range of policies compares favourably with other New Zealand health services, and is comparable to the results from economic evaluations of mammography screening overseas. Of those regimes considered, screening women 50-64 years of age at 3-yearly intervals appears to be most cost-effective.     

Assessing the value of hospital-in-the-home: lessons from Australia

OBJECTIVES: To identify factors that influence the cost-effectiveness of hospital-in-the-home (HITH) and to discuss the impact of funding arrangements in creating incentives or disincentives for the establishment of HITH services. METHODS: A review of HITH services in Australia was undertaken. Based on the review, factors affecting the relative costs of HITH and conventional care were identified, in particular, the effect of funding and organisational arrangements on the incentives for managers and providers to choose between HITH and conventional care. RESULTS: The review of HITH services identified a wide range of models of HITH in Australia. Factors identified as important to the success of HITH included demographic and location issues, referral mechanisms, the choice of staffing and the management of the programme. However, it was clear that the structure of the programme often related to funding arrangements. Issues such as 'incentive funding', establishment costs and opportunity for cost-shifting were identified as being relevant to incentives for the efficient provision of HITH. CONCLUSIONS: Evaluations are essential to inform decisions about whether HITH is likely to be a viable and cost-effective alternative to inpatient care. However, the relative costs of HITH and conventional care will depend on local factors. From the point of view of the decision-maker, these will be affected by funding and organisational arrangements. Funders must be aware that complex financial incentives may mask the true costs of HITH services relative to hospital services. They need to ensure that the incentives created by funding arrangements are transparent.