Physicians in health care management: 3. Case Mix Groups and Resource Intensity Weights: an overview for physicians.

In the first of two articles on the subject, the authors explain what Case Mix Groups (CMGs) and Resource Intensity Weights (RIWs) are and how they are used. The former categorize hospital patients into groups. The latter are ratios showing the relative use of hospital resources for a typical case (successful course of treatment in an acute care hospital and discharge when the patient no longer requires the hospital's services) and atypical cases (death, transfer, sign-out and substantially longer than average stay) in each CMG. As such, CMGs and RIWs define the relation between the medical and financial dimensions of hospital cases for use in planning and management. Ontario and Alberta are the first provinces to use them to adjust hospital funding. CMGs are limited by the number of diagnoses contained in each category, and RIWs are limited by the use of New York cost data due to the lack of Canadian data.     

Competition and the cost of hospital care, 1972 to 1982

Using 1982 data from 5732 US hospitals, we found that costs were substantially higher in hospitals operating in more competitive local environments than in hospitals in less competitive environments. After controlling for wage rates, patient case mix, state regulatory programs, and hospital teaching role, average costs per admission were found to be 26% higher in hospitals in the most competitive markets (more than ten hospitals within a 24-km radius) than in hospitals with no competitors within a 24-km radius. Average costs per patient-day were 15% higher in the most competitive markets than in hospitals with no neighbors. These findings on the cost implications of nonprice competition among hospitals suggest that the new modes of hospital payment will have a greater disruptive impact on hospital behavior in areas with many, rather than few, hospitals. In anticipating the effects of new modes of payment on hospital behavior, policymakers should consider the nature of quality competition as well as price competition within local markets.     

Hospital-based utilization management: a cross-Canada survey.

Utilization management attempts to measure, understand and, when appropriate, reduce hospital use. We conducted a telephone survey to determine the status of utilization management in Canadian hospitals. The sample comprised a random selection of 30% of acute-care hospitals with over 100 beds for adults in Ontario and Quebec and all such hospitals in the other provinces. Of the 123 chief executive officers contacted 99 (80%) claimed to have a utilization management program. Of those, 90 (91%) agreed to participate in an in-depth survey or to designate a senior administrator to be interviewed who was most knowledgeable about the program. High occupancy rates and funding issues were the most common environmental triggers for the development of utilization management programs; funding issues were listed more frequently by respondents in Ontario than by those elsewhere (p = 0.0008). Retrospective review alone was used in half of the hospitals, concurrent review or some mixed approach being used in the other half. Ontario and the Atlantic provinces were more reliant than the rest of the country on retrospective review alone (p = 0.0032). Most of the hospitals used peer review and education to stimulate corrective action. Of the respondents 67% indicated that the medical staff supported the utilization management program, and 53% reported that the program had a positive impact on the relationship between administrative and medical staff. Most of the respondents were unsure of the program's impact on the quality of care or the rate of unnecessary hospital admission. However, retrospective review alone was found to be less successful in reducing inappropriate utilization than either concurrent review or combined review (p = 0.0048).     

Indirect costs of teaching in Canadian hospitals.

We sought to determine whether there are indirect costs of teaching in Canadian hospitals. To examine cost differences between teaching and nonteaching hospitals we estimated two cost functions: cost per case and cost per patient-day (dependent variables). The independent variables were number of beds, occupancy rate, teaching ratio (number of residents and interns per 100 beds), province, urbanicity (the population density of the county in which the hospital was situated) and wage index. Within each hospital we categorized a random sample of patient discharges according to case mix and severity of illness using age and standard diagnosis and procedure codes. Teaching ratio and case severity were each highly correlated positively with the dependent variables. The other variables that led to higher costs in teaching hospitals were wage rates and number of beds. Our regression model could serve as the basis of a reimbursement system, adjusted for severity and teaching status, particularly in provinces moving toward introducing case-weighting mechanisms into their payment model. Even if teaching hospitals were paid more than nonteaching hospitals because of the difference in the severity of illness there should be an additional allowance to cover the indirect costs of teaching.     

Containing Ontario's hospital costs under universal insurance in the 1980s: what was the record?

