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Comparing methodologies for the cost estimation of hospital services
S S Tan1, F F H Rutten, B M van Ineveld
1Erasmus MC University Medical Center, 3000 DR, Rotterdam, The Netherlands. s.s.tan@erasmusmc.nl
Summary
Reliable hospital service cost estimates can be achieved by focusing bottom-up microcosting on significant cost drivers like labor and inpatient stays, rather than all components.
Area of Science:
- Health Economics
- Hospital Management
- Cost Accounting
Background:
- Accurate hospital service costing is crucial for financial management and resource allocation.
- Traditional microcosting methods can be resource-intensive.
- Exploring alternative costing approaches is essential for efficiency.
Purpose of the Study:
- To evaluate the reliability of total cost estimates when substituting bottom-up microcosting components with top-down or gross costing methods.
- To identify the impact of different costing strategies on the accuracy of hospital service cost calculations.
Main Methods:
- Cost estimates were calculated for appendectomy, normal delivery, stroke, and acute myocardial infarction in Dutch hospitals for 2005.
- Comparison of total cost estimates derived from full bottom-up microcosting versus partial substitution with top-down or gross costing.
Main Results:
- Replacing all bottom-up microcosting components with top-down or gross costing significantly impacts total cost estimates.
- Reliable total cost estimates can be maintained by selectively applying bottom-up microcosting to high-impact cost components, such as labor and inpatient stay.
Conclusions:
- Bottom-up microcosting does not need to encompass all cost components to yield reliable total cost estimates.
- Focusing resource-intensive microcosting efforts on key cost drivers (labor, inpatient stay) offers a practical and reliable approach to hospital service costing.
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