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Predicting hospital accounting costs.

J P Newhouse, S Cretin, C J Witsberger

    Health Care Financing Review
    |March 5, 1990
    PubMed
    Summary
    This summary is machine-generated.

    Two methods estimating hospital costs using utilization data were evaluated. While faster than Medicare Cost Reports, neither method accurately predicted costs for most hospitals, suggesting further investigation is needed.

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    Area of Science:

    • Health economics
    • Healthcare administration
    • Medical billing and reimbursement

    Background:

    • Medicare Cost Reports are the standard for hospital cost data but are slow to produce.
    • Prompt hospital cost estimation is crucial for financial management and policy analysis.
    • Alternative methods are needed to provide timelier, albeit potentially less accurate, cost information.

    Purpose of the Study:

    • To investigate two alternative methods for estimating hospital costs.
    • To compare the accuracy and feasibility of these methods against traditional Medicare Cost Reports.
    • To assess the potential for quicker hospital cost data acquisition.

    Main Methods:

    • Utilized current-year hospital utilization data from bills.
    • Method 1: Applied previous year's cost-charge ratios to current utilization data.

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  • Method 2: Used current year's bill charges to estimate costs.

    • Main Results:

    • Both alternative methods provided more prompt hospital cost data than Medicare Cost Reports.
    • Method 1 (using prior year cost-charge ratios) was more accurate than Method 2.
    • Even with the more accurate Method 1, only 40% of hospitals had predicted costs within +/- 5% of actual costs.

    Conclusions:

    • Alternative methods using utilization data offer faster hospital cost insights but lack precision.
    • The accuracy limitations of these methods necessitate further research.
    • Investigating the feasibility and cost of using small, fast-track hospital samples for cost reports is recommended.