In recent years the Ontario government has been concerned that the proportion of public expenditures devoted to health care is at an all-time high. In addition, the media have devoted considerable attention to specific incidents that may represent inadequate funding of hospital services. To shed light on the debate on health care expenditures we analysed the trend in expenditures of Ontario's hospital sector in the 1980s in terms of the amount of inputs (e.g., labour) used to produce hospital services (e.g., a patient-day or admission) and after adjustment for general inflation. As in the 1970s the number of inputs grew relatively slowly during the 1980s. Inputs per patient-day grew at an annual rate of 0.46% and inputs per admission at an annual rate of 2.4%. Cost increases were largely accounted for by hospital wage increases; this could have been due to Ontario's rapidly expanding economy. These findings indicate that Ontario has continued to be successful in containing the number of inputs used in the hospital sector. However, after two decades of substantial success with publicly acceptable cost control, the government faces increased scrutiny as the media and the public focus attention on several areas of perceived inadequate funding in health care services.     

政府卫生筹资政策执行力对医疗费用影响的研究

目的定量分析政府筹资功能的执行力与城乡医疗机构的医疗费用上涨之间关系。方法采用带观测变量的结构方程模型（PA-OV模型）构建政府筹资政策执行力与医疗费用之间的经济学模型。结果①医疗费用上涨的根源在于政府投入不足,特别是对城市医院的投入不足,如国家对城市医院财政投入增加1亿元,城市医院总医疗费用将下降39.567亿元;财政投入占乡镇卫生院医务人员工资比例上升1%,人均医疗费用下降0.595元;②政府投入不足根源为政府筹资政策执行力不足,政策执行进程未与社会发展战略同步。政策执行力不足在政府、医院和医生等不同利益群体均有体现,而根源在于政府卫生筹资政策的执行力不足。结论要有效控制医疗费用上涨,目前关键在于提高政府卫生筹资政策执行力,具体表现为增加政府财政投入,特别是增加对城市医院的投入。     

Electronic fetal monitoring: a Canadian survey.

OBJECTIVES: To determine the current status of electronic fetal monitoring (EFM) in Canadian teaching and nonteaching hospitals, to review the medical and nursing standards of practice for EFM and to determine the availability of EFM educational programs. DESIGN: National survey in 1989. PARTICIPANTS: The directors of nursing at the 737 hospitals providing obstetric care were sent a questionnaire and asked to have it completed by the most appropriate staff member. The response rate was 80.5% (593/737); 44 hospitals did not have deliveries in 1988 and were excluded. The remaining hospitals varied in size from 8 to 1800 (mean 162.1) beds and had 1 to 7500 (mean 617.1) births in 1988; 18.8% were teaching hospitals. RESULTS: Of the 549 hospitals 419 (76.3%) reported having at least 1 monitor (range 1 to 30; mean 2.6); the mean number of monitors per hospital was higher in the teaching hospitals than in the nonteaching hospitals (6.2 v. 1.7). Manitoba had the lowest mean number of monitors per hospital (1.1) and Ontario the highest (3.7). In 71.8% of the hospitals with monitors almost all of the obstetric patients were monitored at some point during labour. However, 21.6% of the hospitals with monitors had no policy on EFM practice. The availability of EFM educational programs for physicians and nurses varied according to hospital size, type and region. CONCLUSIONS: Most Canadian hospitals providing obstetric services have electronic fetal monitors and use them frequently. Although substantial research has questioned the benefits of EFM, further definitive research is required. In the meantime, a national committee should be established to develop multidisciplinary guidelines for intrapartum fetal assessment.     

Is Computerized Physician Order Entry Use Associated with a Decrease in Hospital Resource Utilization in Hospitals That Care for Children?

Despite large hospital costs for implementation and maintenance of Computerized Physician Order Entry (CPOE) for medication safety, little evidence exists to determine if predicted efficiency improvements translate into lower hospital resource utilization for inpatient pediatrics. The purpose of this study is to investigate the relationship between hospital CPOE use and resource utilization per case within children’s healthcare. The authors use a retrospective cross-sectional design with linear regression to assess relationships between hospital CPOE use and resource utilization per case. Despite large CPOE costs and financial barriers to adoption, we find that compared to those without CPOE, hospitals with CPOE did not have significantly lower cost per case. Because of the lack of evidence for financial benefit for CPOE use hospitals will likely need other motives to adopt CPOE. This emphasizes the importance of financial incentives for adoption of CPOE within children’s healthcare and represents important benchmark data for future comparison.     

Teaching Hospital Costs: Implications for Academic Missions in a Competitive Market

Robert Mechanic, MBA; Kevin Coleman; Allen Dobson, PhD

JAMA. 1998;280:1015-1019.

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.

     

Coronary thrombolysis--clinical guidelines and public policy: results of an Ontario practitioner survey.

The Ontario Medical Association (OMA) guidelines for intravenous thrombolysis in acute myocardial infarction were released in March 1988 and contributed to a government decision against special per-case funding to assist hospitals using tissue-type plasminogen activator (tPA). In October 1988, 1512 cardiologists, internists and physician-administrators who were OMA members were mailed a questionnaire seeking their views on the OMA guidelines and related issues. Of the 419 questionnaires (28%) that were returned, 392 contained usable responses. Among the respondents 268 (68%) had used thrombolytic drugs in the preceding 12 months; the mean number of cases was 10.6 (standard deviation 12.9). A strong or a mild preference for tPA over streptokinase was registered by 64% of the respondents; 28% had no preference. However, the self-reported ratio of actual streptokinase:tPA use was about 3:1, and 73% indicated that the government's funding policy had limited the availability of tPA in their hospital. The respondents were almost equally divided as to whether the policy should be changed. The guidelines were deemed helpful by 85% of the noncardiologists, as opposed to 52% of the cardiologists (p less than 0.005). OMA involvement in developing and circulating such guidelines was supported by 74% of the respondents and opposed by 18%; opposition was more likely to come from those who found the guidelines unhelpful (p less than 0.001). Support for involvement by the College of Physicians and Surgeons of Ontario was much weaker (supported by 32%, opposed by 62%). Overwhelming opposition to government involvement was evident.     

A survey of medical quality assurance programs in Ontario hospitals.

OBJECTIVE: To determine the prevalence and types of medical quality assurance practices in Ontario hospitals. DESIGN: Survey. SETTING: All teaching, community, chronic care, rehabilitation and psychiatric hospitals that were members of the Ontario Hospital Association as of May 1990. PARTICIPANTS: The person deemed by the chief executive officer of each hospital to be most responsible for medical administration. INTERVENTION: A questionnaire to obtain information on each hospital's use of criteria audit, indicators inventory, occurrence screening and reporting, and utilization review and management (URM) activities. OUTCOME MEASURES: Prevalence of the use of the quality assurance activities, the people responsible for the activities and the relative success of the URM program in modifying physicians' performance. RESULTS: Of the 245 member hospitals participants from 179 (73%) responded. Criteria audits were performed in 136 (76%), indicators inventory in 43 (24%), occurrence screening in 44 (25%), occurrence reporting in 61 (34%) and URM in 123 (69%). In-hospital deaths were reviewed in 157 (88%) of the hospitals. In all, 87 (55%) of the respondents from hospitals that had a URM program or were developing one indicated that their program was successful in modifying physicians' practices, and 29 (18%) reported that it was not successful; 26 (16%) stated that the effect was still unknown, and 16 (10%) did not respond. Seventy (40%) stated that results of tissue reviews were reported at least 10 times per year and 94 (83%) that medical record reviews were reported at least as often. The differences in the prevalence of the quality assurance activities between the hospitals were not found to be significant. CONCLUSIONS: Many Ontario hospitals are conducting a wide variety of quality assurance activities. Further study is required to determine whether the differences in prevalence of these activities between hospitals would be significant in a larger, perhaps national, sample. Strategies are needed to ensure universal involvement and participation in the improvement of the quality of care and the assessment of the cost-effectiveness of health care treatments. Recommendations to achieve these objectives are suggested.     

Costs, charges and revenues of elective coronary angioplasty and stenting: the public versus the private system

OBJECTIVE: To calculate the costs of elective coronary angioplasty and stenting (CAS) in the public and private healthcare systems and to compare these costs with the charges levied and the revenues obtained. DESIGN: A prospective health economics study. SETTING: A tertiary care public hospital and a co-located tertiary care private hospital in the 12 months from February 1998. STUDY POPULATION: 186 consecutive patients (124 public, 62 private) undergoing elective CAS. MAIN OUTCOME MEASURES: Outcome of CAS; exact costs of CAS in the two hospitals; exact charges to private patients; estimated charges in a typical, not co-located, "industry standard private hospital"; estimated costs to the Federal Government of CAS in the public and private system. RESULTS: The immediate and six-month outcomes in the two groups were similar. The average cost of CAS in public patients was $5,516, compared with $5,844 in private patients. The length of stay, number of stents per case and use of nonstent consumables was similar for both groups. Average charges for CAS in patients in the co-located private hospital were $13,347, and estimated average charges for CAS in an industry standard private hospital were $14,978. Estimated current costs to the government for CAS in a public hospital, a co-located private hospital, and an industry standard private hospital were $5664, $5,394 and $6,201, respectively. CONCLUSIONS: Despite similar treatments and similar treatment costs, CAS in the private system, as a consequence of the charges levied, is more than twice as expensive as in the public system, with government costs similar for both systems. These data (together with data from other studies showing that CAS is performed more frequently in private patients) suggest that encouraging more people to take out private health insurance will, paradoxically, increase government costs for CAS as well as increasing overall health expenditure.     

Hospital behavior under competition and cost-containment policies. The California experience, 1980 to 1985

Previous studies of hospital competition have found that greater competition leads to higher hospital costs. We describe herein the change in behavior of California's hospitals since the introduction of competitive and cost-containment programs. To examine the impact of California's pro-competition policies on hospital performance, we grouped the state's short-term hospitals according to the level of competition within their markets. From 1983 through 1985, total inpatient costs (inflation adjusted) increased by less than 1% in hospitals in low-competition markets compared with a decrease of 11.29% in hospitals located in highly competitive markets. After controlling for the effects of the Medicare prospective payment system program, the rate of increase in cost per discharge in hospitals in highly competitive markets was 3.53% lower than the rate of increase in hospitals in low-competition markets during the period from 1983 through 1985. We conclude that these pro-competition policies are having dramatic and potentially far-reaching effects on the nature of hospital competition, leading to increased competition based on price.     

The safety and cost-effectiveness of low osmolar contrast media. Can economic analysis determine the real worth of a new technology?

OBJECTIVES: To estimate the reduction in mortality associated with a reduced adverse reaction rate following the substitution of older high osmolar radiocontrast media (HOCM) by the newer and more expensive low osmolar contrast media (LOCM), and to assess the cost-effectiveness of switching from HOCM to LOCM in patients with and without underlying risk factors for adverse reactions from radiocontrast agents. DATA SOURCES: Data from large prospective studies of adverse reactions to HOCM and LOCM were used to estimate the expected number of deaths and severe non-fatal reactions in a hypothetical population receiving one million intravenous radiocontrast injections with HOCM, and the expected reduction in the frequency of these outcomes after substitution by LOCM in high-risk and low-risk groups respectively. Life-years lost with each radiocontrast-related death were estimated from an audit of fatal adverse reaction reports submitted to the Adverse Drug Reactions Advisory Committee. The direct costs considered in the study were the increased costs of LOCM and the hospital costs of treating radiocontrast reactions which were estimated from an audit of cases admitted to public hospitals in Newcastle. STUDY SELECTION: The literature search included Medline (1966-1989) and bibliographies of original and review articles. We included only studies which were prospective, monitored patients in a formal way, described a mechanism for the recording of adverse events and were of sufficient size to have been capable of detecting severe reactions to radiocontrast agents. DATA EXTRACTION: Data were extracted independently by two investigators, unblinded, with disagreements resolved by consensus. DATA SYNTHESIS: Mortality data from individual reports were pooled and exact confidence intervals were calculated on the assumption of a Poisson distribution. In the case of comparative studies the relative risks of severe reactions in low-risk versus high-risk patients and with LOCM compared with HOCM were treated for homogeneity, and pooled odds ratios and 95% confidence intervals (CI) were calculated by combining the logarithms of the odds ratios weighted by their variances. RESULTS: The mortality after intravenous administration of HOCM was estimated from all studies to be 23.3 (95% CI, 2.4-33.1) per million injections. However, the mortality was 11.7 per million (95% CI, 2.4-34.1) in studies published since 1986. The mortality after the use of LOCM was estimated as 3.9 per million (95% CI, 0.1-21.7).(ABSTRACT TRUNCATED AT 400 WORDS)     

An economic analysis of money follows the patient

Introduction

As part of the proposed changes to re-design the Irish health-care system, the Department of Health (money follows the patient—policy paper on hospital financing, 2013b) outlined a new funding model for Irish hospitals—money follows the patient (MFTP). This will replace the existing system which is predominately prospective with hospitals receiving a block grant per annum. MFTP will fund episodes of care rather than hospitals. Thus, hospital revenue will be directly linked to activity [activity-based funding (ABF)].

Theory and literature review

With ABF there is a fundamental shift to a system where hospitals generate their own income and this changes incentive structures. While some of these incentives are intended (reducing cost per case and increasing coding quality), others are less intended and less desirable. As a result, there may be reductions in quality, upcoding, cream skimming and increased pressure on other parts of the health system. In addition, MFTP may distort health system priorities. There are some feasibility concerns associated with the implementation of MFTP. Data collection, coding and classification capacity are crucial for its success. While MFTP can build on existing systems, significant investment is required for its success. This includes investment in coding and classification, infrastructure, skills, IT, contracting, commissioning, auditing and performance monitoring systems.

Conclusions

Despite the challenges facing implementers, MFTP could greatly improve the transparency and accountability of the system. Thus if the downside risks are managed, there is potential for MFTP to confer significant benefits to Irish hospital care.     

Cost of primary health care services in the emergency department and the family physician's office.

An attempt has been made to determine the true cost of providing primary health care for nontraumatic conditions in the emergency departments of two hospitals in Ontario and in the offices of family physicians. A total of 1117 patients presenting with 1 of 10 common symptom/sign complexes at the emergency departments or the offices of 15 participating family physicians were studies with regard to number of visits made, type of assessment by the physician, investigations undertaken, management, therapy and outcome of the illness. Costs were calculated from the charges that would be made against the provincial health services insurance plan and from the system of hospital financing in effect in the province. The average true cost per illness episode of this type of care was $14.63 in hospital A, $14.20 in hospital B and $15.90 in the family physician's office.     

The Effects of Case Mix on Hospital Costs and Revenues for Medicare Patients in California

Hospital competition and managed care have negatively affected hospital profitability. In the current turbulent health care environment in the U.S., hospitals in California have argued that the rate of increase in hospital costs is faster than the rate of increase in hospital revenues. By employing Medicare case mix indexes (CMIs) as a primary policy variable, this study found that the coefficients for CMIs in hospital costs for Medicare patients were smaller than those in hospital revenues in the years of 1986, 1989 and 1998. However, the coefficients for CMIs in hospital costs for Medicare patients were greater than those in hospital revenues in the years of 1992 and 1995. Although there were some differences between the coefficients for CMIs in hospital costs and revenues for Medicare patients, those differences found to be statistically insignificant. In spite of claims on behalf of Californian hospitals, the rate of increase in hospital costs for Medicare patients had not been greater than that of hospital revenues for Medicare patients.     

The safety of obstetric services in small communities in northern Ontario.

The safety of the obstetric care system in the small hospitals of northern Ontario was assessed by analysing the outcomes of all obstetric cases over a 2-year period. Information was retrieved by place of residence rather than hospital of delivery so that the overall perinatal system, including the referral patterns, would be assessed. There was little difference in perinatal loss rate (stillbirths and neonatal deaths up to 28 days per 1000 births) for residents of areas served by different levels of obstetric care. Areas served by units where cesarean sections are done regularly but which do not have specialists in obstetrics or pediatrics had a perinatal loss rate of 10.43, whereas areas served by units staffed with two or more specialists in both obstetrics and pediatrics and handling more than 1000 deliveries per year had a perinatal loss rate of 12.13. Although many of the smaller hospitals did not have the minimum capabilities suggested for obstetric units relatively safe care was being provided. These results do not support the need for further centralization of obstetric services in northern Ontario.     

Problems in determining the incidence of cervical cancer

Since cancer registries have different recording practices, the incidence rates that they report must be compared with caution. Indexes of reliability of recording indicated that in 1971 the reported incidence of cervical cancer in Ontario was too high. In 1971 Ontario used a method of passive reporting of cancer cases: the Ontario Cancer Registry linked hospital reports, death certificates and reports from the Ontario Cancer Treatment and Research Foundation's treatment centres to produce a single record for each case. Pathological confirmation was requested for cases thus recorded by the registry. In 26% of cases a diagnosis other than cervical cancer was indicated. With these cases omitted, the incidence rate became 15.1/100 000, as opposed to the 20.5/100 000 reported by the registry.     

One strategy for controlling costs in university teaching hospitals

Major teaching hospitals, because they treat a more complex mix of patients than do nonteaching hospitals, usually show higher costs per patient day or per case. As a result, teaching hospitals are particularly vulnerable to the decisions of those cost control and planning agencies that are unable or unwilling to treat the problem of case mix. Research at Yale University reported here demonstrates the effect of case mix on costs. A methodology is outlined that can be used by teaching hospitals in determining their costs of treating patients with a complex mix of diagnoses. It is not held that case mix alone explains all of the cost differences between teaching and nonteaching hospitals; but until that factor is isolated and identified, the other contributors to cost variation cannot be examined.